Appellate Body reform

Alan Wolff’s vision for saving the WTO — aspirational but is it achievable?

Terence P. Stewart · May 1, 2021 · The future of the WTO · Alan Wm. Wolff, Appellate Body reform, climate change, COVID-19 vaccines, Peterson Institute for International Economics, WTO Reform · No Comments

Alan Wolff served as a Deputy Director-General at the World Trade Organization until the end of March this year. He is now a Distinguished Visiting Fellow at the Peterson Institute of International Economics. While at the WTO, DDG Wolff was a frequent speaker to Members and groups on various aspects of the WTO, its importance to bettering lives and promoting peace and the need for reform to remain relevant. I have covered some of former DDG Wolff’s statements in prior posts. See, e.g., March 6, 2021, WTO’s four Deputy Directors-General tenure reportedly concludes at the end of March 2021 — thanks for an outstanding job, https://currentthoughtsontrade.com/2021/03/06/wtos-four-deputy-directors-general-tenure-reportedly-concludes-at-the-end-of-march-2021-thanks-for-an-outstanding-job/ (DDG Wolff gave 142 speeches between October 2017 and March 6, 2021); December 8, 2020, Trade for Peace Week at the WTO – a positive look at how trade can and should contribute to global peace and stability, https://currentthoughtsontrade.com/2020/12/08/trade-for-peace-week-at-the-wto-a-positive-look-at-how-trade-can-and-should-contribute-to-global-peace-and-stability/; November 22, 2020, DDG Wolff’s comments to G20 on immediate challenges for trade to address economic rebound from the pandemic and for WTO reform, https://currentthoughtsontrade.com/2020/11/22/ddg-wolffs-comments-to-g20-on-immediate-challenges-for-trade-to-address-economic-rebound-from-the-pandemic-and-for-wto-reform/; November 10, 2020, The values of the WTO – do Members and the final Director-General candidates endorse all of them?, https://currentthoughtsontrade.com/2020/11/10/the-values-of-the-wto-do-members-and-the-final-director-general-candidates-endorse-all-of-them/.

On April 29, 2021, the Peterson Institute of International Economics presented an hour virtual program with Mr. Wolff during which he presented his thoughts on “Saving the WTO, A Roadmap to the Future” and answered questions. Mr. Wolff provided a paper, and a slide deck (which he went through during his presentation). Links to the virtual meeting, his paper and his slide deck can be found here: PIIE Virtual Event, The Future of the WTO, April 29, 2021, Chttps://www.piie.com/events/future-wto; Alan Wm. Wolff, Saving the WTO, A Roadmap to the Future of the World Trade Organization, April 29, 2021, https://www.piie.com/sites/default/files/documents/wolff-4-29-2021speech.pdf; Alan Wm. Wolff, presentation slides, Saving the WTO, A Rodmap to the Future, April 29, 2021, https://www.piie.com/sites/default/files/documents/wolff-4-29-2021ppt.pdf.

Mr. Wolff’s paper, slide deck, and presentation reflect his thinking on the importance of the World Trade Organization, the challenges that need to be addressed to get to a future of continued importance for the WTO and reforms that will be required in the structure and operation of the organization. For those with an interest in the multilateral trading system and the challenges defining the current mix of global trade needs, Mr. Wolff’s materials are an important resource and will undoubtedly spark a lot of discussion in Geneva, in capitals and among those caring about a viable trading system. While there are practical aspects of his paper, the paper in total is aspirational. While there are many questions about whether the elements of the roadmap laid out are achievable and while there are some potential missing links or sequencing issues that may prevent forward movement on some items, Mr. Wolff’s vision of what could be is worth careful evaluation.

Mr. Wolff reviews that the WTO governs more than three quarters of world trade, is the basis for the hundreds of free trade agreements and has all Members stating that the system serves their interests. Negotiations, transparency/ implementation and dispute settlement are the core elements. For fragile and conflict-affected countries, membership supports achieving peace through improving opportunities for citizens. Since the late 1940s, the GATT and now the WTO have seen huge increases in trade with billions of lives improved as a result.

While the value of the WTO is encapsulated in the above aspects, there are obviously many problems that plague the current functioning of the WTO. Some are discussed in Mr. Wolff’s paper — e.g., mistrust, limited success of negotiating function, lack of full transparency, breakdown of the dispute settlement system, and changing economic profile of Members and hence obligations Members should assume.

There are eight current major challenges that Mr. Wolff identifies as needing to be addressed to get to the future (slides 8 and 9):

“1. Dealing with the trade aspects of fighting the pandemic.

“2. Using trade to boost the economic recover, with special attention to developing countries.

“3. Making the recovery greener.

“4. Assuring that carbon border adjustment measures are based on cooperation and do not become a source of conflict.

“5. Forestalling fragmentation of the digital economy.

“6. Putting into place binding dispute settlement that is accepted as legitimate by all litigants.

“7. Making the trading system visibly more positive for workers.

“8. Reforming the WTO as an institution.”

Dispute Settlement discussion

There are many specific proposals for actions that are suggested to be taken under each of the topics. Each section of the paper is worth careful review. For purposes of this post, because I have written extensively on dispute settlement, I look at the section of Mr. Wolff’s paper dealing with dispute settlement (pages 14-18). Mr. Wolff’s discussion is copied below.

“Dispute settlement

“• The primary feature that distinguishes the WTO from most other international organizations is the fact that the commitments contained in its agreements are enforceable. Putting into place binding dispute settlement accepted as legitimate by all litigants is essential to restore enforceability.

“There being no Appellate Body (AB) at present, major litigants, including the U.S. and the EU, have used a procedural trick to prevent a dispute settlement panel finding from becoming final. This is informally known as “appealing into the void”. Proceedings are paused indefinitely while the losing party at the panel stage appeals to a body that does not exist except on paper.

“The blocking of appointments is the sole result of one Member, the United States, being dissatisfied with what the Appellate Body was doing and not doing, mostly rendering trade remedies less effective and in some instances totally ineffective. While killing off the Appellate Body was largely a matter of one Member acting against the will of 163 others, there has been a growing recognition that only a serious negotiation is going to resolve the matter. Importantly, an increasing number of Members now concede that the former system had serious imperfections, so that change is necessary.

“There is a far wider and deeper importance to the dispute settlement issue than correcting quasi-judicial overreach, or under-performance. The premise on which the United States entered into its agreements liberalizing trade was that industries and workers suffering harm from facing a more open domestic market or from unfair foreign competition would have a remedy within agreed limits. The erosion of trade remedies — their increasing unavailability and increasing ineffectiveness when available — caused a fundamental imbalance as compared with the deal that the United States thought that it had negotiated. In part it is due to this imbalance that a belief has grown in some quarters that the WTO serves capital rather than labor.

“It is the widely held view in the United States, in the Senate, House and Executive Branch, that the Appellate Body sowed the seeds of its own destruction. Domestic experience in the United States with its own Supreme Court is instructive. The Court itself becomes threatened if it becomes politically tone-deaf. This occurred with respect to
New Deal legislation during the 1930s, and it was, observers feel, threatened again during more recent times with the attempted judicial repeal of Obamacare. In the United States, the constitutional system has checks and balances preventing a rule by judges (gouvernance des juges as the problem was known when it was a central cause of the French revolution). In the WTO, there has been neither a legislative nor an executive function available to review and change any outcomes that emerged from the Appellate Body. Kritarchy, rule by judges, is a form or governance that is unsustainable, and that is what occurred, at least with respect to trade remedies. This is unsupportable for an organization consisting of Members prizing sovereignty over their own trade.

“The solution to the WTO dispute settlement problem lies in creating accountability to the Members. This should not take a form that interferes with the independence of its decision-making nor the binding nature of decisions. I support, as do almost all and perhaps ultimately all Members, a binding, independent, two-tier (panel and appellate stage) WTO dispute settlement system. As it may be impossible to create a relevant legislative function which would provide systemic checks and balances, much of the cure of necessity will have to lie in how a new Appellate Body (NAB) is structured.

“The European Union created a multiparty interim arrangement (MPIA). Although not a complete solution in itself, it can provide some ideas for moving forward with changes in the structure of the appellate body and how it functions. The process conducted by then Dispute Settlement Body Chair Ambassador David Walker also yielded elements of a
potential solution. The following suggestions could be considered:

“• Expand the number of Appellate Body members. The EU suggested a roster of 10 for its MPIA (only three serving on any one case) but this number could be expanded to provide greater diversity of representation both in terms of geography and skill sets — including relevant trade remedy experience, as antidumping and subsidies are complex matters.

“• Provide explicitly for a role of the WTO secretariat to seek to narrow differences and make the process more about settling a particular dispute than on seeking to make law.

“• Seek to uphold the primary importance of trade agreements by directing appellate panels to look at negotiating history to discern the intent of the parties.

“• Have strict time limits for appellate review to discourage a de novo examination of the issues at hand.

“• Place emphasis on streamlining written presentations as well as limits on length of decisions to focus on the essential elements needed to settle a dispute.

“• The rules should provide that only issues raised by the parties can be addressed on review.

“• Where the WTO agreements do not cover a specific issue, the matter should be referred to the Members to resolve through rulemaking.

“• Double down on the emphasis that the appellate review is not to expand obligations or limit rights and is to give due deference to domestic decision making where trade remedies are the subject of review.

“• The appellate body should not act as a collegial body on particular cases — appellate panels should be independent of each other.

“• It is necessary to try to provide a suitable oversight role for the Dispute Settlement Body (DSB) which is currently no more than a rubber stamp for appellate decisions.

“Another major problem with WTO dispute settlement is that it takes far too long to get to a result, often taking several years. This is unacceptable in the eyes of ministers of WTO Member countries bringing a case and industries seeking to benefit from it. Strict time limits must be adhered to. Justice delayed can easily become justice denied.

“As for process, I would suggest that the trilateral partners, the EU, the U.S, and Japan, begin working on a solution. The three are used to working with each other. The EU and the U.S. have been the furthest apart on the AB issue, with Japan somewhat in the middle. In parallel, a small working group of friends of the DSB chair or General Council chair, could be constituted to consider ways forward. The trilateral would feed suggestions into the working group, and both could report to the Membership as a whole in the DSB. At this stage a meeting of the whole membership in the name of inclusiveness, would not be productive. Inclusion in a null result is not meaningful inclusion.”

As Mr. Wolff’s paper correctly notes, there have not been effective checks and balance on the Appellate Body which is not supportable over time as it results in obligations not from negotiations but from decisions of the Appellate Body. His suggestions address a number of concerns raised by the U.S., including overreach problems through clarifying what expanding rights and obligations means (e.g., no gap filling), providing deference to administering authorities in trade remedy cases (giving meaning to ADA Art. 17.6(ii), limit issues reviewed to those raised by parties, strict time limits, etc.

Missing from Mr. Wolff’s analysis is the concern raised by the Trump Administration that because economies such as the Chinese economy don’t conform to market-economy principles, the current dispute settlement system doesn’t permit addressing distortions created by such economic systems and permits such economies to block efforts to address such distortions by trading partners under their domestic law. Mr. Wolff while serving as a Deputy Director-General at the WTO reviewed his belief that the WTO system was premised on convergence of economic systems versus the coexistence of different economic systems. He repeated that view during the virtual event on April 29th and in his paper but noted that a number of WTO Members do not support that view. In a consensus based system, those opposed to convergence can block clarification of the need to converge. Mr. Wolff’s paper doesn’t review whether dispute settlement reform can occur without solving that underlying issue (either through achieving convergence or by adopting new rules to achieve more acceptable balance). Indeed, his paper suggests that “Part of the answer to distrust in the area of trade will be putting into place more effective and timely dispute settlement as a means for trade agreement enforcement.” (page 22)

Also missing from Mr. Wolff’s analysis is the need to curb review of factual findings of panels by the Appellate Body (the DSU Article 11 issue) and the need to address rebalancing of rights and obligations to correct for past overreach situations.

Conclusion

Mr. Wolff’s paper and presentation correctly claim that the WTO must be more engaged and respond to the existing challenges through action. While acknowledging the mistrust and problems with the current structure and operation of the WTO, his remarks present a vision of a better functioning global trade system that responds to the needs of its Members, is capable of addressing a changing world through improved transparency, cooperation, updated rules, a revised dispute settlement system and a Secretariat that is able to present ideas for action, independently monitor compliance and more.

For skeptics, it will be easy to point to not only mistrust, but vastly different perspectives by Members on the role of the WTO and the focus of future activities, the current consensus system and its use by many to thwart movement, and the increased activity of Members outside of the WTO to support the view that Mr. Wolff’s vision, however interesting, has no chance of succeeding.

Mr. Wolff quotes President Theodore Roosevelt in his paper (page 5), a quote that he would undoubtedly put forward in response to the skeptics and to urge WTO Members to recommit to the effort.

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust
and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.“

Katherine Tai, USTR designate, on addressing WTO reform including dispute settlement if confirmed; the USTR 2021 Trade Policy Agenda

Terence P. Stewart · March 2, 2021 · Uncategorized · Airbus-Boeing disputes, Appellate Body reform, COVID-19, digital services taxes, e-commerce plurilateral negotiations, Environmental Goods Agreement negotiations, Government Procurement Agreementro, industrial subsidies, state capitalism, WTO Reform · No Comments

President Biden’s nominee for U.S. Trade Representative had a hearing on her nomination before the U.S. Senate Finance Committee on Thursday, February 25, 2021. Written questions to the nominee were due to the Chairman of the Committee on February 26 by 5:00 p.m. Questions with answers were returned to the Committee by the USTR nominee on March 1. Ms. Tai will be one of three nominees who will be voted on by the Senate Finance Committee on March 3 at 10:00 a.m. See Reuters, Senate panel to vote Wednesday on three Biden nominees, including trade pick Tai, March 1 2021, https://www.reuters.com/article/us-usa-biden-nominations/senate-panel-to-vote-wednesday-on-three-biden-nominees-including-trade-pick-tai-idUSKCN2AT3K4?il=0; Inside U.S. Trade’s World Trade Online, Finance Committee to vote on Tai’s nomination on Wednesday, March 1, 2021, https://insidetrade.com/trade/finance-committee-vote-tai%E2%80%99s-nomination-wednesday (includes link to answers to questions from Senate Finance Committee by the nominee).

It is expected that Ms. Tai will receive an affirmative vote and be referred to the full Senate for a confirmation vote in the near future. It is expected that she will be confirmed by the Senate in the coming days.

I had reviewed the February 25th hearing in an earlier post. See February 25, 2021, U.S. Trade Representative nominee Katherine Tai confirmation hearing before the U.S. Senate Finance Committee, https://currentthoughtsontrade.com/2021/02/25/u-s-trade-representative-nominee-katherine-tai-confirmation-hearing-before-the-u-s-senate-finance-committee/. The 95-page compilation of questions for the record and Ms. Tai’s answers contains a little more explanation of her view of the approach of the Biden team on trade issues of importance to the WTO membership. Yesterday was also the day that USTR released the 2021 Trade Policy Agenda and 2020 Annual Report of the President of the United States on the Trade Agreements Program.

While the bulk of questions to Ms. Tai were on the U.S.-China relationship and a wide array of issues flowing from various Chinese practices, there were also a number of questions going to WTO reform and, in particular, on dispute settlement and the Appellate Body. There were also a series of questions on the U.S.-EU WTO disputes on Airbus/Boeing. There were also questions about U.S. actions that are subject to WTO dispute (though the questions didn’t focus on the WTO disputes) — Section 232 tariffs on steel and aluminum; Section 301 tariffs on large parts of imports from China. There were questions on the Environmental Goods Agreement negotiations which stopped in 2016 and whether plurilateral negotiations should be on a non-MFN basis. There were also several questions about the WTO Government Procurement Agreement and U.S. notification of its intent to withdraw coverage from certain medical goods. In addition most of the topics raised in the hearing were covered by specific written questions (e.g., USMCA enforcement, US-EU issues on digital services taxes, negotiations with the U.K., Kenya, CPTPP countries, market access issues with countries like India, Japan and others).

On WTO reform and problems with the WTO dispute settlement system, Ms. Tai’s responses indicate that the Biden Administration will be actively engaged in search for reforms. This is the first affirmative indication that the Biden Administration is likely to move past identifying the myriad problems with the dispute settlement system (something the Trump team identified with great specificity) to engaging in identifying reforms needed. Similarly, Ms. Tai’s response on the WTO disputes on Airbus-Boeing indicates the Biden Administration will be focusing on finding a negotiated solution with the European Union. Similarly, the Biden Administration will focus on enforcement of existing obligations our trading partners have at the WTO or bilaterally or plurilaterally. With China this means the U.S. will seek compliance through the WTO or through bilateral agreements (such as the U.S.-China Phase I Agreement) where there are specific commitments not being complied with, and the U.S. will seek through negotiations new rules where there is a lack of clarity in current agreements or lack of existing rules.

The 2021 Trade Policy Agenda looks at how trade policy can address core Biden Administration priorities — tackling the COVID-19 pandemic and restoring the economy; being worker centric; putting the world on a sustainable environment and climate path; advancing racial equity and supporting underserved communities; addressing China’s coercive and unfair economic trade practices through a comprehensive strategy; partnering with friends and allies; standing up for American farmers, ranchers, food manufacturers and fishers; promoting equitable economic growth around the world; and making the rules count (enforcement). While many of the Administration’s priorities from a trade perspective include areas for potential WTO action, the main discussion of WTO activity is in the partnering with friends and allies section. A three page fact sheet from USTR released yesterday provides a summary on the 2021 trade policy agenda and is embedded below.

fact-sheet-on-2021-Trade-Policy-Agenda-report

Senate Finance Committee Questions and Ms. Tai’s Responses dealing directly with the WTO or the US-EU Airbus-Boeing disputes

I have copied below the questions and responses that deal directly with the WTO or the US-EU Airbus-Boeing disputes. I include the name of the Senator asking the question. Italics (questions) and bold (name of Senator and answers of Ms. Tai) in the materials is from the original text.

“Chairman Wyden

“Question 2 – Boeing/Airbus Dispute:

“As a longtime trade professional, you’re well aware of the history of the Boeing/Airbus dispute, a case that has spanned well over a decade. At the end of the WTO process, American businesses continue to be in an untenable position. The Europeans are continuing to subsidize Airbus to the detriment of U.S. competitors, while small American businesses—already suffering from COVID-related challenges—are facing extra tariffs on a variety of European products.

“The Boeing/Airbus dispute is just one “trade irritant” between the United States and Europe. There are numerous others—including digital services taxes, biotech authorization processes that aren’t based on science, and protectionist policies in standards development.

“What’s going to change under the Biden Administration – and a USTR Tai – to ensure that Washington and Brussels can bring this dispute to a meaningful and timely conclusion? And ultimately, what would a positive outcome look like?

