Despite the 12th Ministerial Conference of the WTO (MC12) having been postponed, the developed countries are likely to push ahead for launching an ambitious work plan for reforming the WTO. While the reform agenda has multiple dimensions, suggestions for amending the institutional architecture of the WTO could have far-reaching implications.
Although not much is known about what is happening on WTO reforms behind the closed doors of the WTO, two detailed documents of the European Union are in public domain — EU’s 2018 concept paper on WTO modernisation and a recent document in 2021 titled ‘Reforming the WTO: Towards a sustainable and effective multilateral trading system’.
These provide pointers to what to expect from the developed countries on this issue. The US has also thrown its weight behind WTO reform, although it is actually a part of the collective problem confronting the WTO members on issues related to the dispute settlement function of the WTO.
The EU’s agenda
What are the goals of the developed countries, particularly the EU, in WTO institutional reform?
One, with the ostensible objective of revitalising the negotiating function of the WTO, the EU has identified WTO’s tradition of decision making by consensus as a huge challenge in negotiations among 164 members. It is also pushing for creating a flexible approach whereby agreements reached among a limited number of WTO members — technically called plurilateral agreements — can be integrated into the rulebook even without the endorsement of the entire membership, as required under the existing rules.
Two, the EU aims to make fundamental changes to the mandate and functioning of WTO committees, supposedly for improving their effectiveness. With this objective in mind, it has proposed that the WTO rulebook could be incrementally updated through work in the committees.
It also attempts to allow the committees to have a “deliberating function”, which would permit issues outside the WTO rulebook to be discussed, even without a mandate from the entire membership. Further, it is of the view that some committees should be downsized and resources diverted to other committees.
Three, the EU desires to change the member-driven character of the WTO. Its objective is to expand the role of the WTO Secretariat in different aspects and making it a more active player, including in negotiations. In addition, it appears to be creating the ground for providing a formal role for businesses and private sector in WTO processes, through a consultative or advisory committee. Finally, the EU wishes to deepen cooperation with other international organisations, even without any mandate from the membership.
Four, with the objective of promoting transparency, the EU has proposed sanctions for wilful and repeated non-compliance with notification obligations. Punitive actions for violation of notification obligations include naming and shaming of the defaulting country and limiting rights of the defaulting member to participate in WTO proceedings.
Five, the EU proposes a new approach to special and differential treatment of developing countries — a fundamental principle of the multilateral trading system, whereby developed countries do not expect full reciprocity in trade negotiations from developing countries. The EU has proposed that countries that meet any of the following criteria should take full commitments: OECD membership, country classified as ‘high income’, and countries with a sufficiently high share of global exports.
Developing nations beware
What could be some of the likely implications of the proposals seeking institutional changes in the WTO, as mentioned above, for developing countries, including India?
In the name of institutional reform, the developed countries are seeking to acquire almost unfettered rights to decide the issues on which to initiate negotiations and conclude final deals, thereby further marginalising the voice and role of developing countries. In the absence of decision-making by consensus, developing countries would find it well neigh impossible to pursue issues of their interest in the negotiations.
Further, negotiations in technical committees, without political inputs, run the risk of proposals of developing countries getting impeded by legal web that could be spun by the developed countries. Downsizing some of the committees could curtail the institutional avenues available to developing countries for articulating issues of their interest.
Developing countries already grapple with formidable odds and power asymmetry at the WTO. Active involvement of business interests of the developed countries in WTO processes and expanding the role of the WTO Secretariat would further deepen the power asymmetry between the developed and developing countries.
At a time when countries such as India and Brazil are fighting hard to reform the UN Security Council to make it more legitimate, effective and representative, attempts are being made by the developed countries to take another international institution — the WTO — in the opposite direction.
Overall, the vision of the developed countries would make the WTO an instrument for unabashedly promoting their commercial interests, without any meaningful concern for the interests of the developing countries, who constitute the large majority of its membership.
Such an outcome would not bode well for survival of the multilateral trading regime. The process of WTO reform must keep development at its core, promote inclusive growth, and fully take into account the interests and concerns of developing countries.
The writer is Head Centre for WTO Studies, IIFT. Views expressed are personal