255/ DDG Wolff: Acceding governments are in the vanguard of WTO reform
4 December 2019
Deputy Director-General Alan Wolff stressed that acceding governments have long made systemic contributions to the international trading system, with accession commitments stimulating rule-making discussions at the multilateral level. Speaking at the high-level opening of the Eighth China Round Table on WTO Accessions on 4 December in Moscow, DDG Wolff called on WTO members to look at the experience of acceding countries for additional inspiration in the ongoing WTO reform debate. This is what he said:
Eighth China Round Table on WTO Accessions — Session 1: Accessions and WTO reform
I will share with you some views on where the WTO Reform process stands and where I see connections with the work on WTO accessions.
WTO Reform
WTO reform is a continuous process, which started immediately after the entry into force of the WTO in 1995. Reform elements were built in the WTO Agreements, such as Article 20 of the Agreement on Agriculture, or Article VI.4 of the GATS. The launch of the Doha Development Agenda (DDA) in 2001 was a collective reform effort that did not produce the intended comprehensive outcome. Despite this, selected results have been achieved in the WTO that are important, notably the Trade Facilitation Agreement in 2013, and the expanded Information Technology Agreement, and the agreement on elimination of agricultural export subsidies, both in 2015.
Obviously, more is needed. The global trade rules need to be updated to respond to the Fourth Industrial Revolution (1). To foster predictability, investment, and growth, the WTO needs to adapt to a fast-changing world — a world of disruptive technologies, including AI, and unprecedented ways of doing business.
The world recognises that the WTO must be equipped to manage the needs and challenges of 21st Century commercial reality. G20 leaders at the Osaka Summit in June stressed and re-confirmed the need for WTO Reform. Their foreign ministers just last week reiterated the “urgency” of WTO Reform.
In response, WTO Members are moving in that direction. In the near term, Members are looking to deliver outcomes for the 12th WTO Ministerial Conference in Nur-Sultan, just six months away. The priority is to impose disciplines on fisheries subsidies, to extend the moratorium on customs duties on electronic transmissions, and to move the Joint Initiative talks through to substantive results with respect to rules for e-commerce and investment facilitation and dealing with impediments to cross border provision of services due to domestic regulation. Efforts are underway to find ways to make world trade more inclusive by empowering women, and small and medium-sized enterprises (MSMEs).
Serious efforts are also being dedicated to restoring the WTO dispute settlement system’s legitimacy and effectiveness. Members are exploring options for addressing the impasse over the Appellate Body. Finding a way forward on rules enforcement, even if imperfect, will be important for preserving the integrity of the WTO system.
A number of Members are focussed as well on the trade aspects of environmental issues, such as plastics, the circular economy and fossil fuel subsidies. Work is also ongoing on agriculture and food security, and other areas.
In short, the level of activity within the WTO’s membership has not been this high in over a decade.
The discussions at the Informal Trade Negotiating Committee (TNC) this week Friday (6 December) and the General Council next week (9-11 December) will provide an opportunity to take stock of where Members stand on these issues. These meetings can provide guidance to Members on what should be done in the lead up to MC12.
The rate of change of the nature of trade is accelerating. While not all 164 Members support the joint initiatives listed above, the intensive work underway to establish rules that govern the trade aspects of the digital economy are engaging as a formal matter, 80 WTO Members accounting for 90% of global trade working together. The process is open to all. 59 Members are involved in discussions to converge on a set of regulatory disciplines for services trade. And just last month, 92 Members signed on to a statement for investment facilitation emphasising the importance of creating a more transparent, effective and predictable environment for cross-border investment. It is the view of a number of developing Members that without investment facilitation, trade liberalization is a spur to imports but not exports.
The reform discussions also address other important issues to improve the functioning of the WTO’s regular bodies by, among other things, improving transparency and notifications by Members of their measures that affect trade.
The question of differentiation and developing country status and to which Members this designation should apply has emerged as another topic of discussion among Members. Any separation of the Membership between developed and developing countries for purposes of receiving preferential treatment has become highly contentious.
Ongoing WTO reform efforts will be central to restoring confidence in the system’s ability to meet the needs of its users and adapt to changing economic circumstances. There is no single reform agenda, no broad package of measures that bear the label “reform”. The full range of challenges as well as opportunities that the WTO’s membership faces cannot, and will not, be addressed overnight or even in the space of a few months. What can take place is for proposals to be tabled and discussed, the means found to move to update the WTO to enhance its effectiveness and assure that it is fit for purpose as the nature of world trade evolves.
WTO Accession and the Reform Debate
The discussions on WTO reform need to be open-minded and creative. In this context, Article XII Members — which now represent 20% of the WTO Membership — have a special role to play in contributing to the policy debate. Acceding governments — that is, future Article XII Members — should also contribute ideas, as they are required by the process of accession to engage in an intensive review of the WTO’s provisions as they will affect them. No WTO Members are more conversant with the rules than those which have recently acceded and those which are already deeply engaged in the accession process.
WTO accessions have long made systemic contributions as part of their accession process. They are in the vanguard of WTO reform. Each accession negotiation builds on previous outcomes. Through the accession of 36 new Members under Article XII, more than 1,500 commitment paragraphs have been incorporated into the WTO rule book. Each new accession protocol has been adopted with the aim of strengthening multilateral disciplines and has represented a building block for the multilateral trading system. In many instances, this has set a new standard for WTO rules. Transparency is a case in point, with over 250 specific commitments in this area alone.