“Answer: The Boeing/Airbus WTO litigation has been ongoing for more than 15 years. If confirmed, I will make it a priority to resolve this long-running dispute in a way that ensures Boeing and its workers can compete on a level playing field.

“Question 3 – WTO Reform:

“It was not always clear that the previous administration saw the value in the WTO. In contrast, the Biden Administration has pledged to work with our allies and re-engage in multilateral institutions like the WTO.

“That said, there has been bipartisan agreement that the WTO is in need of reform. There are numerous issues with the institution—from the lack of meaningful negotiations, to failure to comply with notification and transparency requirements, to ongoing concerns regarding the Appellate Body.

“Where do you recommend the United States start in restoring the WTO to a functioning and useful institution?

“Answer: If confirmed, I will work to re-engage with like-minded partners who similarly recognize the importance and necessity of WTO reform. Since the founding of the General Agreement on Tariffs and Trade (GATT) in 1947, U.S. leadership has been critical at every juncture when the global trade system has required a major update. This will be difficult work that may take some time, but I remain hopeful that with proper U.S. leadership, we can achieve the necessary reforms.

“How can the United States support the incoming Director General, Dr. Okonjo-Iweala, in building consensus and ultimately ensuring that the WTO makes the needed reforms?

“Answer: If confirmed, I will work closely with Dr. Okonjo-Iweala, following her own historic appointment, to tackle these challenges in a practical and constructive manner. Dr. Okonjo-Iweala brings a wealth of knowledge from her 25 years of experience at the World Bank and her two terms as Nigeria’s Finance Minister. She is widely respected for her leadership and management skills. The U.S. stands ready to assist her in building the consensus required to achieve the much-needed reforms.

“Ranking Member Crapo

“Question 4:

“I have concerns about the power of technology companies. However, I am concerned that the EU is using such concerns as fig-leaf for discriminatory measures against U.S. businesses, including unreasonable digital services taxes or through measures that appear to target American companies in particular, like the Digital Services Act.

“Are you willing to aggressively challenge these types of measures whether through use of Section 301 or through WTO dispute settlement?

“Answer: The previous Administration started Section 301 investigations in response to the digital service taxes introduced by a number of countries, but it then suspended the introduction or implementation of specific remedies to allow time for negotiations. If confirmed, I will review the status of those actions and will work with my colleagues at the Treasury Department to address digital services taxes as part of the multilateral effort to address base erosion and profit shifting through the OECD/G20 process.

“Question 10:

“WTO reform is of great interest to many Members of this Committee. In particular, there are bipartisan concerns about overreach by the WTO Appellate Body. While I see some utility in second-level review, we need to ensure reforms that stop activism by the Appellate Body, including through rulings that have undercut our trade remedy laws and environmental conservation measures.

“What are some concrete reforms that you think are necessary to ensure the Appellate Body operates as intended?

“Answer: Over the years, the Appellate Body has overstepped its authority and erred in interpreting WTO agreements in a number of cases, to the detriment of the United States and other WTO members. In addition, the Appellate Body has failed to follow existing rules created to ensure that disputes are resolved in a timely manner. Reforms are needed to ensure that the underlying causes of such problems do not resurface and that the Appellate Body does not diminish the rights and obligations of WTO members.

“Question 12:

“I am deeply concerned about data localization requirements. The European Union attempts to be invoking privacy concerns in the WTO E-commerce negotiations as an excuse to allow it to engage in protectionist practices with respect to data.

“Do you agree that that United States should not accept the EU’s proposed exception to allow countries to engage in data localization?

“Answer: To participate in today’s global economy, U.S. companies need the ability to access networks, transfer data and use secure data centers of their choice. If confirmed, I commit to using the tools at my disposal to ensure that American workers and innovators are able to compete effectively abroad.

“Senator Grassley

“Question 1:

“If confirmed, how will you use the tremendous leverage the United States has to revitalize the WTO’s negotiating function so that the rules reflect the modern economy, including e-commerce?

“Answer: The WTO negotiating function has failed to keep pace with changes in the global economy. WTO rules need to be updated to reflect developments that have unfolded over the past quarter-century, particularly in the digital economy. If confirmed, I commit to work with like-minded partners to ensure that any new rules are high-standard ones that reflect the Build Back Better agenda.

“What reforms would the Biden Administration be interested in pursuing to WTO’s Appellate Body?

“Answer: Over the years, the Appellate Body has overstepped its authority and erred in interpreting WTO agreements in a number of cases, to the detriment of the United States and other WTO members. In addition, the Appellate Body has failed to follow existing rules created to ensure that disputes are resolved in a timely manner. If confirmed, I commit to seeking a comprehensive range of reforms to address these shortcomings.

“Do you think China should be accorded developing country status at the WTO?

“Answer: If the WTO is going to succeed in promoting equitable economic development, it is critical that the institution rethink the ability of countries to self-select developing country status. The rules for special and differential treatment should be reserved for those countries whose development indicators and global competitiveness actually warrant such flexibilities; they should not be abused by countries that are already major trading powers.

“Question 7:

“The European Union is in the process of implementing legislation that will impose new EU antibiotic use restrictions on producers of animal products that export to the EU, a move that could cause serious disruptions. EU regulators are refusing to take into account relevant data from countries outside the EU or to consider use restrictions already in place in the U.S. and elsewhere, as required under WTO rules.

“How do you intend to deal with this type of EU regulatory protectionism?

“Answer: I understand the importance of this issue. If confirmed, I commit to holding our trading partners to their WTO commitments with respect to sanitary and phytosanitary measures, the application of standards and other obligations that impact our agricultural exporters.

“Senator Cantwell

“Question 4 – Boeing-Airbus Dispute/Europe:

“Aerospace has been a leading U.S. export for many years. The future of aerospace matters to U.S. jobs. There are more than 100,000 aerospace jobs in Washington state and before the pandemic there were even more.

“In 2006, the United States brought a case at the World Trade Organization (WTO) because Europe provided $22 billion in illegal subsidies for the development of Airbus commercial aircraft (A350 and A380).

“The Europeans countered with a case against the United States. The WTO ruled for the United States in 2012 and 2016 and for the EU in 2019. As a result of the WTO cases, the United States imposed WTO-approved tariffs of up to 25% on a range of products including European aircraft, wine and spirits, and dairy. The European Union still imposed tariffs of up to 25% on U.S. aircraft and a range of agricultural products including Pacific salmon, wine, wheat, and berries.

“The EU has kept sanctions in place even though in March 2020 Washington State repealed the tax provision that the WTO found to be out of compliance. Last year, the Trump administration failed to reach an agreement with the Europeans on commercial aircraft subsidies that would finally end the dispute and the tariffs.

“As it seeks to rebuild the transatlantic alliance, the Biden administration has a real opportunity to resolve this dispute, finally end harmful Airbus subsidies, and establish a level playing field for America’s aerospace industry.

“Will you prioritize reaching an agreement on commercial aircraft subsidies to end European and U.S. tariffs and finally end the Boeing Airbus dispute?

“Answer: The Boeing/Airbus WTO litigation has been ongoing for more than 15 years. If confirmed, I will make it a priority to resolve this long-running dispute in a way that ensures Boeing and its workers can compete on a level playing field.

“Do you anticipate reaching separate agreements with the United Kingdom and the European Union?

“Answer: The United Kingdom left the European Union on January 31, 2020. If confirmed, I look forward to working with the United Kingdom on a range of trade issues, including the disputes regarding Boeing and Airbus.

“Will you commit to resolving the Boeing-Airbus dispute and tariffs prior to finalizing any U.S. – EU Trade Agreement or U.S. – United Kingdom Trade Agreement?

“Answer: If confirmed, I will make it a priority to resolve this long-running dispute in a way that ensures Boeing and its workers can compete on a level playing field. I commit to working with Members of Congress on trade priorities with the European Union and the United Kingdom.

“Question 5 – Digital Trade/Europe:

* * *

“What steps will you take to cooperate with Europe on addressing intellectual property and market access challenges in China?

“Answer: While there are differences between the U.S. and the EU on some important issues, the U.S. and the EU share broad concerns about China’s unfair practices, including policies that in practice condition market access on technology transfer. It is a priority of the Biden Administration to work with our allies, including our European allies, to address the many challenges posed by China.

“Will you re-engage on the WTO negotiations on e-commerce and will you make it a priority?

“Answer: The WTO negotiating function has failed to keep pace with changes in the global economy. WTO rules need to be updated to reflect developments that have unfolded over the past quarter-century, particularly in the digital economy. If confirmed, I commit to work with like-minded partners to ensure that any new rules reflect the values of the Build Back Better agenda.

“Question 6 – Environmental Goods:

“Climate Change is a global challenge that no nation can solve on their own. For this reason, I appreciate President Biden rejoining the Paris Agreement so the U.S. can resume its role as a leader in reducing the world’s dangerous levels of carbon pollution.
Being part of the global solution on climate will also help ensure the U.S. has access to a rapidly growing trillion-dollar annual market that could create thousands of high-wage trade and manufacturing jobs in Washington state.

“But that market opportunity is currently constrained by a variety of tariffs that make environmental goods and services more expensive and less accessible then they should be, especially in the developing world where most future carbon pollution will come from.

“That’s why I think it’s imperative that we work to make it easier for all countries to adopt lower carbon technologies. Examples include goods and services that address air pollution control, renewable energy, water and waste management, environmental monitoring, and carbon capture and storage technologies.

“Ideally with America being the ones manufacturing and selling those technologies to the rest of the world.

“In 2001, the Doha Ministerial Declaration directed WTO members to negotiate the elimination of tariffs on environmental goods. In 2014 the U.S. and its global trading partners began negotiations on an Environmental Goods Agreement (EGA) under the WTO with the goal of eliminating tariffs on environmental products and services. That was a big deal, because the 46 WTO members negotiating that Agreement account for 90% of environmental goods traded worldwide. Unfortunately, discussions stalled in 2016 and were not pursued by the last Administration.

“Ms. Tai, do you support the goals of the Environmental Goods Agreement?

“Answer: Combatting climate change and developing green enterprises and jobs are key priorities for the Biden-Harris Administration. In July 2014, the United States and 13 additional Members of the World Trade Organization (WTO) officially launched negotiations on the proposed Environmental Goods Agreement (EGA) to eliminate tariffs on green technologies. If confirmed, I will pursue a trade agenda that supports the Biden Administration’s comprehensive vision of reducing greenhouse gas emissions and achieving net-zero global emissions by 2050, or before, by fostering U.S. innovation and production of climate-related technology and promoting resilient renewable energy supply chains.

“As U.S. Trade Representative, will you seek to restart negotiations on this vital pact that could make the products we need to combat climate change cheaper and more accessible worldwide?

“Answer: If confirmed, I will seek stakeholder input on the EGA and evaluate the agreement for its consistency with the Build Back Better agenda and its potential contribution to the Biden-Harris Administration’s goal of achieving net-zero global emissions by 2050.

“Will you commit to looking into existing tariff levels with other WTO members to determine which countries have tariffs on environmental goods that differ or exceed corresponding US tariffs? And will you share that analysis with the members of this Committee?

“Answer: If confirmed, I commit to working closely with you to identify barriers to reciprocal market access for U.S. producers of environmental goods.

“Senator Cornyn

“Question 1:

“Since June 2018, certain American spirits exports to the EU and UK have faced a 25% tariff in response to the U.S. imposition of tariffs on steel and aluminum, and in connection with the WTO dispute concerning Boeing. Absent a resolution to the steel tariffs, the EU’s tariff on American Whiskey will automatically double to 50% in June. The U.S. has imposed a 25% tariff on certain EU and UK wines and spirits imports since October 2019 in connection with the WTO Airbus dispute. The negative impact of these tariffs are being felt across the U.S. from farmers, to suppliers, retailers, and the hospitality sector.

“Will you commit to taking these views into account?

“What is the Administration’s plan to negotiate resolutions to the various trade disputes with the EU and UK to ensure that these tariffs are quickly removed?

“Answer: The purpose of WTO dispute resolution process is to ensure that other countries play by the rules so that our businesses, workers, farmers and ranchers can compete on a level playing field. Tariffs may be a tool to achieve these ends, but they are not the goal. The Boeing/Airbus WTO litigation has been ongoing for more than 15 years. If confirmed, I will make it a priority to resolve this long-running dispute in a way that ensures Boeing and its workers can compete on a level playing field and that takes into account all affected stakeholders.

“Question 8:

“The Biden Administration has announced its intention to increase government procurement of domestically manufactured goods and services. At the same time, the United States is a party to the WTO Government Procurement Agreement (GPA), which limits the United States’ ability to apply robust Buy America requirements to government procurement. Some have proposed suspending U.S. obligations under the GPA on a temporary, emergency basis to shore up critical domestic supply chains and spur economic recovery in the wake of the COVID pandemic.

“What are your thoughts on such a concept?

“Should the U.S. renegotiate any of its U.S. GPA commitments to ensure that the Administration can achieve its “Buy America” objectives?

“Answer: As a part of its review of the implementation and efficacy of laws, regulations, and policies related to federal procurement, the United States should also examine procurements made under our trade agreement obligations to ensure that they serve the interests of the United States, its businesses and workers. If confirmed, I commit to undertake this review.

“Question 9:

“Both the Obama and Trump Administrations recognized the existence of serious deficiencies in the WTO dispute settlement process. WTO members have used the dispute settlement process to achieve what they could not achieve in negotiations, including the severe weakening of antidumping and countervailing duty laws. In addition, the Appellate Body has repeatedly failed to address China’s dangerous combination of government subsidies, state-owned enterprises and distortive non-market behavior. The United States needs to engage in serious and meaningful negotiations to resolve these issues prior to considering any reestablishment of the Appellate Body.

“What are your plans for addressing the serious deficiencies in the WTO’s dispute settlement process?

“Do you agree that the Appellate Body should not be revived until these problems are fully addressed?

“Answer: If confirmed, I will re-engage like-minded partners who similarly recognize the importance and necessity of reform of the WTO, including its dispute settlement process. This will be difficult work, but I remain hopeful that with proper U.S. leadership, we can achieve the necessary reform that resolves our long-standing, bipartisan concerns.

“Question 10:

“Domestically produced steel is among the cleanest in the world.

“How do you plan to ensure that the WTO cannot block or weaken the administration’s efforts to promote and expand markets for domestically produced steel?

“Answer: If confirmed, I commit to examining any potential barriers to the expanding the exportation of domestically produced steel, including at the WTO, and working with Congress to address those barriers.

“Senator Portman

“Question 3:

“In Choruses from the Rock, T.S. Elliot wrote of creating ‘a system so perfect that no one will need to be good.’ That sentiment might also be applied to the World Trade Organization (WTO), which despite having clear, agreed upon rules has found itself drifting from the obvious meaning of those rules. For systems, or organizations, to be sustainable they need active engagement and not just passive reliance on their underlying institutional architecture. One of the dilemmas facing the WTO reform agenda is the fact that the existing rules are quite clear, and yet the development of new rules may suffer from the same jurisprudential drift as the existing rules have.

“Aside from tacking on a clause that says ‘and we mean it’ to a number of provisions in the WTO agreements, how do you believe new rules should be written to avoid the pitfalls that the United States has seen with respect to Appellate Body activism? And what mechanisms, if any, should be created to ensure that those who interpret such agreements remain faithful to the text of the agreement and neither expand or diminish obligations created by the agreement?

“Question 4:

“The previous two administration have, on a bipartisan basis, blocked appointments to the Appellate Body (AB) of the World Trade Organization (WTO) over concerns about AB activism. Restoring the AB without addressing the underlying issues that sparked U.S. concerns would likely not be a sustainable solution to the problem of AB overreach.

“How do you intend to approach issues related to the stalled AB? Do you believe that resuscitating the AB should come with reforms to guard against future overreach? What might some of those reforms be?

“Answer: Yes, it is absolutely critical that any solution to the existing impasse be one that seeks to address the underlying problems, including longstanding concerns of overreach and jurisprudential drift. If confirmed, I will seek to work with other countries that share U.S. concerns about WTO dispute settlement to craft reforms to guard against such problems re-emerging in the future.

“Question 5:

“Last summer I introduced a bipartisan resolution, which articulated some proposed reforms to the World Trade Organization (WTO). One of those solutions is to pursue more plurilateral agreements without Most Favored Nation (MFN) requirements. This would allow the United States to pursue trade opening opportunities with like-minded nations while preventing those not party to the agreement from benefiting.

“Do you agree about the value of non-MFN plurilaterals? If confirmed, do you intend to explore such arrangements with like-minded countries?

“Answer: Given the negotiating challenges that the WTO has encountered in recent years, I agree that non-MFN plurilaterals need to be explored as a possible path forward. If confirmed, I commit to exploring the possibility of such arrangements with like-minded countries. Developing countries are hesitant to accept them, however, and getting these arrangements accepted within the WTO will not be easy.

“Question 21:

“For roughly the past two and a half years, the European Union (EU) and the United Kingdom (UK) have levied a 25 percent tariff on American whiskey imports in response to the United States’ Section 232 tariffs. These tariffs are set to double to 50 percent in June 2021. At the same time, the United States has imposed a 25 percent tariff on certain wine and spirit imports from the EU and UK in connection to the Boeing-Airbus dispute

“How do you propose to solve the Boeing-Airbus dispute in order to ensure WTO compliance by the EU, while prioritizing the removal of tariffs on products such as American whiskey subject to 232 retaliation?

“Answer: The purpose of WTO dispute resolution process is to ensure that other countries play by the rules so that our businesses, workers, farmers and ranchers can compete on a level playing field. Tariffs may be a tool to achieve these ends, but they are not the goal. The focus must be on the resolution of the issue that has been found to impact our industry and workers. If confirmed, I will make it a priority to review the status of this long-term dispute and seek a resolution that finally addresses the unfair practices found through the WTO process that disadvantage U.S. industry and workers.

“Question 22:

“The United Kingdom (UK) is no longer a member of the European Union. Yet, the UK continues to face Airbus-related tariffs. Since the UK cannot advocate for policy change in Brussels on this issue, and as a gesture of goodwill in the interest of bringing our countries closer together, these tariffs on the UK should be removed.

“Do you believe that these tariffs should be removed from the UK?

“Question 23:

“Wheels of Jarlsberg cheese are produced in Ireland by a Norwegian company. These wheels are subject to a 25 percent tariff as a result of the Boeing-Airbus dispute. The same company makes loaves of Jarlsberg cheese in Ohio. The tariff on the wheels threatens the entire company and therefore the U.S. production of loaves. The last six-month statutory review of these tariffs did not benefit from public input, therefore did not account for the impacts on Jarlsberg cheese.

“When do you plan to review the items that are subject to Boeing-Airbus tariffs, and will you seek public input? How will you decide what stays on the tariff list and what is removed?

“Answer: If confirmed, I will work to make sure our trade enforcement actions consider the impact of tariffs on U.S. businesses and workers. When action taken under the Section 301 process leads to the imposition of tariffs on certain imports, USTR requests public input through a notice and comment period. This statutorily required practice will continue if I am confirmed as U.S. Trade Representative.

“Question 31:

“The World Trade Organization’s Government Procurement Agreement (GPA) opens up parts of the U.S. procurement market to other countries. Yet, the GPA is also a uniquely helpful model for bringing like-minded allies together on a plurilateral basis. In this way, the GPA can be both a limiting and empowering factor when it comes to restoring the resiliency of our supply chains.

“To what extent do you intend to pursue changes to U.S. GPA commitments as part of the administration’s broader Buy American agenda?

“Answer: It is the policy of the Biden-Harris Administration that the United States should seek to maximize the use of goods made in the United States for federal procurement and financial assistance awards, consistent with applicable law. As a part of its review of the implementation and efficacy of laws, regulations, and policies related to federal procurement, the United States should also examine procurements made under our trade agreement obligations to ensure that they serve the interests of the United States, its businesses and workers. If confirmed, I commit to undertaking this review.

“Question 32:

“In May 2020, President Trump signed an Executive Order directing the Food and Drug Administration (FDA) to identify essential medical countermeasures and require the U.S. Trade Representative (USTR) to withdraw coverage under U.S. trade agreements for these products. USTR has since notified the Government Procurement Agreement (GPA) Committee and our trade agreement partners of the intent to withdraw coverage for these medical countermeasures. This drew objections from some of our trading partners.

“Do you intend to pursue this withdrawal of coverage?

“Answer: As part of a review of whether our trade agreement obligations serve the interests of the United States, if confirmed, I will review the action taken to withdraw coverage of certain essential medical countermeasures from the Government Procurement Agreement and our trade agreements.

“Question 37:

“In 2018, China began to indulge protectionist impulses with respect to imports of certain waste and scrap paper. Just the other month, China banned imports of recovered paper. As you know, the United States has raised with China the inconsistency of China’s import restrictions on recyclable materials with World Trade Organization (WTO) rules. These new restrictions seem to likely to further constitute a violation of those rules.

“Will you commit to looking into these new import restrictions on recycled paper, and work with domestic industry who has been affected by these restrictions? Do you see an opportunity to include these import restrictions on paper within the scope of any future negotiations with China?

“Answer: If confirmed, I commit to engaging in a review of how trade policy can advance the development of the circular economy. As part of that process, I will engage in close consultations with domestic industry and Congress. Given the importance of China to these discussions at the global level, I would hope that China would be interested in active discussions with the U.S. on this matter.

“Senator Brown

“Question 4 – World Trade Organization:

“As was discussed during Thursday’s hearing, many agree that it is past time for World Trade Organization (WTO) reform to ensure that both dispute settlement panels and the Appellate Body are not used as a venue for foreign governments and competitors to subvert the will of Congress and perpetuate unfair trade practices.

“If confirmed, how will you approach WTO reform and how will you ensure that U.S. trade laws remain effective and are not weakened as a result of WTO dispute settlement proceedings?

“Answer: If confirmed, I will work to re-engage with like-minded partners who similarly recognize the importance and necessity of reform of the WTO. Since the founding of the General Agreement on Tariffs and Trade (GATT) in 1947, U.S. leadership has been critical at every juncture when the global trade system has required a major updating. This will be difficult work that may take some time, but I remain hopeful that with proper U.S. leadership, we can achieve the necessary reforms. This includes reforming WTO dispute settlement to prevent diminishing the rights and obligations of countries to use their trade remedy laws to counteract unfair trade practices.

“Senator Bennet

“Question 8:

“The Airbus/Boeing dispute tariffs are significantly affecting the Colorado small businesses. Restaurants in particular, which are already struggling due to the pandemic, are facing substantial costs on European food, wine, and spirits.

“If nominated, what will be your first steps regarding the EU Airbus/Boeing dispute?

“Answer: If confirmed, I will make it a priority to review the status of these long-term disputes and seek a resolution that finally addresses the unfair practices found through the WTO process that disadvantage U.S. industry and workers.

“Will you work with a wide range of interests to understand the tariffs’ impacts on their industries, including restaurants?

“Answer: The purpose of the dispute resolution process is to ensure that other countries play by the rules so that our businesses, workers, farmers and ranchers can compete on a level playing field. Tariffs may be a tool to achieve these ends, but they are not the goal. The focus must be on the resolution of the issue that has been found to impact our industry and workers. If confirmed, I will ensure that our trade enforcement actions consider the impact of tariffs on U.S. businesses and workers.

“Senator Cassidy

“Question 4 – Sugar – WTO Quota Allocation Methodology:

“There have been indications over the past year or so that USTR and USDA are considering revising the methodology used by the United States to allocate our WTO sugar quota. This quota has traditionally been allocated in varying amounts to 40 countries based on a longstanding formula, with reallocations being carried out later in the fiscal year to account for nonperformance. While it is understood there may be some inefficiencies built into the current methodology, there are also elements to the arrangement that benefit the overall operation of existing sugar policy.

“Can you provide your assurance that USTR will engage in thorough consultations with both USDA program managers and industry stakeholders regarding potential changes to the existing allocation process before any such changes are instituted?

“Answer: If confirmed, I commit to consulting with USDA program managers and industry stakeholders before any changes to the current allocation process take place.

“Question 5 – Spirits:

“What are your thoughts on how this situation can be improved?

“Answer: The purpose of the WTO dispute resolution process is to ensure that other countries play by the rules so that our businesses, workers, farmers and ranchers can compete on a level playing field. Tariffs may be a tool to achieve these ends, but they are not the goal. The focus must be on resolving the issue that has harmed has our industry and workers. If confirmed, I will make it a priority to review the status of these long-term disputes and evaluate the use of tariffs, including their impact on unrelated industries, to ensure U.S. trade tools maximize the benefit and minimize the cost for U.S. industries, workers, and consumers.

“Senator Daines

“Question 4:

“As you know, many agricultural commodities have been targeted by the European Union with retaliatory tariffs due to disputes over Boeing/Airbus and other issues. In particular, Hard Red Spring wheat has been harmed by WTO sanctioned punitive tariffs on U.S. grown non-durum wheat. Until the Airbus/Boeing dispute is resolved, or the tariffs are lifted in negotiations, U.S. wheat growers will be at a disadvantage in the marketplace relative to competitors in Canada and elsewhere.

“What steps can be taken to find a negotiated solution and put the respective tariffs on hold?

“Other agriculture commodities have been impacted as well. Will you commit to working to lift these retaliatory tariffs?

“Senator Warren

“Question 1:

“The Covid-19 pandemic has been the worst public health crisis facing our nation and the world in over a century. Now that safe and effective vaccines are available, it is vital that all people around the world have access to vaccines and any future treatments for Covid-19. Unfortunately, the Trump administration put the profits of pharmaceutical manufacturers ahead of global public health. Too many people in low- and middle-income countries may have to wait years to get vaccinated because of the high prices being charged for Covid-19 vaccines, and an insufficient supply that is currently being bought up disproportionately by wealthy nations. No one should die because drug company profits are prioritized over the health and wellbeing of human beings.

“Countries that can manufacture pharmaceuticals should be given the opportunity to produce Covid-19 vaccines and treatments as quickly as possible in order to bolster global supplies and ensure equitable distribution. In October, South Africa and India proposed a temporary waiver of the WTO’s Trade-Related Intellectual Property Rights (TRIPS) agreement, to increase the global supply of COVID vaccines and treatments and save lives throughout the world. That proposal is now supported by a large number of low and middle income countries. Under the Trump administration, the United States was one of the wealthy nations working to block this emergency waiver.

“Will you as United States Trade Representative reverse the Trump-era decision that is putting lives at risk, and instead support the TRIPS waiver so that Covid-19 vaccines and medications can be made widely available in low and middle-income countries?

“Answer: Responding to the COVID-19 pandemic is the top priority of the Biden Administration. I recognize the critical importance of ensuring widespread access to life-saving vaccines, diagnostics, therapeutics, treatments, and other key products worldwide in order to counter the pandemic and enable global economic recovery. If confirmed, I commit to examining the TRIPS waiver proposal thoroughly to determine its efficacy in enhancing our global health security and saving lives.

“Senator Barrasso

“Question 4 – Sugar:

“The current world sugar market is highly dysfunctional, driven by production and trade distorting practices employed by nearly all sugar-producing countries.

“It is more important than ever that the United States maintain its current no-cost sugar policy which provides a stable and predictable economic environment for U.S. producers, an environment necessary for capital investments and long-run sustainability.

“How would you envision taking on a multilateral challenge like the reform of the global sugar market, and

“Answer: If confirmed, any reforms I pursue regarding the global sugar market will be consistent with maintaining the current no-cost U.S. sugar policy.

“Do you think the World Trade Organization (WTO) is equipped now, or can be made equipped going forward, to effectively address the underlying issues among all members?

“Answer: WTO rules need to be updated to reflect long-standing agricultural issues that have not been rectified under the WTO’s current construction. If confirmed, I will work with like-minded partners to ensure that any new rules are consistent with U.S. domestic sugar goals.“

The full set of questions and answers is embedded below.

USTR-nominee-answers-to-written-questions

Excerpts from USTR’s 2021 Trade Policy Agenda and 2020 Annual Report of the President of the United States on the Trade Agreements Program

The section of the 2021 Trade Policy Agenda dealing with “partnering with friends and allies” is copied below. However, other priorities correspond with priorities for major trading partners like the EU and with the priorities identified by the WTO’s Director-General Ngozi Okonjo-Iweala, including dealing with the COVID-19 pandemic and recovery, having trade play a role in addressing climate change, addressing China’s many trade distortive practices and more.

“Partnering with Friends and Allies

The Biden Administration will seek to repair partnerships and alliances and restore U.S. leadership around the world. The Biden Administration will reengage and be a leader in international organizations, including the World Trade Organization (WTO). The United States will work with Director-General Ngozi Okonjo-Iweala and like-minded trading partners to implement necessary reforms to the WTO’s substantive rules and procedures to address the challenges facing the global trading system, including growing inequality, digital transformation, and impediments to small business trade. The Biden Administration will also work with allies and like-minded trading partners to establish high-standard global rules to govern the digital economy, in line with our shared democratic values.

“The Biden Administration will also coordinate with friends and allies to pressure the Chinese Government to end its unfair trade practices and to hold China accountable, including for the extensive human rights abuses perpetrated by its state-sanctioned forced labor program. In addition, the trade agenda will seek to collaborate with friends and allies to address global market distortions created by industrial overcapacity in sectors ranging from steel and aluminum to fiber optics, solar, and other sectors to which the Chinese Government has been a key contributor.”

The complete publication from USTR is embedded below.

USTR-2021-trade-policy-agenda-and-2020-annual-report

Conclusion

President Biden’s nominee for U.S. Trade Representative is likely to be confirmed in the coming days after being voted out of the Senate Finance Committee tomorrow. Her confirmation hearing before the Committee and responses to questions asked cover a very wide array of topics. But a significant number pertain to WTO reform including addressing distortions flowing from China’s state capital system and changing special and differential treatment away from self-selection, addressing the problems of the Appellate Body reviewed by prior Administrations including the overreach problem, working to resolve long running disputes (US-EU on Airbus-Boeing), getting results in the e-commerce/digital trade plurilateral negotiations, addressing the growing conflict over digital services taxes (although likely through the OECD/G20 process) and other issues. Her answers are consistent with the 2021 Trade Policy Agenda released by USTR yesterday and show strong interest in using trade policy to help address the COVID-19 pandemic and restore global economic growth, addressing the existential threat from a warming planet and other Biden Administration priorities. The Biden Administration, and Ms. Tai as the next USTR, will work with trading partners in the WTO to help restore relevance and hopefully create rules for the 21st century. Both the answers to questions and the 2021 Trade Policy Agenda should be good news for our trading partners looking at the future of multilateralism.

Race for WTO Director-General — additional material on The Rt Hon Dr. Liam Fox MP (United Kingdom)

Terence P. Stewart · September 7, 2020 · Selection of WTO Director-General · Appellate Body reform, China, European Union, The Rt Hon Dr. Liam Fox MP, United Kingdom, United States · No Comments

The two month period for candidates for the position of Director-General of the World Trade Organization to make themselves known to the WTO Members ends today, September 7, 2020. The Chairman of the General Council along with the Chairs of the Dispute Settlement Body and Trade Policy Review Body will now start the process of holding “confessionals” with WTO Members to receive in confidence the four candidates whom each Member believes could generate consensus among the membership as part of the first round of reducing the candidates from eight to five. Two other rounds will follow to reduce the candidates from five to two and then from two to one.

Today I review some other press articles about the candidate from the United Kingdom to provide additional perspective on important issues or the candidate’s approach to the position of Director-General if selected. The other seven candidates were reviewed previously. Yesterday, I posted material about H.E. Mohammad Moziad Al-Tuwaijri (Saudi Arabia), the day before on H.E. Amina C. Mohamed (Kenya), on September 4 on H.E. Yoo Myung-hee (Republic of Korea), on September 3 on Amb. Tudor Ulianovschi (Modolva), On September 2 on Mr. Abdel-Hamid Mamdouh (Egypt), on September 1 on Dr. Ngozi Okonjo-Iweala (Nigeria) and on August 31 on Dr. Jesus Seade Kuri. See September 6, 2020, Race for WTO Director-General – additional material on H.E. Mohammad Moziad Al-Tuwaijri (Saudi Arabia), https://currentthoughtsontrade.com/2020/09/06/race-for-wto-director-general-additional-material-on-h-e-mohammad-moziad-al-tuwaijri-saudi-arabia/; September 5, 2020, Race for WTO Director-General – additional material on H.E. Amina C. Mohamed (Kenya), https://currentthoughtsontrade.com/2020/09/05/race-for-wto-director-general-additional-material-on-h-e-amina-c-mohamed-kenya/; September 4, 2020: Race for WTO Director-General – additional material on H.E. Yoo Myung-hee (Republic of Korea), https://currentthoughtsontrade.com/2020/09/04/race-for-wto-director-general-additional-material-on-h-e-yoo-myung-hee-republic-of-korea/; September 3, 2020, Race for WTO Director-General – additional material on Amb. Tudor Ulianovschi (Moldova), https://currentthoughtsontrade.com/2020/09/03/race-for-wto-director-general-additional-material-on-amb-tudor-ulianovschi-moldova/; September 2, 2020, Race for WTO Director-General – additional material on Mr. Abdel-Hamid Mamdouh (Egypt), https://currentthoughtsontrade.com/2020/09/02/race-for-wto-director-general-additional-material-on-mr-abdel-hamid-mamdouh-egypt/; September 1, 2020, Race for WTO Director-General – additional material on Dr. Ngozi Okonjo-Iweala (Nigeria), https://currentthoughtsontrade.com/2020/09/01/race-for-wto-director-general-additional-material-on-dr-ngozi-okonjo-iweala-nigeria/; August 31, 2020, Race for WTO Director-General – additional material on Dr. Jesus Seade Kuri (Mexico), https://currentthoughtsontrade.com/2020/08/31/race-for-wto-director-general-additional-material-on-dr-jesus-seade-kuri-mexico/.

There is no intention on my part to be exhaustive, and the research has been limited to press pieces or videos in English. Rather the intention is to identify information not addressed in my earlier posts that may be of interest to readers.

As noted above, today’s post looks at a few articles featuring The Rt Hon Dr. Liam Fox MP from the United Kingdom, the eighth and final candidate nominated for the position of Director-General.

The Asean Post, September 5, 2020, Pandemic Is ‘Kiss of Death’ For Managed Trade, https://theaseanpost.com/article/pandemic-kiss-death-managed-trade.

“The coronavirus pandemic has heaped pressure on the troubled World Trade Organization (WTO), a WTO leadership candidate said, warning the crisis could spell the end of rules-based international trade altogether.

“Liam Fox, Britain’s first post-Brexit international trade secretary and one of eight candidates vying to become the WTO’s next director-general (DG), voiced concern that countries might turn their backs on its multilateral trading model.

“‘The reaction of some countries to the COVID emergency will be to seek solace in protectionism and to believe that they will get more resilience by … closing themselves off, if you like, from the global economy,’ he said Thursday in an interview.

“‘Exactly the opposite I believe is true,’ he explained during a conversation using the video link Zoom, insisting that countries will find more security by opening up and ensuring diversity of supply.

“‘For the rules-based trading system, COVID could be the kiss of life if we embrace the right policies – or the kiss of death if we don’t.'”

2. Government of the United Kingdom, Department for International Trade, 19 August 2020, Liam Fox pledges half his team will be women if he is the WTO DG, https://www.gov.uk/government/news/liam-fox-pledges-half-his-team-will-be-women-if-he-is-the-wto-dg.

“Dr Liam Fox has pledged that women will make up at least half of his senior leadership team if he is appointed the next Director General of the World Trade Organization (WTO).

“The UK has nominated former International Trade Secretary Dr Fox to be a candidate to replace current Director General Roberto Azevedo who stepped down this month after seven years.

“Dr Fox, the only elected politician in the running for the role, believes changes need to be made to attract more women into senior trade roles at the WTO. He states:

“Women’s economic empowerment through trade can only continue with widespread commitment to advancing the WTO and rules-based trading systems
“There is a need for the WTO to embrace the ‘talents, innovation and creativity’ of women to ensure it can lift another one billion people out of poverty
“Thirty years of progress is under threat from rising levels of unilateral actions and protectionism and those bearing the economic impact will disproportionately be women

“Dr Fox believes securing the input of women at a senior level at the WTO will help reduce the many barriers women face in accessing trading opportunities.

“He said:

“‘As someone who trained and practised as a medical doctor I was used to half, and sometimes more, of my colleagues being female. But, despite real progress being made, women continue to face disproportionate barriers in accessing trading opportunities and markets due to discriminatory attitudes, poor conditions and harassment as well as unequal access to inputs such as credit and land.’
“‘And, as we look around us at the rising levels of unilateral actions and protectionism, we know that the remarkable achievement of the last three decades is under threat and that those bearing the brunt will be women.’

“Dr Fox believes the WTO and rules-based trading systems have created opportunities for women in both developed and developing countries which will be key to helping the global economy recover from the effects of the coronavirus pandemic.

“In 2016, McKinsey estimated that creating more opportunities for women to work, including in export-led sectors, could add $12 trillion to the global economy by 2025.

“Dr Fox said:

“‘What could be more counterproductive than failing to utilize the talents, innovation and creativity of half the planet’s population? Women’s economic empowerment through trade can and has played a key role in creating political stability and so the conditions for wider economic progress. This matters to all of us, wherever we are.’

“Currently, neither the Director General nor any of the four Deputy Director Generals at the WTO are female. The latest diversity breakdown of the WTO secretariat shows that of the 24 staff members in the most senior grades, only five were female.