Accession commitments also have stimulated rule-making discussions at the multilateral level. Members have consistently pursued a set of trade objectives concerning aspects of the current rules in accession negotiations, which have provided an open channel for developing new approaches. Accessions have already been a step ahead of the multilateral trade negotiations in the areas of trade facilitation, tariff rate quota disciplines, and export subsidies.
There is scope for Members to look at the experience of accessions for additional inspiration in the ongoing Reform debate.
In the area of notification and transparency, many Article XII Members have made significant contributions through extensive notifications, sometimes in areas where original Members have underperformed or where multilateral disciplines do not yet exist (such as the notification of privatization programmes). And although the multilateral disciplines have in many ways caught up with the results of accession negotiations with the entry into force of the TFA, some accession transparency benchmarks are yet to be reached (e.g. publication requirements). The fact that acceding candidates do more than some existing Members in terms of commitments is for their own benefit. It is part of their domestic reforms as well as their agenda for integration into the world trading system. Their actions, this level of engagement, the engagements considered and adopted, at the same time benefits the multilateral trading system by lighting the path forward.
As for the differentiation debate, the strength of accession negotiations is that it pushes applicant governments on the path of market-based economic and institutional reform while taking into account differences in stages of development, national conditions, and approaches to economic organization. Accessions have dealt with incoming Members with specific tailor-made flexibilities based on explicitly expressed needs, which are reflected, for instance, in transitional periods. The Legislative Action Plan also provides an effective tool for defining these needs in a structured manner.
Finding ways to make the multilateral trading system more effective, which is the focus of the ongoing Reform debate, will allow the WTO to deliver more for its Members.
The Joint Initiatives which I mentioned earlier are of significant interest to small and medium-sized developing economies, which make up the bulk of the economies of acceding countries. Article XII Members are already active participants in these initiatives. It is also interesting that some acceding governments, such as Belarus, have expressed interest in participating in the Joint Initiatives, as they are already discussing these issues at home and are keen to be informed of the development of potential new trade rules. I am sure that we will have further discussions on this in the next panel.
Accessions and WTO 2.0
As with domestic reforms where WTO accession can serve as an effective catalyst, WTO Reforms will take time. Therefore, like an Accession Roadmap, it is not unreasonable to intensify and give more concrete shape to reform. As the 36 completed accessions have done previously, the on-going accessions can be a vehicle to improve the WTO. The objective should not be to have Article XII Members forever in the vanguard of reform, but to have convergence toward a very high common standard of substantive rules, processes and organization. It is worth discussion among Members whether they would generally be willing to:
- Recommit to shared ideals and goals, based on the premise that market forces are to determine competitive outcomes;
- Concur that the WTO is founded on participation by all based on a net positive contribution, regardless of the size of economy, allowing for proportionality in light of capabilities;
- Recognize the right to equal trade for all nations and equal opportunities for all participants regardless of gender or how small the size of a business may be; paired with an equal level of obligations except in the case of verifiable limitations of capacity;
- Link explicitly once again the cause of peace and the cause of open markets as they were in the first clause of the 1947 Havana Charter for the International Trade Organization. In fact, this point has been stressed by many of the conflict-affected countries currently in the process of accession;
- Provide that obligations be fully enforceable as envisaged at the founding of the WTO;
- Protect the environment (such as dealing with plastics in the oceans);
- Combat corruption and promote good governance by joining and implementing the government procurement agreement;
- Promote sustainable development through all relevant WTO activities, through training and capacity building, as well as through close coordination with other international organizations.
Another subject for discussion is whether the WTO should have a new structure of governance whereby –
- Rule-making consistent with the WTO’s objectives becomes more possible;
- The WTO’s dispute settlement system is more responsive to the needs of Members; and
- The management of the system by its Members as well as their Secretariat becomes more effective and agile in meeting the needs of Members, including
- initiating subjects for negotiation,
- monitoring and working to assure compliance with existing obligations,
- providing relevant analyses, and
- recommending actions to assure the fostering of the objectives of the renewed WTO Charter.
I trust that accession negotiations, which have consistently produced net positive results that strengthen the multilateral trading system, can stimulate fresh thinking on these and other topics that Members may bring forward, and provide substantive building blocks, which will help foster the emergence of the WTO reform that the G20 leaders have called for. One accession negotiator from a large WTO member recently said, “Accession is what we (Members) want the WTO to be ideally”. Despite the difficulties and challenges which you as acceding governments may face at home or with Members during the accession process, please always remember that your contributions are making the multilateral trading system stronger and more inclusive, as you help to improve your own rates of economic progress.
I look forward to our discussion.
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Notes
- Professor Klaus Schwab, of the World Economic Forum, coined the term. He is convinced that we are at the beginning of a revolution that is fundamentally changing the way we live, work and relate to one another. Previous industrial revolutions liberated humankind from animal power, made mass production possible and brought digital capabilities to billions of people. This Fourth Industrial Revolution is, however, fundamentally different. It is characterized by a range of new technologies that are fusing the physical, digital and biological worlds, impacting all disciplines, economies and industries, and even challenging ideas about what it means to be human.
The resulting shifts and disruptions mean that we live in a time of great promise and great peril. The world has the potential to connect billions more people to digital networks, dramatically improve the efficiency of organizations and even manage assets in ways that can help regenerate the natural environment, potentially undoing the damage of previous industrial revolutions. At the heart of his analysis is the conviction that the Fourth Industrial Revolution is within the control of all as long as there is collaboration across geographies, sectors and disciplines to grasp the opportunities it presents.
Source: wto.org
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