“Dr Fox said:

“‘To attract more women into the architecture of trade, we need to make changes at all levels.’
“‘We need more input for women, by women if the WTO is to play its part in taking another one billion people out of extreme poverty. That is why, if I am successful in my candidacy, women will account for at least half of my senior leadership team.'”

3. Inside U.S. Trade’s World Trade Online, September 2, 2020, Fox: Congress should leverage TPA renewal to resolve WTO appellate impasse, https://insidetrade.com/trade/fox-congress-should-leverage-tpa-renewal-resolve-wto-appellate-impasse.

The article reviews statements by Dr. Fox that his political thinking would identify outreach to the U.S. Congress after the upcoming election as a way to make progress in resolving the impasse on the WTO’s Appellate Body. Dr. Fox opines that the renewal of trade promotion authority (“TPA”) in the front half of 2021 gives Congress significant say on trade matters which could be used to find solutions on the Appellate Body impasse.

4. Chatham House, 10 August 2020, In Conversation with The Rt Hon Dr Liam Fox MP: Candidate for Director-General of the World Trade Organization, https://www.chathamhouse.org/event/conversation-rt-hon-dr-liam-fox-mp-candidate-director-general-world-trade-organization.

Chatham House has conducted interviews with each of the candidates for Director-General. The session with Dr. Fox was held on August 10, 2020 and was on the record. My notes of some of the questions asked and of Dr. Fox’s responses are contained below.

Q: You are a free trader. Could you share your philosophy about international trade? What is your vision of trade?

A: One of the great benefits of international trade is its contribution to moving one billion people out of poverty in a generation, one of the greatest accomplishment in history. We live in a very interdependent and interconnected world. Trade is not an end in itself but a means to spread prosperity around the world which leads to security. If countries try to block trade, there are consequences such as mass migration of peoples.

Q: How do you deal with the view that many people in developed world feel that trade has undermined their prosperity?

A: Such views flow from a failure to understand the benefits that come from free and open trade. In developed countries we take benefits of trade for granted and simply look at the downside costs. If you consider benefits to consumers from trade, the benefits include a much broader selection of goods and services at lower prices. Countries always have the trade off between trade liberalization and protectionism. Those seeking protection may have better lobbyists, but they don’t have better products. Typically trade ministers don’t mention consumers at all when discussing trade policies. Yet that is one of the basic advantages of trade – greater choice, lower prices.

Q: What are the top three challenges you would face if selected as the next Director-General?

A: Dr. Fox views there are different types of issues facing the WTO. The most important issue in his view is to get Members to reconnect with the vision of a shared endeavor. One of the dangers of undermining the multilateral system is the resulting free-for-all that would result among countries which will hurt most countries including major countries like the United Kingdom and Germany. Secondly, there are a host of practical issues – restoring the appellate body would be one. Without the ability to enforce rights and obligations, the WTO is denying Members one of the value added elements of membership. Other practical issues include dealing with and recovery from the COVID crisis and how we treat our members. At the time of the webinar with Chatham House, Dr. Fox had done 72 bilaterals with Members. There is a common view that small members who are a nuisance get listened to as do the large members. However, the rest of the 164 Members don’t feel that they do get listened to. This is a big problem for the WTO. For the organization to function well, the Members need trust among themselves. For Member who don’t feel that their views are being listened to, the trust breaks down.

Q: Members will be much more involved in their own economies post-COVID. What can WTO do to get ahead of this situation?

A: Governments will be much more concerned with domestic issues in the post-COVID world. The focus on domestic needs will potentially lead to more protectionism, greater subsidies and other trade distorting measures. The key point for Members and the WTO is the resilience of the multilateral system. What we have learned during the COVID pandemic is that the way we have organized global value chains has shifted from a structure of resilience to one of efficiency. The world will likely get some rebalancing of global value chains to improve resilience. The role of the WTO is to make the case openly and constructively that resilience is to be found in greater diversity of supply, not from massive onshoring or attempting to go it alone. If a country onshores everything, the country potentially will be more vulnerable in another crisis. During the COVID pandemic, one can see many elements of global trade that have been disrupted. Vessels ended up in the far east disrupting timing of the movement of goods. With far fewer passenger flights, there has been less air cargo which has raised costs. The lock down in countries has led to less government work on various trade related ares (e.g., certifications). Yet all of these problems we have seen during the pandemic are not technical in nature but rather political. That is the reason Dr. Fox believes that the next Director-General of the WTO needs to have a political background. Many issues will be sorted out in capitals based on political will and not in technical discussions in Geneva.

Q: How would you engage the big players, like the U.S., China and the EU?

A: Engaging the major players is about getting the political commitment from them to wok within the system. What their voters want is a successful economy. In Dr. Fox’s view, a successful economy is enhanced by open trade. In terms of the US-China dispute, typically disputes end when costs become too great for the disputants to sustain. In a global environment like existed in 2018 and much of 2019 where growth was occurring, costs may have been sustainable by the U.S. and China. Dr. Fox believes that the costs are less likely to be sustainable in the post-COVID world. If true, one would expect there would be increased internal pressures to come to a compromise in the two countries.

Q: UNCTAD has confirmed a major contraction of trade during the pandemic. What is most important for the WTO to do to facilitate dismantling trade barriers?

A: The first task for the WTO and the next Director-General is to deal with the COVID export-restriction measures. In Dr. Fox’s view, nothing is as permanent as temporary measures entered during a crisis. The WTO needs to improve notifications (export restrictions or other barriers). Dr. Fox is worried how existing export barriers on medical goods may apply to vaccines when they are developed. Moreover, many countries are dependent on open trade to avoid starvation. Must understand of where we differ from the end of the financial crisis. During the financial crisis only 0.7% of G20 trade was subject to trade restrictions. In 2018 more than 10% of G20 trade was covered by trade restrictions. This change is a major problem. The G20 countries have to lead by example in terms of eliminating trade restrictions. Getting an understanding that we are in a bad place and likely to worsen is important. We cannot have business as usual.

Q: As the next Director-General, if selected, would you try to pick a particular sector (e.g., digital trade) to make progress?

A: Dr. Fox believes that the next Director-General needs to look at connected problems – trade crisis, COVID crisis and environmental crisis — and see where the crises intersect. Fisheries subsidies is all about sustainability. The WTO needs to get NGOs and the young people who are concerned to put pressure on their governments. As stated before, it is not just what happens in Geneva that is important but what happens in capitals. An Environmental Goods Agreement is another potentially important issue.

Q: The EU has been talking about a border carbon tax/tariff. Where should WTO stand on carbon border adjustment mechanisms?

A: This is going to be a big issue for the WTO. For developed countries, a price should be paid to achieve reduced carbon levels. The difficulty will come in the concept of a green subsidy. If the subsidy becomes distortive in areas like agriculture, that will be problematic for many Members. Then again the question of a carbon border adjustment mechanism is a political issue. If we want to see environmental objectives met there will be a price to pay.

Conclusion

Each candidate has been very busy these last several months meeting with WTO Members both in Geneva and in capital (whether in person or virtually), talking to the media, doing events with academia and think tanks and others. The above additional materials on Dr. Fox are a small sample of what is available online. The excerpts or summaries from the various publications have largely been limited to some of the key issues my previous posts have examined (appellate body reform, industrial subsidies, etc.) or discussions of other issues of potential interest.

Race for WTO Director-General — additional material on H.E. Mohammad Moziad Al-Tuwaijri (Saudi Arabia)

Terence P. Stewart · September 6, 2020 · Selection of WTO Director-General · Appellate Body reform, China, European Union, H.E. Mohammad Moziad Al-Tuwaijri, Saudi Arabia, United States · No Comments

Today I review some other press articles about the candidates to provide additional perspective on important issues or the candidate’s approach to the position of Director-General if selected. Yesterday, I posted material about H.E. Amina C. Mohamed (Kenya), the day before on H.E. Yoo Myung-hee (Republic of Korea), on September 3 on Amb. Tudor Ulianovschi (Modolva), On September 2 on Mr. Abdel-Hamid Mamdouh (Egypt), on September 1 on Dr. Ngozi Okonjo-Iweala (Nigeria) and on August 31 on Dr. Jesus Seade Kuri. See September 5, 2020: Race for WTO Director-General – additional material on H.E. Amina C. Mohamed (Kenya), https://currentthoughtsontrade.com/2020/09/05/race-for-wto-director-general-additional-material-on-h-e-amina-c-mohamed-kenya/; September 4, 2020: Race for WTO Director-General – additional material on H.E. Yoo Myung-hee (Republic of Korea), https://currentthoughtsontrade.com/2020/09/04/race-for-wto-director-general-additional-material-on-h-e-yoo-myung-hee-republic-of-korea/; September 3, 2020, Race for WTO Director-General – additional material on Amb. Tudor Ulianovschi (Moldova), https://currentthoughtsontrade.com/2020/09/03/race-for-wto-director-general-additional-material-on-amb-tudor-ulianovschi-moldova/; September 2, 2020, Race for WTO Director-General – additional material on Mr. Abdel-Hamid Mamdouh (Egypt), https://currentthoughtsontrade.com/2020/09/02/race-for-wto-director-general-additional-material-on-mr-abdel-hamid-mamdouh-egypt/; September 1, 2020, Race for WTO Director-General – additional material on Dr. Ngozi Okonjo-Iweala (Nigeria), https://currentthoughtsontrade.com/2020/09/01/race-for-wto-director-general-additional-material-on-dr-ngozi-okonjo-iweala-nigeria/; August 31, 2020, Race for WTO Director-General – additional material on Dr. Jesus Seade Kuri (Mexico), https://currentthoughtsontrade.com/2020/08/31/race-for-wto-director-general-additional-material-on-dr-jesus-seade-kuri-mexico/.

Today’s post looks at a few articles featuring H.E. Mohammad Moziad Al-Tuwaijri from Saudi Arabia, the seventh candidate nominated.

Inside U.S. Trade’s World Trade Online, August 17, 2020, Saudi DG candidate aims to quantify and deliver outcomes at the WTO, https://insidetrade.com/daily-news/saudi-dg-candidate-aims-quantify-and-deliver-outcomes-wto.

Inside U.S. Trade conducted interviews with each of the eight candidates for the Director-General position. The publication’s write-up of its interview with Minister Al-Tuwaijri was posted on August 17th. As reviewed in earlier posts, Minister Al-Tuwaijri brings a business approach to the position of Director-General if selected.

“‘My delivery-oriented approach is all about regaining trust and regaining confidence in the organization. And I am a great believer that if that’s the case, I think the big powers – the big countries – will go back to negotiation,’ he told Inside U.S. Trade in an interview on Monday.”

His first priority if selected as the Director-General would be to do a review of the challenges the WTO faces to identify priorities for addressing by the Members, but noted Members viewed fixing the dispute settlement system and bringing life back to the negotiating function as two broad agenda issues.

Minister Al-Tuwaijri views an approach that includes developing information that shows the effects of particular policies or actions on Members as critical to helping solve various problems including how special and differential treatment is applied and various Chinese practices that are causes of the U.S.-China tensions.

2. Chatham House, August 17, 2020, In Conversation with H.E. Mohammad Maziad Al-Tuwaijri, https://www.chathamhouse.org/file/conversation-he-mohammad-maziad-al-tuwaijri.

Chatham House has done a series of webinars with each of the candidates vying for the WTO Director-General position. On August 17, Chatham House featured Minister Al-Tuwaijri of Saudi Arabia. What follows are my notes on some of the questions asked and Minister Al-Tuwaijri’s responses.

Q: What is your overarching philosophy of international trade and your vision for the WTO as a 21^st century organization?

A: Recovery from COVID-19 will be different for each country and each region. Minister Al-Tuwaijri has reviewed the stimulus programs put in place by various governments to cushion the economic effects of addressing the COVID-19 pandemic, and he designed the stimulus plan for Saudi Arabia. There are questions of whether the stimulus provided will be sufficient and how quickly economies will rebound. The economic uncertainty and unpredictability is harmful to business activity and investment. Looking at the WTO, there is no question that reform is needed. But the question is what type of reform is needed. Another question is what type of candidate is needed (an insider or someone with a fresh set of eyes). Minister Al-Tuwaijri views himself as the right candidate. The WTO faces many challenges. Digital trade is a game changer, but there are currently no WTO rules. The WTO has accomplished relatively little in its first 25 years. The WTO faces challenges on all three pillars — negotiations, disputes, and notifications and transparency. There are increased tensions geopolitically. The WTO must in Minister Al-Tuwaijri’s view go back to its core principles. In G20 one of the objectives has been to gather political will of the G20 countries to support reform at the WTO.

Q: What are the three most important challenges that the WTO faces?

A: For Minister Al-Tuwaijri, the three pillars of the WTO — negotiations, transparency, disputes — are interconnected. However, the root cause of the WTO current situation is the failure of the negotiating function to provide results. If the negotiating process can be improved, WTO Members can regain trust. As Director-General, Minister Al-Tuwaijri would start a process where the WTO can identify early warning signs that negotiations are not proceeding. On transparency, the WTO needs to understand why countries are not as transparent as required by the WTO. If the reason is technical, such as lack of infrastructure in certain Members, then the WTO need to address through technical assistance. If the issue is really political, the Director-General needs to do outreach to capitals. Similarly, if rules need to be modified, the WTO needs to address that as well. Minister Al-Tuwaijri believes the next Director-General needs to ask the tough questions to identify the root causes of issues before the WTO Members try to fix the issues. The next Director-General can facilitate the WTO Members making some successes to show the organization can move forward and be relevant. But unless the WTO adopts an holistic approach to the needs and causes, the WTO will be back to the same dysfunctional state in the future.

Q: What would you do in the first 100 days? You have mentioned creating a delivery unit in the Director-General’s office and shifting to annual Ministerials. Are these some of the actions you would take in the first 100 days?

A: In Minister Al-Tuwaijri’s view, the intensity of trade-relevant events is happening frequently which requires more frequent Ministerial meetings. But having more meetings is not an end in itself. The key is how to prepare for the meetings, how to make the meetings more impactful. Minister Al-Tuwaijri would want to include voices of the business community within the Ministerial. In his first 100 days as Director-General, Minister Al-Tuwaijri would engage with all members to understand their views on issues. For example, he would look at ideas around the appellate body impasse (Amb. Walker’s proposal, the MPIA) and discuss why these proposals haven’t resolved the impasse. He would complete the deep dive into all matters pending before the WTO and potential reform issues and tracking the root causes. This would be important to do in the first 100 days.

Q: On the politics of trade, re US and China, the U.S. Trade Representative Robert Lighthizer has said that it is important for the next Director-General to understand that large state-run economies aren’t adequately disciplined under existing WTO rules. Do you agree?

A: Both the United States and China are important members of the WTO. Minister Al-Tuwaijri was pleased to see that the two countries were able to reach a Phase 1 agreement which shows they can negotiate some of their differences. The WTO needs both countries to go back to negotiations. The WTO is a Member-driven organization, so what gets negotiated is a matter of Members agreeing. It is clear that resolving the tensions between the two Members matters to businesses in both countries. If selected as the next Director-General, Minister Al-Tuwaijri would encourage both countries to go back to negotiations within the WTO.

Q: How do you plan to fold trade sustainable development goals (SDGs) into WTO reform program?

A: Minister Al-Tuwaijri indicated that he was privileged to implement the SDGs in the Kingdom of Saudi Arabia. He believes it would be helpful to have some unified definitions and fresh thoughts on the SDG issues. There is ongoing work within the WTO on some of the SDGs, and many members are working on the issues. Minister Al-Tuwaijri believes that addressing SDGs in the WTO, like many other issues, goes to how do Members implement objectives and measure progress. Only way that progress was made in Saudi Arabia was to map SDGs and the Saudi 2030 program and connect the dots. Minister Al-Tuwaijri would look forward to working with WTO Members to address SDGs as appropriate in the WTO reform program.

Q: on deglobalization, what are best steps DG can take to address the problem? With export restriction measures and subsidy measures from Pandemic response, does this make WTO more relevant?

A: Minister Al-Tuwaijri understands nations responding to the shock of the COVID-19 pandemic with panic and restrictive measures. He believes that the pandemic provides the WTO membership a huge opportunity. Every crisis teaches us something. The pandemic provides an opportunity for the WTO to be more relevant. The question is how. Minister Al-Tuwaijri belives that the WTO needs to do an impact analysis of all the actions taken. As Director-General, he would undertake that analysis. Minister Al-Tuwaijri stated that the WTO is still needed. He has seen that in the G20 process where the G20 countries have talked about the need for reform in the WTO and the G20 support for reform. It is important to evaluate whether the reform ideas are doable and doable in a timely manner. Minister Al-Tuwaijri believes that there are many issues that can be resolved that can bring back trust and confidence in the organization.

Conclusion

Each candidate has been very busy these last several months meeting with WTO Members both in Geneva and in capital (whether in person or virtually), talking to the media, doing events with academia and think tanks and others. The above additional materials on Minister Al-Tuwaijri are a small sample of what is available online. The excerpts or summaries from the various publications have largely been limited to some of the key issues my previous posts have examined (appellate body reform, industrial subsidies, etc.) or discussions of other issues of potential interest.

Future posts will look at additional materials for the last candidate, The Rt Hon Dr. Liam Fox MP (United Kingdom).

Race for WTO Director-General — additional material on H.E. Amina C. Mohamed (Kenya)

Terence P. Stewart · September 5, 2020 · Selection of WTO Director-General · Appellate Body reform, China, European Union, H.E. Amina C. Mohamed, Kenya, United States · No Comments

Today I review some other press articles about the candidates to provide additional perspective on important issues or the candidate’s approach to the position of Director-General if selected. Yesterday, I posted material about H.E. Yoo Myung-hee (Republic of Korea), the day before on Amb. Tudor Ulianovschi (Modolva), On September 2 on Mr. Abdel-Hamid Mamdouh (Egypt), on September 1 on Dr. Ngozi Okonjo-Iweala (Nigeria) and on August 31 on Dr. Jesus Seade Kuri. See September 4, 2020: Race for WTO Director-General – additional material on H.E. Yoo Myung-hee (Republic of Korea), https://currentthoughtsontrade.com/2020/09/04/race-for-wto-director-general-additional-material-on-h-e-yoo-myung-hee-republic-of-korea/; September 3, 2020, Race for WTO Director-General – additional material on Amb. Tudor Ulianovschi (Moldova), https://currentthoughtsontrade.com/2020/09/03/race-for-wto-director-general-additional-material-on-amb-tudor-ulianovschi-moldova/; September 2, 2020, Race for WTO Director-General – additional material on Mr. Abdel-Hamid Mamdouh (Egypt), https://currentthoughtsontrade.com/2020/09/02/race-for-wto-director-general-additional-material-on-mr-abdel-hamid-mamdouh-egypt/; September 1, 2020, Race for WTO Director-General – additional material on Dr. Ngozi Okonjo-Iweala (Nigeria), https://currentthoughtsontrade.com/2020/09/01/race-for-wto-director-general-additional-material-on-dr-ngozi-okonjo-iweala-nigeria/; August 31, 2020, Race for WTO Director-General – additional material on Dr. Jesus Seade Kuri (Mexico), https://currentthoughtsontrade.com/2020/08/31/race-for-wto-director-general-additional-material-on-dr-jesus-seade-kuri-mexico/.

Today’s post looks at a few articles featuring H.E. Amina C. Mohamed from Kenya, the sixth candidate nominated.

Financial Times, August 4, 2020, Leading WTO candidates back US bid for dispute system reforms, https://www.ft.com/content/f4830e2b-df7b-474a-8104-6336992ca193.

“The two leading candidates to run the World Trade Organization have called for reform to address US criticisms that have paralysed the institution’s legal body and risk undermining the entire organisation.

“Kenya’s Amina Mohamed and Nigerian Ngozi Okonjo-Iweala are the favourites to be appointed WTO director-general after incumbent Roberto Azevedo steps down in September. In interviews with the Financial Times, both said that American criticisms of judical over-reach by the organisation’s dispute settlement system were valid.

* * *

“Asked by the FT whether the US criticisms were fair, Ms Mohamed, a former diplomat and trade minister, said: ‘Yes, I think that the US concerns are real.’

“She added: ‘The feeling in Geneva among very many members is that they [the appellate body] went outside the mandate that was granted to them.’

“WTO member governments should reassert their authority over rulemaking in the organisation, Ms Mohamed said.

“‘We need to make sure . . . that the appellate body members understand that is the only mandate that they can have, that they cannot add to or diminish the rights of parties. Those rights were negotiated by member states,’ she said. The body’s habit of deliberately creating legal precedent to apply to other cases involving other governments ‘was not right’, she added.”

2. Inside U.S. Trade’s World Trade Online, July 21, 2020, Kenya’s Mohamed says she has delivered at the WTO before and will again, https://insidetrade.com/daily-news/kenya’s-mohamed-says-she-has-delivered-wto-and-will-again.

As part of the publication’s interviews with all WTO Director-General candidates, Inside U.S. Trade interviewed Minister Mohamed in July. Minister Mohamed repeated views she has expressed at the WTO and in various webinars. The WTO has serious problems including a negotiating function that is stalled, the impasse on the dispute settlement system and more. As a member-driven organization, it is the Members who will have to set the reform agenda, though the Director-General can help facilitate Members’ efforts. Reform will require support from all Members including the largest, such as the U.S. and China.

Minister Mohamed noted that the issues the U.S. has raised, whether on the operation of the Appellate Body or other issues, are of concern to other Members as well and need to be addressed if the WTO is to maintain relevance. Both the U.S. and China have been major beneficiaries of the trading system. Tensions between the major players is in part due to lack of reform. The rule book needs to be updated and added to to ensure it reflects the realities of 21st century trade developments.

3. Chatham House, 6 August 2020, In Conversation with Ambassador Amina Mohamed: Candidate for Director-General of the World Trade Organization, https://www.chathamhouse.org/event/conversation-ambassador-amina-mohamed-candidate-director-general-world-trade-organization.

Chatham House has conducted a series of webinars with each of the eight candidates for the Director=General position. The webinar with Minister Mohamed was held on August 6, 2020. My notes on some of the questions and Minister Mohamed’s responses follows.

Q: what is your overarching philosophy for international trade?

A: Following the Great Depression and World War II, the creation of the Bretton Woods institutions focused on multilalteral cooperation. Multilateral cooperation and trade liberalization led to unprecedented growth and development. Trade was a big part of the progress. Minister Mohamed has seen the dynamism that trade can have to help countries develop and integrate into the global economy. However, there have been instances where countries haven’t had the ability to integrate, where assistance was needed

Multilateral trade rules have not kept up to date. There are many developments and challenges facing global trade — digital trade, environmental challenges, sustainable development, and now the pandemic.

The WTO will need reform, recovery, and renewal to play the role it needs to play.

Q: Based on the economic effects from the COVID-19 pandemic, the WTO is predicting a huge trade decline in 2020 with a smaller recovery in 2021. What does WTO need to do to help countries deal with the pandemic and recover?

A: The WTO needs to do what the WTO does best, insist on transparency. Out of fear at the start of the pandemic. Members of the WTO erected trade restrictions on the export of medical goods and some on agricultural goods. Members were focused on national needs versus working on international cooperation. The WTO must be sure that the gateways of trade are open. The WTO must look at members’ responses to the pandemic. For outside observers, the WTO’s monitoring/transparency function is often overlooked. In the pandemic, the transparency function of the WTO has become incredibly important. The WTO must make sure the transparency mechanism works well. If WTO Members put in place trade facilitation measures, Members can get out of the pandemic all together and quickly. WTO Members must be sure medical supplies and agricultural goods are available to all, particularly those who don’t produce medical goods and must import them.

Q: There is a crisis in the WTO’s dispute settlement system. How would you address?

A: In Minister Mohamed’s view, the whole WTO system is a complete system. Negotiations, monitoring, disputes, If you take one piece out, you create a gap which must be filled. The WTO dispute settlement system is a two-tiered system. If rules are not obeyed, you need an effective system or the rules lack legitimacy. Based on Minister Mohamed’s outreach to Members, she knows that there is broad support for reform of the dispute settlement system. If Members don’t agree on and complete reform, Members will put in interim measures. The way to create reform is to get proposals out on the table. There are important questions such as why does the AB not exist any more? Where did we get off track? How can we get it back on track? Members are interested in getting dispute settlement back on track. There have been a number of proposals. One, from Amb. Walker, has been gaining traction. The process must include all Members in the discussion and get agreement on how to proceed.

Q: Where is the aid for trade initiative going?

A: Minister Mohamed was at the WTO when the aid-for-trade initiative was adopted. Members need such an initiative to permit integration of least developed and some developing countries where capacity building is required to permit participation (e.g., developing standards). The WTO came up with a program that attracted funding from countries that could help. It has worked really, really well. If Minister Mohamed becomes the Director-General, she would work with other international organizations to increase financing. She noted that all other multilateral organizations have trade desks. A key objective is to ensure the aid-for-trade initiative has the resources to help as many countries as possible. It is a critical initiative, but needs a lot of support.

Q: What role will sustainable development goals have on WTO moving forward?.

A: Minister Mohamed noted that sustainable development has been an aspect of WTO work and will continue to be going forward.. She focused on this at the Nairobi Ministerial in 2015 and obtained an agreement on agricultural export subsidies which goes to reducing hunger by eliminating distortions in agricultural trade which should permit more food to be produced locally. At the present time, the WTO has fisheries subsidies negotiations underway. An agreement, when reached, is important for trade but also for sustainable development. Other issues have effects on sustainable development as well – agricultural negotiations on domestic support), plurilateral negotiations on digital trade (must be sure that benefits area shared on an MFN basis and have provisions that will help address the digital divide). And the WTO looks at issues involving trade and the environment..

Q: On climate change, as Director-General of the WTO how will you ensure WTO is engaged on climate change?

A: At the WTO, there are a range of issues that look at trade and another topic. Thus, the WTO has a Trade and Environment Committee. When Minister Mohamed was Ambassador to the WTO, the Committee was very active and did a lot of work. For example, the Committee started on a list of goods and services that were environmental goods. If Minister Mohamed becomes Director-General, she would try to energize the Committee, update the list and ensure that the WTO is engaged in global discussion on environmental issues.

Q: What strategy do you have to build cooperation within WTO?

A: As Director-General, Minister Mohamed would deal with tensions in the system by addressing reform to deal with shortcomings in the rules. Must update the rule book which Members feel is outdated. The needs from the Pandemic, the rise of digital trade, sustainable development goals — all are topics where a review and revision of the rule book are required. There are old issues that need new rules or updated rules. There are new issues that need new rules. Without updated rules, the WTO will face continued tensions. The Director-General can create the space for parties to negotiate, be an honest broker and help facilitate progress.

Q: Looking at the tension between the US and China, how can you convince the U.S. that multilateralism is in the U.S.’s interest?

A: There is no real question that multilateral trade has been beneficial for all. The purpose of GATT was to see that trade disputes were resolved according to agreed rules, without going to conflict. At present, there are heightened tensions because the WTO rules are weak or are absent. So must put in place the conditions to permit parties to confidentially meet and resolve matters. The Director-General acts as an honest broker. Tensions have existed in the past and have been resolved within the GATT and now the WTO. Need to build confidence among Members and need to put issues on the table and discuss. There is no doubt in Minister Mohamed’s mind that trade issues can be resolved within the WTO.

Q: Concerned about the Doha Round not being active. This is a question of how we use trade as a means of development?

A: This is a concern raised by a number of countries. The Doha Development Agenda (DDA) was launched in 2001. Followed 9-11 where needed to show international community could come together and achieve something significant. DDA remains unfinished. However at the 2015 Nairobi Ministerial, WTO Members resolved the issue of export subsidies. If the WTO can deal with domestic support, market opening, fisheries subsidies will have resolved a number of important matters from the DDA. So some DDA issues have been resolved already, others are under negotiation. Need to see that the other two pillars of the agriculture package will be restarted again (domestic support, market liberalization). Will try to get agreement to reopen these at next Ministerial and move for progress on remaining agricultural issues (including cotton).

Q: The Trade Facilitation Agreement (TFA) is the only multilateral agreement since the start of the WTO. What lessons for WTO going forward?

A: TFA is a new generation agreement. By that Minister Mohamed means that the agreement bases the flexibilities and the concessions on the abilities and needs of individual Members. That approach of fashioning exceptions to obligations to the needs of specific Members is likely to be typical of future agreements. There may also be capacity building and other similar features.

Conclusion

Each candidate has been very busy these last several months meeting with WTO Members both in Geneva and in capital (whether in person or virtually), talking to the media, doing events with academia and think tanks and others. The above additional materials on Minister Mohamed are a small sample of what is available online. The excerpts or summaries from the various publications have largely been limited to some of the key issues my previous posts have examined (appellate body reform, industrial subsidies, etc.) or discussions of other issues of potential interest.

Future posts will look at additional materials for other candidates.

Race for WTO Director-General — additional material on H.E. Yoo Myung-hee (Republic of Korea)

Terence P. Stewart · September 4, 2020 · Selection of WTO Director-General · Appellate Body reform, China, European Union, H.E. Yoo Myung-hee, Republic of Korea, United States · No Comments

Today’s post looks at a few articles featuring H.E. Yoo Myung-hee from the Republic of Korea, the fifth candidate nominated.

Hankyoreh, August 9, 2020, S. Korea’s candidate for WTO director-general emphasizes reform, http://english.hani.co.kr/arti/english_edition/e_international/957072.html.

“Speaking with reporters at the Government Complex in Sejong on Aug. 6, Yoo provided an explanation on the current situation with the director-general election.

* * *

“’What I detected from my conversations with dozens of ministers is that many countries are feeling disappointed and frustrated with the WTO’s inability to do its job. They all agreed that there need to be reforms to restore the WTO’s functions in terms of negotiations, disputes, and implementation,’ Yoo said. Regarding the methods of carrying out WTO reforms, she said she planned to ‘hold discussions involving several different approaches,’ noting that there were ‘large differences of opinion among member countries on the role and authority of the Appellate Body.’

“Yoo also stressed that the WTO ‘will need to guarantee free movements of products and services, particularly in the event of another future crisis like the COVID-19 pandemic, while ensuring that [such a crisis] is not abused as an opportunity for applying protective trade measures.’”

2. Inside U.S. Trade’s World Trade Online, August 5, 2020, Korea’s DG candidate on retoling the WTO: ‘Success breeds success,’ https://insidetrade.com/daily-news/korea%E2%80%99s-dg-candidate-retooling-wto-%E2%80%98success-breeds-success%E2%80%99.

As part of Inside U.S. Trade’s series of interviews with each of the eight candidates, Minister Yoo was interviewed in early August. In the August 5 write-up by the publication on the interview, Minister Yoo covered both her experience as a trade negotiator and her ability to close deals as strengths in her candidacy and stressed that achieving some successes at the next WTO Ministerial Conference was crucial to permit the organization to move forward and rebuild trust and be able to address the larger reform issues before the WTO.

Restoring the negotiating function is key to progress, to helping major members like the U.S. and China see that their concerns can be handled through the WTO and would take pressure off of the dispute settlement system.

On dispute settlement, all Members want an effective system, but there are wide differences on what that means. Minister Yoo would urge engagement by Members, outreach to capitals to encourage political will, and perhaps outside input for novel possible solutions.

3. Chatham House, 25 August 2020, In Conversation with Minister Yoo Myung-Hee: Candidate for Director-General of the World Trade Organization, https://www.chathamhouse.org/file/conversation-minister-yoo-myung-hee-candidate-director-general-world-trade-organization; https://www.youtube.com/watch?reload=9&v=8ebGAH4MYOM.

The webinar was part of Chatham House’s series talking to each candidate for the Director-General post. The event was an “on-the-record” event. Below are my notes on some of the questions posed to Minister Yoo and her responses

Q: Tell us about your overarching view of international trade?

A: Minister Yoo stated that trade has been the engine for global economic growth and has contributed to a very large reduction of poverty. Trade is a means not an end. Since 1995 trade has increased from $5.2 trillion to over $19 trillion in 2018 with a significant reduction in global poverty occurring during the same time. But the trading system must adapt, change and evolve. The world has seen slowing economic growth, rising protectionism, and in the last year the emergence of the COVID-19 pandemic. Global trade contracted last year for 1^st time since the 2008-2009 financial crisis and will do so again this year. At the same time, there has been concern among some as trade is affecting more aspects of our lives than ever before.

Minister Yoo believes that in a rapidly changing world, the WTO has not been able to pull its weight. The WTO has struggled with all three pillars of the system – negotiations, transparency, dispute settlement. She states that the WTO needs to come out of the crisis stronger than before. To do that, Minister Yoo believes the next Director-General must work with Members to achieve what she describes as her three Rs – relevance, resilience and responsiveness. First, the WTO must be relevant. To do that, the WTO rule book must evolve with the changing realities of 21st century trade. It is critical that the WTO reenergize its negotiating function and restore the two-tier dispute settlement system. Second, the WTO must be resilient. The WTO must address the needs of countries who haven’t gotten many benefits from WTO membership. Third, the WTO must be responsive to future emergencies. In times of crisis, like the current COVID-19 pandemic, the WTO must be there to ensure stability and predictability. Historically, in times of crisis, world collaboration has emerged to help the world move forward. This was true at the end of World War II with the creation of the Bretton Woods organizations and during the 2008-2009 financial crisis with the emergence of the G20. So the current COVID-19 crisis could be an opportunity to move the global trading system forward.

Q: The U.S. led the Bretton Woods efforts, but today the U.S. is skeptical of global collaboration. How can the WTO foster the role of global engagement?

A: The U.S. has shown continuing interest in the multilateral trading system as can be seen from their various proposals for WTO reform and their extensive materials on dispute settlement. But over the last 25 years, there have been no major trade agreements at the WTO other than trade facilitation. This lack of ability to update the rule book has led to frustration and loss of trust in the WTO not just by the U.S. but by others as well. So we need to use this moment to reform the WTO to revitalize the system. Such revitalization could provide an important reason for countries to handle problems through the WTO rather than outside of the system. Minister Yoo, based on her conversations with trade ministers around the world and ambassadors in Geneva, sees the same frustration with the WTO from many Members. However, Members are committed to the multilateral system. COVID-19 provides an impetus for taking action. Minister Yoo believes that the WTO needs successes. The WTO needs to go step by step; success will spur success and permit addressing larger issues over time.

Q: You mentioned the slowing down of the global economy and the COVID-19 pandemic. What role should the WTO play in COVID-19?

A: Minister Yoo believes that the WTO can and should play many roles. COVID-19 is both a health crisis and an economic crisis. First, the WTO can enhance transparency of trade restrictive measures adopted and ensure that such measures are consistent with WTO obligations (e.g., targeted, temporary). Second, the WTO needs to ensure the free flow of goods and services (during the pandemic this is basically medical and agricultural goods and services). The WTO should review its rules to ensure that in a future crisis, the WTO can in fact ensure stability and predictability in the trade arena. Third, the WTO can work with other multinational organizations to overcome both the health and the economic crises. On the health crisis, the WTO should work with the WHO and other organizations dealing with availability and affordability of medical goods, on the promotion of R&D so we can have vaccines and therapeutics and so that there can be equitable and affordable availability to the people of the world. On the economic crisis, the WTO should work with IMF, the World Bank, regional development banks and others to reduce the damage caused by the pandemic and to promote a quick recovery and build back better. For vulnerable economies (and sectors within economies), there is likely ongoing needs for assistance from the WTO and other organizations to weather the pandemic. Minister Yoo believes that there are also many other roles that the WTO could play.

Q: There have been growing trade tensions between the U.S. and China, but specifically when it comes to industrial subsidies, S&D in the WTO, what role should WTO take to reduce tensions.

A: In Minister Yoo’s view, the WTO must revitalize the multilateral trading system. This is important to permit countries to handle trade issues within the WTO versus taking action outside of the system. On bilateral issues, such as industrial subsidies, the WTO should look at the spillover effects of such policies on other WTO Members and examine the existing rule book. If rules address the specific problem, then the issue may be enforcement of existing obligations. But if rules are unclear or don’t cover the policy involved, then Members need to be open to revising existing agreements or adopting new agreements consistent with basic principles of the WTO (e.g., fair competition). While this is a member-driven organization, the Director-General plays the role of facilitator.

Q: On WTO dispute settlement, what needs to be changed?

A: Restoring a functioning dispute settlement system is a top priority issue for the next Director-General. Why is there the current impasse at the WTO on the Appellate Body? Minister Yoo believes that the impasse flows from longstanding different views of Members on the role of dispute settlement. Some are concerned that the Appellate Body is creating rights or obligations — that is overreaching their authority — contrary to the limits in the Dispute Settlement Understanding. Other Members say that the Appellate Body’s actions are necessary as the Appellate Body is tasked with finding a positive resolution to a case and that may lead to interpretations of gaps or silence or ambiguous language. Minister Yoo believes that the lack of progress in negotiations may have led Members to overly rely on dispute settlement for issues that could have been resolved through negotiations. Still, based on her extensive discussions with ministers and ambassadors, Minister Yoo understands that Members share the value of having an effective dispute settlement system. There are some proposals for reform before the WTO. The Walker proposal addresses some suggestions on procedural and some substantive issues. US has put forward their views on the problems. But, as said before, there are very fundamental differences in the views of Members. Minister Yoo believes that the next WTO Director-General needs to put all proposals on the table and have Members engage in discussions. She believes that outreach to capitals will also be necessary to secure Members’ buy-in to resolving the current impasse.

Q: What should WTO do to address the environmental crisis (e.g., coordinate carbon taxes)?

A; COVID-19 has put a focus on the need for sustainable development. The pandemic could wipe out economic progress over the last decade. Thus, it is important to pursue sustainable development. The question is how to achieve sustainable development in trade, or how to operationalize sustainable development goals in trade? Minister Yoo started by reviewing what the WTO is currently doing. She noted that the fisheries subsidies negotiations are ongoing. A conclusion of the negotiations would advance sustainable development goals. Similarly, the WTO has had a Committee on Trade and Environment. WTO Members and the next Director-General should look at the Committee’s agenda and see if Members are open to updating the agenda. Finally, there used to be negotiations to liberalize trade in environmental goods. Hopefully, such negotiations can be resumed.

As to anti-carbon measures, Minister Yoo understands that the objective is to reduce carbon gases It is important that trade agreements and environmental agreements be able to work together. Some countries have expressed concerns about environmental objectives being applied to discriminate against trade from certain countries. Minister Yoo states that it is important that any such measures be done on a nondiscriminatory basis. If selected as the next Director-General, Minister Yoo hopes to help Members to find mutually acceptable solutions on these matters.

Q: On developed and developing countries, should there be different obligations in the environmental area?

A: WTO Members understand that developing countries may need additional policy space when adopting various agreements. So during negotiations, it is often the case that Members adopt flexibilities for developing and least developing countries. In trade negotiations, Members negotiate those flexibilities. The key in Minister Yoo’s view is to focus on the actual needs of Members. Those needs may be longer implementation periods, the need for technical assistance, the need for capacity building, etc. The WTO should be able to provide technical assistance and capacity building where needed.

Q: Currency in U.S.-China trade affects the value of other currencies in Asia and elsewhere. How can you deal with these trade tensions?

A: In many areas, there are tensions between U.S. and China. At the WTO, Members can deal with trade-related tensions. The WTO can provide a meaningful platform to address trade-related issues. The WTO has not fully addressed currency issues as curency is largely in the IMF’s area of expertise. Minister Yoo noted that the WTO has received no official proposal to address currency at the WTO. It is an issue that can be addressed in some trade remedy cases. But there is limited actual case law, so it is too early to consider the issue at the WTO. On other issues, WTO can be part of the solution through both dispute settlement and by updating the rule book. The WTO should provide a platform for the U.S. and China to address trade issues between them. This could permit building up new rules. Even small successes between the Members would permit addressing larger issues.

Q: WTO must be able to deal with state capitalism. Is there an inevitability of increased tension?

A: On state capitalism, rather than addressing the economic model itself, the WTO should look at specific government policies since those can have spillover effects on other countries. If the policies have negative effects on trade that are inconsistent with WTO principles, then WTO Members should review the rule book and see if Members need to be updated existing rules or if new rules are needed or if the question is simply enforcement of existing rules.

Conclusion

Each candidate has been very busy these last several months meeting with WTO Members both in Geneva and in capital (whether in person or virtually), talking to the media, doing events with academia and think tanks and others. The above additional materials on Minister Yoo are a small sample of what is available online. The excerpts or summaries from the various publications have largely been limited to some of the key issues my previous posts have examined (appellate body reform, industrial subsidies, etc.) or discussions of other issues of potential interest.

Future posts will look at additional materials for other candidates.

Race for WTO Director-General — additional material on Amb. Tudor Ulianovschi (Moldova)

Terence P. Stewart · September 3, 2020 · Selection of WTO Director-General · Amb. Tudor Ulianovschi, Appellate Body reform, China, European Union, Moldova, United States · No Comments

Today I review some other press articles about the candidates to provide additional perspective on important issues or the candidate’s approach to the position of Director-General if selected. Yesterday, I posted material about Mr. Abdel-Hamid Mamdouh (Egypt), the day before on Dr. Ngozi Okonjo-Iweala (Nigeria) and on August 31 on Dr. Jesus Seade Kuri. See September 2, 2020, Race for WTO Director-General – additional material on Mr. Abdel-Hamid Mamdouh (Egypt), https://currentthoughtsontrade.com/2020/09/02/race-for-wto-director-general-additional-material-on-mr-abdel-hamid-mamdouh-egypt/; September 1, 2020, Race for WTO Director-General – additional material on Dr. Ngozi Okonjo-Iweala (Nigeria), https://currentthoughtsontrade.com/2020/09/01/race-for-wto-director-general-additional-material-on-dr-ngozi-okonjo-iweala-nigeria/; August 31, 2020, Race for WTO Director-General – additional material on Dr. Jesus Seade Kuri (Mexico), https://currentthoughtsontrade.com/2020/08/31/race-for-wto-director-general-additional-material-on-dr-jesus-seade-kuri-mexico/.

There is no intention on my part to be exhaustive, and the research has been limited to press pieces in English. Rather the intention is to identify information not addressed in my earlier posts that may be of interest to readers.

Today’s post looks at a few articles featuring Amb. Tudor Ulianovschi from Moldova, the fourth candidate nominated.

Inside U.S. Trade’s World Trade Online, August 24, 2020, Moldovan DG hopeful: WTO needs a ‘dynamic,’ courageous leader, https://insidetrade.com/daily-news/moldovan-dg-hopeful-wto-needs-%E2%80%98dynamic%E2%80%99-courageous-leader.

As part of Inside U.S. Trade’s series of interviews with candidates for the Director-General position, the publication published its summary of the interview with Amb. Ulianovschi on August 24. A good part of the article reviews Amb. Ulianovschi’s views on his strengths as a candidate and the need for reform for the WTO.

On substantive priorities, Amb. Ulianovschi is focused on deliverables for the next Ministerial to be held in 2021, mentioning a fisheries subsidies agreement and various plurilaterals (Joint Statement Initiatives) that were under negotiation among various members. He would also seek a Ministerial Declaration on the role of the WTO in alleviating the negative trade consequences from COVID-19.

Amb. Ulianovschi views the need for Members to address the challenges from COVID-19 as a means for building momentum to deal with other pressing issues like tightening rules on industrials subsidies or how special and differential treatment is handled for countries at different stages of economic development.

On WTO reform, Amb. Ulianovschi, in addition to updating the rule book to reflect 21st century trading reality, stated that deep reform is needed. He would encourage Members to review all WTO rules and decide which rules needed to be rethought and which ones have not been implemented properly.

2. Xinhuanet, August 8, 2020, Interview: Moldova’s WTO candidate urges new, inclusive digital trade rules, http://www.xinhuanet.com/english/2020-08/08/c_139273598.htm.

Amb. Ulianovschi stated in the interview that rulemaking on e-commerce was needed now and called for more inclusiveness for least-developed and developing countries in the digital economy. There are capacity issues for many least-developed countries and developing countries that need to be addressed. He pointed to the importance of digital trade during the COVID-19 pandemic and noted that further development of digital trade would improve resilience.

3. Chatham House, September 2, 2020, Webinar: In Conversation with Ambassador Tudor Ulianovschi: Candidate for Director-General of the World Trade Organization, https://www.chathamhouse.org/event/webinar-conversation-ambassador-tudor-ulianovschi-candidate-director-general-world-trade.

Chatham House has done a series of on-the-record webinars with the candidates for Director-General of the WTO. What follows are my notes on some of the questions posed and answers given by Amb. Ulianovschi.

Q: What is your overarching attitude towards international trade?

A: Amb. Ulianovschi is a strong advocate of free and fair trade; he favors multilateral trade. He believes that the WTO has done good for its Members during its existence and that it will continue to do so. However, any organization needs to adapt to 21^st century realities (e.g, the COVID-19 pandemic, the rise of protectionism, the financial crisis, changing nature of trade). Key issues for the WTO include how are rules negotiated; how are the rules followed; and how are disputes between Members handled. Amb. Ulianovschi takes a very holistic approach to the WTO and its future. He states that it is better to have a system than not to have a system. So in Amb. Ulianovschi’s view, the question is how to adapt the WTO to the 21st century. The WTO very clearly needs reform. Pursuing reform must be an overarching priority for the next Director-General. Amb. Ulianovschi believes that the WTO needs to help increase economic development of people who are lagging behind. While the WTO and liberalized trade have helped many people get out of poverty, there remain many more who need help. COVID-19 has highlighted the inequalities that exist today. In his view, the WTO is more necessary than ever to help address the inequalities and expand world trade for the benefit of all.

Q: is free trade always fair trade? Where are the limits? If you remove all subsidies immediately, what would happen? Aren’t there problems with over-regulation and with under-regulation too?

A: Amb. Ulianovschi stated that if governments go to extremes at either end of the spectrum, the WTO system won’t work. The key for the WTO is finding the right balance. How fast can you liberalize trade flows free? Amb. Ulianovschi believes that the WTO must refocus the organization to integrate those Members who haven’t benefited to date from the WTO. The WTO must help Members with capacity building needs and be sensitive to those concerned with potential adverse effects from opening up home markets to imports too fast.

Amb. Ulianovschi noted that the COVID-19 pandemic has hurt industries in both goods and services. The WTO must help strengthen least developed countries and developing countries and ensure that regional or plurilaterals help all nations (e.g., by providing benefits on an most favored nation basis). Amb. Ulianovschi stated that micro-, small and medium businesses (MSMEs) should be the focus of the WTO as such entities make up some 95% of many developing countries’ and least-developed countries’ economies. there should be a focus on trade facilitation measures for many of these countries. This is the way to move forward.

Finally, on monitoring and notification requirements, every WTO Member must promptly notify any domestic measures taken. Prompt notifications will improve transparency which should help reduce the risk of spillover effects on other economies from actions taken.

Q: what role precisely can the WTO play in avoiding the worst effects of a global recession and negative effects of COVID-19?

A: According to Amb. Ulianovschi, COVID-19 should be seen as a wake-up call to Members for the need for greater transparency. The key role of the WTO during a pandemic is to keep trade flows open and non disrupted for goods and services because of global value chains. Where there are disruptions, improved transparency will help focus on what is needed. Amb. Ulianovschi believes that the WTO must work much closer with WHO and FAO to be sure there is a more holistic approach to dealing with COVID-19 effects and recovery. On vaccines, Amb. Ulianovschi believes Members must avoid nationalization of vaccines. The WTO must make sure there are as few barriers as possible on vaccines, so all peoples can receive vaccines.

In Amb. Ulianovschi’s view, COVID-19 has caught most or all countries off-guard. Many governments focused initially on protecting their own citizens and their economies. As required, restrictive measures should be notified to WTO promptly. Any such measures are not to be permanent. Governments must reduce and then eliminate such measures based on lack of continued need.

Q: On climate change and environmental degradation – what is the connection between global trade and sustainable development? Is there a tension? Can they be connected?

A: Trade doesn’t need to be at odds with sustainable development. There are multilateral negotiations ongoing on fisheries subsidies. These negotiations are not only important for WTO Members but also for the achievement of one of the UN Sustainable Development Goals, 14.6. So trade can be connected to achieving sustainable development goals.

Q: Where do you see US and EU aligned and where are the major differences?

A: Amb. Ulianovschi noted that he has had discussions with major capitals in Europe, the Americas and Asia. On a fundamental level, while there are concerns in the U.S. and the EU that the current system is not fully beneficial for them, they and China and other major countries are all in favor of a multilateral system. This is a good starting point. However, there is great mistrust within the organization among Members. Some of the concerns expressed by both the EU and US on the dispute settlement system are important for the next Director-General to address at the political level to get Members willing to deal with reform of the dispute settlement. On digital trade, the WTO must see that digital trade is made an empowering tool. However, there are many regulatory issues (e.g., privacy, customs duties, localization, etc.) that need to be addressed in the discussions as these are important for businesses to be able to operate. In Amb. Ulianovschi’s view, it is critical that WTO Members avoid a vacuum of rules in any area of importance (e.g., digital trade) . Where there is a vacuum of multilateral or plurilateral rules, then conflict is likely. The US is concerned about lack of rules and application of rules on different issues.

Q: do you consider the challenges to be primarily technical or primarily in political?

A: Amb. Ulianovschi has indicated that the current challenges are a bit of both, but he leans towards political as the most important. The next Director-General must have both political and technical skills and background. Looking at issues where both elements are needed, Amb. Ulianovschi identified unfinished business on agriculture as an example. Many items raised in the Doha Development Agenda remain unresolved after nearly 20 years. In Amb. Ulianovschi’s view, the WTO needs technicians to come forward with new approaches to moving elements forward, but the WTO also needs political will from Members to agree to forward movement.

Conclusion

Each candidate has been very busy these last several months meeting with WTO Members both in Geneva and in capital (whether in person or virtually), talking to the media, doing events with academia and think tanks and others. The above additional materials on Amb. Ulianovschi are a small sample of what is available online. The excerpts or summaries from the various publications have largely been limited to some of the key issues my previous posts have examined (appellate body reform, industrial subsidies, etc.) or discussions of other issues of potential interest.

Future posts will look at additional materials for other candidates.

Race for WTO Director-General — additional material on Mr. Abdel-Hamid Mamdouh (Egypt)

Terence P. Stewart · September 2, 2020 · Selection of WTO Director-General · Appellate Body reform, China, Egypt, European Union, Mr. Adbed-Hamid Mamdouh, United States · No Comments

Today I review some other press articles about the candidates to provide additional perspective on important issues or the candidate’s approach to the position of Director-General if selected. Yesterday, I posted material about Dr. Ngozi Okonjo-Iweala (Nigeria) and the day before on Dr. Jesus Seade Kuri. See September 1, 2020: Race for WTO Director-General – additional material on Dr. Ngozi Okonjo-Iweala (Nigeria), https://currentthoughtsontrade.com/2020/09/01/race-for-wto-director-general-additional-material-on-dr-ngozi-okonjo-iweala-nigeria/; August 31, 2020, Race for WTO Director-General – additional material on Dr. Jesus Seade Kuri (Mexico), https://currentthoughtsontrade.com/2020/08/31/race-for-wto-director-general-additional-material-on-dr-jesus-seade-kuri-mexico/.

Today’s post looks at a few articles featuring Mr. Abdel-Hamid Mamdouh from Egypt, the third candidate nominated.

Daily News Egypt, August 25, 2020, Reviving WTO role as guarantor for stable international trade is my priority: Director General Candidate, https://dailynewsegypt.com/2020/08/25/reviving-wto-role-as-guarantor-for-stable-international-trade-is-my-priority-director-general-candidate/.

“In an interview with Daily News Egypt, Mamdouh highlighted that,
should his election campaign prove successful, his priority will be to
revive the organisation’s role as the guarantor of stability and
predictability in international trade relations.

“Mamdouh noted that the WTO was created to promote the growth and
expansion of world trade through a rules-based system guaranteeing the
rights and obligations of its members.

“He added that the organisation has suffered from a serious breakdown in
its three vital functions, namely dispute settlement, negotiations, and its
monitoring and deliberative capacities. These three functions are closely
interconnected, and the system was designed to operate with balance
across these three pillars.

“’My first priority will be to revive the three functions, starting with the
negotiating function,’ Mamdouh said, ‘If we cannot bring people to the
table to negotiate solutions to problems, we will get nowhere.’

* * *

“Regarding the challenges facing the organisation, in my view, over the
past quarter of a century, the WTO has suffered from a chronic
imbalance across all its vital functions. That is, dispute settlement,
negotiations, and the transparency/deliberative functions.

“In any legal system, there needs to be a balance between the ‘legislative’
and the ‘judicial’ functions. For the WTO, these are the negotiating and
the dispute settlement functions. While dispute settlement has gained
strength due to the inherent automaticity of procedures, the negotiating
function has broken down. This has created an unsustainable imbalance.

“At the same time, the international trade landscape has dramatically
changed, and the WTO system has been unable to update its rule book.
This has caused unsustainable pressure on the dispute settlement
function, which produced the current breakdown in the Appellate Body,
and as the saying goes, if you cannot negotiate, you litigate.

“The world of trade has changed, and so have the dynamics within the
organisation. Whereas the General Agreement on Tariffs and Trade
(GATT) started its journey back in 1947 with merchandise trade across
borders, we have now expanded into trade in services and intellectual
property.

“Today, the way we trade links goods, services, ideas, capital, and
regulation. That requires a comprehensive and coherent approach by the
WTO, that leads to a ‘deal’ that is truly inclusive of all sectors and
interests of Members.

“For example, I see the role that digitalisation has played for many
industries across the economy, with technology-driven business models.
At the same time, I also see the rising tide of legitimate domestic
regulation in areas like privacy, consumer protection and cyber-security.
The interface between the two needs to be managed, to ensure the lowest
trade restrictiveness of regulatory measures, while not intruding on
regulatory sovereignty.

“To complete the picture of where we stand today, we must look at the
crisis caused by the novel coronavirus (COVID-19) pandemic, and make
sure that we retain the lessons we are currently learning. The world will
need a strong and stable WTO to support the post-crisis economic
recovery.

* * *

“A lot of challenges await the WTO’s new head, including the
increasing US-China tensions. How do you evaluate these
challenges and how you will deal with them?

“In my view, the tensions between the US and China are, to a very large
extent, a result of the WTO malfunctioning. The organisation was
specifically designed to avoid such tensions, by providing a forum for
resolving trade problems, not only through discussions and deliberations,
but also by updating the rule book through negotiations.

“The WTO Director General should use his or her soft power to persuade
the two parties that the organisation could be part of the solution, not the
problem. The best way to resolve such tensions would be through
seeking multilateral rule-base solutions, as opposed to bilateral deals.

“Furthermore, such tensions also have serious implications that go far
beyond the two parties directly involved. They affect a very wide range
of other WTO Members. Similarly, resolutions of such tensions will also
concern other parties, and that should be considered. Therefore,
multilateral solutions of such problems will always be the best option.

“I don’t believe that we should look at such situations in terms of having
winners and losers, but rather in terms of how we can find win-win
outcome through good mediation and creative negotiating solutions that
involve trade-offs acceptable to all.”

2. African Business Magazine, 13 August 2020, ‘The honest broker’ — Egypt’s Abdel-Hamid Mamdouh sets out his WTO leadership bid, https://africanbusinessmagazine.com/in-the-news/the-honest-broker-egypts-abdel-hamid-mamdouh-lays-out-his-wto-leadership-bid/.

“Promising not to repeat the same mistakes, Mamdouh believes the difference between the ‘Doha Round’ and the successful ‘Uruguay Round’, which led to the creation of the WTO in 1995, was the lack of strategic balance that kept the latter moving forward.

“’In the Doha Round that is not what we did,’ he says.

“’We had a big agenda with balance inside it, but we did not actually preserve the integrity of the balance as we proceeded. What happened really was the collapse of the negotiating process.’

* * *

“’We really are facing a situation where the system is threatened to fall apart,’ he says.

“’But let’s not let this crisis go to waste. Let’s use this crisis to mobilise all the political will and to move forward.’

“The first step is to ‘recall and reconstruct’ the common purpose of the WTO, based around the principles that trade is important for economies and that the best way to benefit from trade is to ensure the predictability and stability of trading conditions.

“The next step is to reform the 1947 General Agreement on Tariffs and Trade; the WTO’s underlying treaty to eliminate trade barriers that was successfully built upon during the Uruguay Round and less so during the Doha Round.

“Moving towards the next ministerial meeting in Kazakhstan in 2021, specific areas of focus include negotiations on fisheries subsides, e-commerce, investment facilitation, domestic regulation services, trade and women empowerment and SMEs.

“To make the reforms possible the WTO must reimagine itself as an institution that can accommodate the demands of all its different members even though they often hold competing points of view.

“’What we need is a political vision that advances the different interests of different constituencies to bring everyone around the table, because the system can serve the interests of all,’ he says.

“’Successful relationships do not depend on how much we agree on, they depend a lot more on how we deal with our differences.’”

3. The National, August 13, 2020, WTO is in system meltdown according to the Egyptian who wants to run the body, https://www.thenational.ae/world/europe/wto-is-in-system-meltdown-according-to-the-egyptian-who-wants-to-run-the-body-1.1062808.

“Speaking at a webinar hosted by the London-based think tank Chatham House, Mr Mamdouh said the WTO had not been faced with comparable problems since it replaced the General Agreement on Tariffs and Trade (GATT).

“’The WTO is facing a stress test that reminds me of the stress test on the GATT when I came to Geneva in [1985], when the reform was necessary,’ he said.

“Mr Mamdouh explained that the systems within the WTO were now in a state of ‘complete breakdown’ because of ‘excessive pressure’ on its dispute settlement function.

“’That was not sustainable, so it failed as well,’ he said.

* * *

“The Egyptian nominee for the WTO’s top post has said it would be his goal to hit the ground running with the body’s 12th ministerial conference, which is scheduled for June 2021.

“’I would say that there are two sets of issues that I would have as my priorities. The first is to have a clear vision for a reform agenda and reform process. So we would agree that [the ministerial conference], what do we want to do with this organisation?’

“Secondly Mr Mamdouh said there were a number of crucial negotiations, foremost among which was fisheries subsidies negotiations, which needed to be concluded.

“’There are ongoing negotiations on eCommerce, investment facilitation, domestic regulation services, small and medium-sized enterprises, trade and women empowerment. We need to register concrete progress on those,’ he said.

“’We need to, we need to use the next ministerial to move the WTO into positive territory,’ Mr Mamdouh added.”

3. The Cairo Review of Global Affairs, July 29, 2020, The Race for the World Trade Organization (podcast of interview), https://www.thecairoreview.com/podcasts/the-race-for-the-world-trade-organization/. What follows are my notes on some of Mr. Mamdouh’s responses to questions

Mr. Mamdouh noted that there has been a Breakdown in negotiating function and in transparency/monitoring function. In his view, the first task is to get the negotiating function operating again.

In response to a question on how COVID-19 has affected world trade, Mr. Mamdouh distinguished between short-term and long-term issues.

Within the short-term, Mr. Mamdouh views that there has been a lot of panic analysis. The WTO system allows some restrictions to be applied, particularly export restrictions, and a number of countries have applied such restrictions. If such restrictions are imposed, they have to be transparent, notified to the WTO, used only to the extent necessary, and terminated when not needed. What the WTO needs to ensure now is that goods and services flow smoothly. Moreover, during the COVID pandemic, not all goods have been affected by restrictions. Rather, we are basically talking about medical products and food products. So the range of goods restricted by some Members is quite limited.

Mr. Mamdouh stated that once countries get past the short term, all will need a strong WTO to ensure predictability and stability to let trade serve its role in restoring growth.

On a question dealing with negotiating issues important to developing countries, Mr. Mamdouh responded that there are negotiating items on the table now that need to be resolved which support developing country development by securing stability and predictability and which should take account of special needs of developing countries. Mr. Mamdouh believes that the WTO Members need to ensure that all three legs of the organization (negotiations, transparency/monitoring, and dispute settlement) function properly, so the organization doesn’t find itself back in the dysfunctional situation Members now find themselves in. One of the important opportunities for developing countries is the issue of digital trade, but many developing countries are presently unable to take advantage of the technological developments. Stated differently, there is a digital divide. So an important issue is how can trade negotiations at the WTO and work by the WTO with other multilateral organizations support addressing the digital divide.

How trade has changed? Mr. Mamdough responded that the trend over the last 20 years has been towards a more global value chain model of trade which depends on the smooth cross-border movement of goods and services. WTO Members need a clear and predictable trade regime to permit the smooth movement of goods and services. Many developing countries have not focused on the growing importance of the role of services in global value chains (e.g., transport, logistics, electronic payments, R&D, production engineering, etc.). Governments need to look at their regulation of services to be sure they are competitive. The third way in which trade has changed, is the digitalization of trade. Thus, how we produce, trade and consume goods and services have all changed.

On dispute settlement, Mr. Mamdouh stated that the WTO needs reform. But major surgery is not needed. The concerns expressed are not about the rules as such but how the rules are applied. Moreover, in looking at reform of dispute settlement, WTO Members must keep in mind the role that the breakdown in the negotiating function and the monitoring/governance function has had in putting undue pressure on dispute settlement. Restoring balance among the key functions will reduce the pressure on dispute settlement.

4. Inside U.S. Trade’s World Trade Online, June 15, 2020, Egypt’s Mamdouh: WTO needs to find its ‘common purpose’ again, https://insidetrade.com/daily-news/egypt%E2%80%99s-mamdouh-wto-needs-find-its-%E2%80%98common-purpose%E2%80%99-again.

Inside U.S. Trade has conducted interviews with all of the eight candidates for the Director-General position. The interview with Mr. Mamdouh was an early one conducted by the publication in mid-June.

Mr. Mamdouh takes instruction from the reform success of the Uruguay Round which succeeded because the reform agenda was balanced such that all participants had items of importance to them in the negotiations. This resulted in Members having a common purpose. Mr. Mamdouh doesn’t believe Members currently have a common purpose and that has prevented there being a viable negotiating function.

Conclusion

Each candidate has been very busy these last several months meeting with WTO Members both in Geneva and in capital (whether in person or virtually), talking to the media, doing events with academia and think tanks and others. The above additional materials on Mr. Mamdouh are a small sample of what is available online. The excerpts or summaries from the various publications have largely been limited to some of the key issues my previous posts have examined (appellate body reform, industrial subsidies, etc.) or discussions of other issues of potential interest..

Future posts will look at additional materials for other candidates.

Race for WTO Director-General — additional material on Dr. Ngozi Okonjo-Iweala (Nigeria)

Terence P. Stewart · September 1, 2020 · Selection of WTO Director-General · Appellate Body reform, China, Dr. Ngozi Okonjo-Iweala, European Union, industrial subsidies, Nigeria, United States · No Comments

Today I review some other press articles about the candidates to provide additional perspective on important issues or the candidate’s approach to the position of Director-General if selected. Yesterday, I posted material about Dr. Jesus Seade Kuri. See August 31, 2020, Race for WTO Director-General – additional material on Dr. Jesus Seade Kuri (Mexico), https://currentthoughtsontrade.com/2020/08/31/race-for-wto-director-general-additional-material-on-dr-jesus-seade-kuri-mexico/.

There is no intention on my part to be exhaustive and the research has been limited to press pieces in English. Rather the intention is to identify information not addressed in my earlier posts that may be of interest to readers.

Today’s post looks at a few articles featuring Dr. Ngozi Okonjo-Iweala from Nigeria, the second candidate nominated.

The Australian, August 17, 2020, Should WT address antai-dumping measures?, https://www.theaustralian.com.au/subscribe/news/1/?sourceCode=TAWEB_WRE170_a_GGL&dest=https%3A%2F%2Fwww.theaustralian.com.au%2Fbusiness%2Fleadership%2Fshould-wto-address-antidumping-measures%2Fnews-story%2F995b960b1de450c1d983f4aabeca2351&memtype=anonymous&mode=premium&nk=1fc9f182863545ef2c82ab30edd82766-1598966889

The summary of the article states that “Ngozi Okonjo-Iweala says the WTO should investigate whether Australia was inappropriately using anti-dumping provisions to keep out foreign steel.” I am not a subscriber to the Australian and so the information provided above is limited.

2. Nikkei Asian Review, July 13, 2020, Good listener or strong negotiator? WTO candidates make case for top job, https://asia.nikkei.com/Editor-s-Picks/Interview/Good-listener-or-strong-negotiator-WTO-candidates-make-case-for-top-job.

“Ngozi Okonjo-Iweala

* * *

“Q: How would you go about navigating reforms at the WTO amid a rise of unilateralism and U.S.-China trade clashes?

“A: This is the topical question of the hour, the growing nationalism, the divide. But if you listen carefully, you find that there’s some intersecting interests. After all, the same big powers that seem to have a big divide are sitting across each other at the table and negotiating some deals.

“The WTO should work with all members including the big ones to find out what are those intersecting areas — however small they may be — how do we begin to deliver to make the two sides see their common interests that we can work on and build trust.

“It will take time, it will be challenging, there’s no magic wand to it, but you need someone with the energy, the passion, who is not a quitter, and who can deliver and work with these powers and listen — listen to them, because sometimes they feel they’re not even listening to the big powers.

“Q: Could you talk about your visions for reforms?

“A: First, updating WTO rules to the 21st century to take account of 21st-century issues, such as e-commerce and the digital economy, such as climate change, the green economy and biodiversity and circular economy … the issue of women and trade and micro-, medium and small enterprise. Even technology, what technology is doing to supply chains.

“Then you’ve got to look at existing rules and see whether they are serving the purpose. There are some members who feel that some rules may be leading to circumvention and disturbing the balance of rights and obligations of members. Issues like special and differentiated treatment, which developing countries feel very strongly about [but] developed countries have a different view.

“The dispute settlement system is paralyzed. You cannot have a rules-based organization, which is the sole place where people can take their grievances and complaints, but rules are not being followed.

“A third area I would mention is transparency and notification. Transparency is so vital to the multilateral trading system, and notification for businesses. If something is going to be done in a country, businesses need to know that you’re willing to take one action or another, otherwise they can’t function.

“The WTO has to start achieving more outcomes. If it doesn’t do that then people continue to see it as irrelevant.

“Q: How should the WTO address Washington’s complaint about China’s state capitalism and developing country designation?

“A: Those are some critical issues that members will need to discuss and debate on. But let’s put it this way, we must make sure that all members of the WTO feel that the balance of rights and obligations for all members of the WTO is about a fair system. So, that’s why it’s important to listen to who feels it’s not fair and then restore that balance of rights and obligations that members need to undertake.”

3. Nairametrics, August 12, 2020, WTO Job: Okonjo-Iweala reveals how to resolve rift between US and China, https://nairametrics.com/2020/08/12/wto-job-okonjo-iweala-reveals-how-to-resolve-the-rift-between-us-and-china/.

“On healing the rift between the US and China, Okonjo-Iweala admitted that it is going to be challenging and not be easy. She said:

“‘Well this is not going to be easy, if it was easy, it could have been done a long time since. So it would be very challenging but it is not an impossible job. It is very clear that both the US and China have been helped and benefitted from the multilateral trading system in the past. Hundreds of millions have been lifted out of poverty. They have experienced shared prosperity in the economies and their countries.’

“The Nigerian candidate pointed out that it is important to remind the US and China of this shared prosperity. She then disclosed that she would listen to both countries to find out what really are the issues causing distrust among them. She said that she will not want to be involved in the larger political problems, but will rather separate the trade issues and focus on them and build this trust.

“Going further on how to settle their rift, Okonjo-Iweala said, ‘You need to begin to find areas where there can be confidence-building and trade. Building trust is not talking about it, you have to have areas where both can work together and agree and we have a golden opportunity in the fisheries subsidies negotiations that are going on now because the US is a party to it, China is a party, the EU, all other members.’

“‘It is a multilateral negotiation, so if they can sit around the table with others to negotiate this and have a successful outcome, that is one thing that will be shared in common between the 2. So that will begin to build confidence. Then reaching out both in the US and in China to talk to the policymakers, go where the decisions are made, talk to congress also in the US and begin to show the benefits of the system again.’

“She also said they will look at reasons why they need to work together because their rift may be causing negative externalities for other members. She is of the opinion that exposing all of these, working with them, and listening carefully will begin to build confidence.

“She believes that while achieving this will be difficult, focusing seriously on trade issues can create room for a breakthrough.”

4. P.M. News, August 4, 2020, Okonjo-Iweala: My priorities as WTO chief, https://www.pmnewsnigeria.com/2020/08/04/okonjo-iweala-my-priorities-as-wto-chief/.

“’I would be focusing, if I get the job, on the dispute settlement system. Because this is the fundamental pillar of the WTO,’ Okonjo-Iweala said.

”If you have a rules-based organisation, you must have a place where rules are arbitrated and that’s what happens with the dispute settlement system. So restoring that will be a top priority as well.’

* * *

“The candidate showed her confidence to ‘find a way to unlock the seeming division’ on the trade side, between China and the United States, underlining that finding areas of mutual interest and to build trust within the WTO trading system would be important.

“’Actually, if you listen to the two members, they have some things in common,’ Okonjo-Iweala added.

“’The dispute settlement system of the WTO is valued by both, they want it to reform, they don’t want it to disappear.’

“Okonjo-Iweala also noted that she hopes China will play the role of an economic growth engine in the current COVID-19 pandemic as it did during the 2008 global financial crisis.

“’I think the best thing China can do is to recover quickly. Because it’s one of the engines of growth in the world and it’s almost a quarter of world trade,’ she told Xinhua.

“’So if it recovers quickly, it means that it can help the rest of the world recover. So that’s the role I would see for China.’”

5. Financial Times, August 4, 2020, Leading WTO candidates back US bid for system reform, Amina Mohamed and Ngozi Okonjo-Iweala say American criticisms of over-reach are valid, https://www.ft.com/content/f4830e2b-df7b-474a-8104-6336992ca193.

Article also reviews Dr. Okonjo-Iweala’s view that the WTO should be taking a lead on COVID-19 and should take steps to see that the early introduction of export restraints on medical goods and medicines is not repeated.

6. Inside U.S. Trade’s World Trade Online, July 22, 2020, Nigeria’s candidate: Technical skill won’t solve WTO problems, https://insidetrade.com/daily-news/nigeria%E2%80%99s-candidate-technical-skill-won%E2%80%99t-solve-wto-problems.

Inside U.S. Trade has conducted interviews with each of the eight candidates. In its July 22 write-up of Dr. Okonjo-Iweala’s interview, the publication noted that Dr. Okonjo-Iweala would see who is behind on notifications and see if the problem is due to a lack of technical capability which is a real but solvable problem for many developing countries. For those with the ability to provide notifications but who haven’t, she would see what could be done including some proposals where “sticks” have been suggested to address non-compliance.

On U.S. concerns about China’s state-run economy, Dr. Okonjo-Iweala noted that the WTO doesn’t comment on Member’s economic systems but should address the consequences to the global trading system of different economic systems. She believes the WTO should start by establishing a definition of “public body” and look at improving rules on industrial subsidies and would urge the U.S., EU and Japan to table their proposal in that regard.

Conclusion

Each candidate has been very busy these last several months meeting with WTO Members both in Geneva and in capital (whether in person or virtually), talking to the media, doing events with academia and think tanks and others. The above additional materials on Dr. Okonjo-Iweala are a small sample of what is available online. The excerpts or summaries from the various publications have largely been limited to some of the key issues my previous posts have examined (appellate body reform, industrial subsidies, etc.).

Future posts will look at additional materials for other candidates.

Race for WTO Director-General — additional material on Dr. Jesus Seade Kuri (Mexico)

Terence P. Stewart · August 31, 2020 · Selection of WTO Director-General · Appellate Body reform, China, Dr. Jesus Seade Kuri, European Union, industrial subsidies, Mexico, small and vulnerable economies, United States · No Comments

The eight candidates for the Director-General spot at the World Trade Organization have just eight days left in their efforts to get themselves known to the WTO Members before the phase three process of finding the candidate most likely to achieve consensus within the membership starts.

In prior posts I have provided a summary of statements made at the General Council meetings during July 15-17 and the press conferences that followed and then did a series of posts looking at each candidate’s publicly expressed views on four issues of importance drawing from the same two sources as well as a series of webinars hosted by the Washington International Trade Association and the Asia Society Policy Institute. See July 19, 2020, The eight candidates for WTO Director-General meet the General Council – recap of prepared statements and press conferences, https://currentthoughtsontrade.com/2020/07/19/the-eight-candidates-for-wto-director-general-meet-the-general-council-recap-of-prepared-statements-and-press-conferences/; August 10, 2020 [updated August 27], The race to become the next WTO Director-General – where candidates are on important issues: reform of the Appellate Body, https://currentthoughtsontrade.com/2020/08/10/the-race-to-become-the-next-wto-director-general-where-candidates-are-on-important-issues-reform-of-the-appellate-body/; August 13, 2020 [updated August 27], The race to become the next WTO Director-General – where candidates are on important issues: eligibility for special and differential treatment/self selection as a developing country, https://currentthoughtsontrade.com/2020/08/13/the-race-to-become-the-next-wto-director-general-where-candidates-are-on-important-issues-eligibility-for-special-and-differential-treatment-self-selection-as-a-developing-country/; August 17, 2020, The race to become the next WTO Director-General – where the candidates stand on important issues: convergence vs. coexistence of different economic systems; possible reform of rules to address distortions from such economic systems – Part 1, background on issues, https://currentthoughtsontrade.com/2020/08/17/the-race-to-become-the-next-wto-director-general-where-the-candidates-stand-on-important-issues-convergence-vs-coexistence-of-different-economic-systems-possible-reform-of-rules-to-address-dist/; August 19, 2020 [updated August 27], The race to become the next WTO Director-General – where the candidates stand on important issues: convergence vs. coexistence of different economic systems; possible reform of rules to address distortions from such economic systems – Part 2, comments by the candidates, https://currentthoughtsontrade.com/2020/08/19/the-race-to-become-the-next-wto-director-general-where-the-candidates-stand-on-important-issues-convergence-vs-coexistence-of-different-economic-systems-possible-reform-of-rules-to-addre/; August 23, 2020 [updated August 27], The race to become the next WTO Director-General – where the candidates stand on important issues: fisheries subsidies and e-commerce/digital trade, https://currentthoughtsontrade.com/2020/08/23/the-race-to-become-the-next-wto-director-general-where-the-candidates-stand-on-important-issues-fisheries-subsidies-and-e-commerce-digital-trade/.

Today I review some other press articles about the candidates to provide additional perspective on important issues or the candidate’s approach to the position of Director-General if selected. There is no intention to be exhaustive and the research has been limited to press pieces in English. Today’s post looks at a few articles featuring Dr. Jesus Seade Kuri from Mexico, the first candidate nominated.

CNBC, August 26, 2020, China needs to make ‘a greater, clear contribution’ to solve trade disputes, WTO hopeful says, https://www.cnbc.com/2020/08/26/china-has-to-make-greater-efforts-in-trade-disputes-wto-hopeful-says.html.

The press excerpt from the interview states that Dr. Seade indicated that “China must make greater efforts to overcome trade disputes with its World Trade Organization (WTO) partners.”

“There are issues with China that China needs to make a greater, clear contribution to resolve those issues between them and everybody else.”

“He argued that there needs to be progress over a price mechanism and over technological differences, adding that in 19 years of membership, there have been 44 disputes initiated against China. ‘That’s a lot,’ he said, although he noted that ‘at the same time, China has been very engaged in many other respects.'””

The video interview of Dr. Seade on CNBC is available at the following link, https://www.cnbc.com/video/2020/08/27/china-is-very-important-to-the-wto-say-director-general-candidate.html.

2. Successful Farming (Reuters article), August 17, 2020, Time for Forceful Leader to Fix WTO, Not a “Butler,” Mexico’s Pick Says, https://www.agriculture.com/markets/newswire/time-for-forceful-leader-to-fix-wto-not-a-butler-mexicos-pick-says.

“To restore U.S. faith in the dispute resolution body that Washington accuses of overreach, he said members could consider a stronger supervisory mechanism to make sure the powerful appellate body did not stray beyond its mandate.”

3. The Jamaica Gleaner, August 11, 2020, Jesus Seade Commentary, Caribbean’s Place at the World Trade Organization, http://jamaica-gleaner.com/article/commentary/20200811/jesus-seade-caribbeans-place-world-trade-organization.

“POSSIBLE TO SUPPORT SVEs (small and vulnerable economies)

“Later on, during my time with the International Monetary Fund, the World Bank, and the WTO, I gained invaluable experience working with many Caribbean countries. From that involvement, I believe that it is possible to support SVEs with developing risk-management programmes and cooperative schemes to mitigate the impact of external shocks, supporting faster recovery, and promoting economic diversification. As the only candidate to have the honour of having served at senior positions in all three Bretton Woods organisations, I believe that I fully understand the intertwined interaction among trade, development, and finance and how comprehensive policies can solve problems in different areas.

“Back to the WTO. The organisation is facing important challenges itself. It has failed to achieve significant progress in much-needed negotiations since its creation 26 years ago, its Appellate Body is in a state of disrepair, and the organisation will now have to face the severe dislocation of world trade caused by the pandemic. Staying as it is now, the WTO will fail to offer the support SVEs need. The Caribbean, in particular, has been struggling in recent years with the weakness of global trade, compounded by the region’s economic dependence on the trade of a limited array of goods and services, and its fragility vis-à-vis climate change. Those issues require suitable flexibilities and support from the WTO. Moreover, they require the scaffolding that goes beyond stop-gap measures.

“As members recognise, there is a need to reignite our work at the WTO and engage in a true 21st-century agenda, with development at the core. In that sense, CARICOM will play a vital role in improving the WTO’s work on small developing economies, with emphasis on special and differential treatment. It is imperative to enhance the work at the councils and committees. Moreover, the WTO must invest more in training and technical assistance, possibly leveraging resources with assistance in kind from member countries and other partner agencies.”

4. Inside U.S. Trade’s World Trade Online, July 31, 2020, Seade: Transparency could help break WTO divide on industrial subsidies, https://insidetrade.com/trade/seade-transparency-could-help-break-wto-divide-industrial-subsidies

Inside U.S. Trade has done a series of interviews with the candidates for the WTO Director-General position. The Seade interview is summarized in the July 31 article cited above. Dr. Seade highlighted the potential importance of transparency in helping WTO Members forge a path forward on industrial subsidies and other issues.

There has been a serious concern by the U.S., EU and others on inadequate transparency of subsidy programs provided by some Members (including China and India) as is clear from counternotifications filed by the U.S. in the past.

The article indicates that Dr. Seade viewed the issue of industrial subsidies as “perhaps the most serious” one before WTO Members. As Dr. Seade has commented in other settings, it is up to those seeking changes in industrial subsidies (U.S., EU, Japan) to work with China to see what package of issues need to be addressed for China to be at the table.

5. Archyde, August 2, 2020, Candidate for the presidency of the WTO, Jesus Seade wants to revive international trade, https://www.archyde.com/candidate-for-the-presidency-of-the-wto-jesus-seade-wants-to-revive-international-trade/.

“What do you propose to overcome the blockade of the United States which prevents the appointment of new judges to the Appellate Body (OA) and cripples the dispute settlement mechanism?

“J. S. : These problems are not insurmountable. The United States complains not about the trade agreements, but about their interpretation by the AB. This is autonomous and must remain so. In order to move forward, I propose the creation of a supervisory committee of the OA, made up of five ambassadors and three lawyers. It is up to him to determine whether the appeals body is confined to applying the agreements or whether it has exceeded its powers. We could thus reassure the Americans and relaunch the WTO.”

6. CGTN, 24 July 2020, WTO ‘in a very serious situation’: Leadership candidate Jesus Seade urges reform, https://newseu.cgtn.com/news/2020-07-24/WTO-in-a-very-serious-situation-Leadership-candidate-urges-reform-SkWda4vrDq/index.html.

“He stressed that the WTO had to provide more space for new negotiations on international trade to adapt to the demands of contemporary geopolitics, especially the rise of emerging economies.

“‘Now you have major new players on the block. China was not a member; now, it is formidably important.’

“He warned that the WTO had to overhaul the ‘broken’ system for dispute resolution to accommodate such shifts. But in spite of its challenges and shortcomings, Seade described the organization as ‘a fundamental piece of global architecture.'”

7. Nikkei Asian Review, July 13, 2020, Interview, Good listener or strong negotiator? WTO candidates make case for top job, https://asia.nikkei.com/Editor-s-Picks/Interview/Good-listener-or-strong-negotiator-WTO-candidates-make-case-for-top-job.

“Jesus Seade

“Q: How do you see the situation of trade at this moment?

“A: I feel bad that an organization I helped to create is now in a situation that needs a serious fix. I think I can provide that fix.

“The crisis in the WTO is in good measure a crisis between the United States and Europe, not China, for dispute settlement.

“For Europe, the dispute settlement system had to be like a “court” who decides things and establishes jurisprudence, whereas the United States always wanted a more basic approach for facilitation of the solutions.

“The United States is very uncomfortable about how things have happened and has taken extreme measures, strong measures. That is why the appellate body now is no longer functional. So that’s a crisis as important as COVID or as differences with China.

“We need to fix that, urgently. It is a very complicated process it’s not one country versus another country. There are many parties in many aspects. This is a very complex crisis. That is why we need a real expert.

“Q: How will you become the bridge between the U.S. and China?

“A: The United States and China are not talking. The director general has to get involved and lead the discussions. What they need is a strong personality, a strong leader to call them to discussions and be engaged on that discussion.

“For the [director general] position, you need to be a top trade negotiator. Because if you come from a background in finance and politics, you can have fantastic leadership and leadership is very important, but at the first difficult discussion between the United States and China, or between the United States and Europe, what will happen?

“I don’t think we should have a director general only encouraging [the parties] to discuss. He has to be part of that, he has to lead the discussion.

“Q: How would you enable the appellate body to function again?

“A: What I have in mind is taking measures that diverse countries — most of them, except the United States — have proposed, which is called the Walker Principles, a package of measures [put forth by New Zealand’s Ambassador to the WTO David Walker] that basically reinforce the measures that already exist. The United States is not rejecting the proposal, just saying that’s not enough.

“So what I’m saying is that I will propose those proposals and then two other measures I have in my mind that would have to be developed in detail, but the fundamental idea is already in my mind and would be additions to those proposals. I see no reason why Japan or the European Union or China would reject my extra proposals. What I hope is for the United States to say, ‘Ah! With those extra proposals maybe, this is going to be interesting,’ and then we’ll hear from the United States.

“It’s not a very complex thing because nobody — not the United States, not Japan, not Europe — nobody is saying that it’s necessary to change the dispute settlement understanding. I think there is something we should be able to solve in the matter of the weeks.”

Conclusion

Each candidate has been very busy these last several months meeting with WTO Members both in Geneva and in capital (whether in person or virtually), talking to the media, doing events with academia and think tanks and others. The above additional materials on Dr. Seade are a small sample of what is out there. The excerpts have largely been limited to some of the key issues my previous posts have examined (appellate body reform, industrial subsidies, etc.).

Future posts will look at additional materials for other candidates.

WTO Appellate Body Reform – Revisiting Thoughts on How to Address U.S. Concerns

Terence P. Stewart · July 12, 2020 · WTO Dispute Settlement · Appellate Body reform, Appellate Body vacancies, Draft General Council Decision on Functioning of the Appellate Body, WTO, WTO General Council · No Comments

In a November 4, 2019 post, I reviewed a draft General Council Decision that had been presented by Amb. David Walker to the General Council on addressing some of the concerns presented over the last several years by the United States with the functioning of the WTO’s Appellate Body. The United States has been blocking the process for selecting new Appellate Body members until its longstanding concerns are addressed. See WTO’s Appellate Body Reform – The Draft General Council Decision on Functioning of the Appellate Body, https://currentthoughtsontrade.com/2019/11/04/wtos-appellate-body-reform-the-draft-general-council-decision-on-functioning-of-the-appellate-body/.

The Appellate Body ceased to have at least three members on December 11, 2019 at which point it could not hear new appeals. Moreover, only appeals that had gone through hearings were handled after December 10, with the last report released last month.

The United States released in February a lengthy Report on the Appellate Body of the World Trade Organization which provides a detailed review of the purpose of dispute settlement in the WTO and the development of major departures from the agreed language of the Dispute Settlement Understanding by the Appellate Body over the first twenty-five years of the WTO’s existence. The report was reviewed in an earlier post. See https://ustr.gov/sites/default/files/Report_on_the_Appellate_Body_of_the_World_Trade_Organization.pdf; USTR’s Report on the WTO Appellate Body – An Impressive Critique of the Appellate Body’s Deviation from Its Proper Role, https://currentthoughtsontrade.com/2020/02/14/ustrs-report-on-the-wto-appellate-body-an-impressive-critique-of-the-appellate-bodys-deviation-from-its-proper-role/.

While a number of WTO Members have joined together in supporting an interim arbitration approach, there has been no apparent ongoing effort to find a resolution to the continuing impasse. Indeed, the interim arbitration approach adopted by the EU, Canada, China and others in the view of the U.S. extends and in some cases exacerbates the longstanding concerns the U.S. has had with the Appellate Body and exceeds the proper role of arbitration.

There have been any number of proposals by academics, former government employees and others on what is needed to reform the Appellate Body to deal with U.S. concerns. The National Foreign Trade Council commissioned a multi-part report on Resolving the WTO Appellate Body Crisis from Bruce Hirsch, a former USTR official with significant responsibilities for dispute settlement matters. See Resolving the WTO Appellate Body Crisis, Proposals on Overreach (December 2019), http://www.nftc.org/default/trade/WTO/Resolving%20the%20WTO%20Appellate%20Body%20Crisis_Proposals%20on%20Overreach.pdf; Resolving the WTO Appellate Body Crisis Volume 2, Proposals on Precedent, Appellate Body Secretariat and the Role of Adjudicators (June 2020), http://www.nftc.org/default/Trade%20Policy/WTO_Issues/Resolving%20the%20WTO%20AB%20Crisis%20vol2%2006042020.pdf. His two papers make an important contribution to those interested in finding a forward path on restoring a second stage to the WTO’s dispute settlement system.

Specifically, Mr. Hirsch’s two papers address a number of important issues with suggestions presented for possible approaches to help move the WTO dispute settlement system back to what was agreed to in the Dispute Settlement Understanding which became operative in 1995 when the WTO was created.

The NFTC press releases on the two papers provides the following summary of proposals in each paper. From the December 17, 2019 press release:

The paper includes six key proposals:

Enforce the 90-day time frame for appeals;
Prohibit advisory opinions, and further elaborate the circumstances constituting advisory opinions;
Clarify that DSU Article 3.2 does not justify expanding or narrowing the reach of WTO provisions or filling gaps in WTO coverage;
Clarify that customary rules of interpretation of public international law do not justify gap-filling and expanding or narrowing the reach of WTO provisions;
Affirm that Article 17.6(ii) of the Antidumping Agreement must be given meaning, by clarifying that the provision reflects the principle just described, that WTO adjudicators may not expand or narrow the meaning of broad provisions and general terms; and
Direct the Appellate Body to reject party arguments that expand or narrow the reach of agreement provisions or fill gaps in agreements.

http://www.nftc.org/newsflash/newsflash.asp?id=236&mode=View&articleid=4219

From the June 5, 2020 press release:

Specifically, the paper outlines 3 proposals that will help “reflect the goal of making the Appellate Body operate as Members expected in 1995:”

Clarify that Appellate Body reports do not create binding precedent;
Replace the Appellate Body secretariat with clerks seconded from the WTO secretariat; and
Guidance on the Role of Adjudicators.

http://www.nftc.org/newsflash/newsflash.asp?id=236&mode=View&articleid=4228

The two papers are an effort to help WTO Members focus on moving forward on bringing the Appellate Body’s role in the Dispute Settlement system back to its intended limited function.

The first paper which deals with the critical issue of overreach also takes in issues such as advisory opinions and adherence to the timeline for completing appeals (absent party consent) which Mr. Hirsch views as often interrelated. If there is a problem with the first paper it is in not addressing how to restore balance to WTO Members by correcting prior cases where overreach occurred. This has been an issue of some importance to the United States and is critical in a number of agreements where there has been a pattern of decisions changing rights and obligations.

In a prior post from November 12, I reviewed the large number of WTO Members who have expressed concern about the Appellate Body creating rights or obligations not contained in the WTO Agreements. See Background Materials on WTO Appellate Body Reform Challenges – The Critical Issue of “Overreach,” https://currentthoughtsontrade.com/2019/11/12/background-materials-on-wto-appellate-body-reform-challenges-the-critical-issue-of-overreach/

The second paper by Mr. Hirsch addresses a number of important issues although only the issue of precedent is on the list of concerns raised by the United States. However, Mr. Hirsch makes a strong case that the structure of the Appellate Body Secretariat has likely contributed to the development of problematic issues such as precedent, and his recommendations make a lot of sense and would return control of the Appellate Body process to Appellate Body members.

Mr. Hirsch notes that there is a lack of trust amongst WTO Members, which certainly reflects the current environment. His proposals are all focused on what he perceives to be a view with which all Members should be able to agree — reform the Appellate Body to ensure it performs the limited role articulated in the Dispute Settlement Understanding. I agree with both his observation on the lack of trust (and the need to develop trust through actions) and what the objective of reform can and should be. I differ only in what type of actions Members can take to ensure compliance by the Appellate Body with the limited role it is to play in dispute settlement.

His two papers do not suggest that all issues raised by the U.S. have been addressed in his papers (not clear if there are additional papers yet to be released). Nor is it the intention of his papers to suggest language amendments to the draft General Council Decision put forward by the then facilitator to the General Council, Amb. David Walker (NZ).

As an aid to readers, I have copied my November 4, 2019 recommended modifications to the draft General Council Decision below. The intention of my edits to the draft Decision was to provide changes reflecting the underlying purpose of the DSU that would be enforceable by the parties to disputes and to suggest an approach to deal with overreach that would deal with the past cases and not simply the future disputes. As one of the objectives of the U.S. is restoring the balance that was agreed to in the negotiated texts, I believe any resolution of the Appellate Body impasse has to identify a path forward on past decisions. The next paragraph and the modified draft General Council Decision are copied verbatim from my November 4th post. There are obviously many excellent ideas in papers from experts like Mr. Hirsch. My suggestions may add some flavor or different options on a number of issues that need to be addressed.

Excerpt from November 4, 2019 Post

What follows is my personal effort to identify some consequences of actions that have long concerned the United States. Obviously, only the U.S. can determine what will address its concerns. But possibly some of the following suggestions, if part of any final package, could address some of the ongoing and longstanding U.S. concerns. The text, other than what is both in bold and underlined, is the draft General Council Decision that is contained as an Annex to Amb. Walker’s October 15, 2019 report to the General Council. Job/GC/222. Only one number has been deleted – “6” (60 days has been changed to 90 days under the first topic).

DRAFT GENERAL COUNCIL DECISION ON FUNCTIONING OF THE APPELLATE BODY

The General Council,

Conducting the function of the Ministerial Conference in the interval between meetings pursuant to paragraph 2 of Article IV of the Marrakesh Agreement Establishing the World Trade Organization (the “WTO Agreement”);

Having regard to paragraph 1 of Article IX of the WTO Agreement;

Mindful of the work undertaken in the Informal Process of Solution-Focused Discussion on Matters Related to the Functioning of the Appellate Body, under the auspices of the General Council;

Recognizing the central importance of a properly functioning dispute settlement system in the rules-based multilateral trading system, which serves to preserve the rights and obligations of Members under the WTO Agreement and ensures that rules are enforceable;

Desiring to enhance the functioning of that system consistent with the Understanding on Rules and Procedures Governing the Settlement of Disputes (the “DSU”);

Decides as follows:

Transitional rules for outgoing Appellate Body members

Only WTO Members may appoint members of the Appellate Body.

The Dispute Settlement Body (the “DSB”) has the explicit authority, and responsibility, to determine membership of the Appellate Body and is obligated to fill vacancies as they arise.

To assist Members in discharging this responsibility, the selection process to replace outgoing Appellate Body members shall be automatically launched 180 days before the expiry of their term in office. Such selection process shall follow past practice.

If a vacancy arises before the regular expiry of an Appellate Body member’s mandate, or as a result of any other situation, the Chair of the DSB shall immediately launch the selection process with a view to filling that vacancy as soon as possible.

Appellate Body members nearing the end of their terms may be assigned to a new division up until 90 days before the expiry of their term.

An Appellate Body member so assigned may complete an appeal process in which the oral hearing has been held prior to the normal expiry of their term if completing such appeal is consistent with Article 17.5 of the DSU or any mutually agreed extension by the parties.

90 Days

Consistent with Article 17.5 of the DSU, the Appellate Body is obligated to issue its report no later than 90 days from the date a party to the dispute notifies its intention to appeal.

In cases of unusual complexity or periods of numerous appeals, the parties may agree with the Appellate Body to extend the time-frame for issuance of the Appellate Body report beyond 90 days.1 Any such agreement will be notified to the DSB by the parties and the Chair of the Appellate Body.

Failure to complete the appeal within 90 days of the notification of intent to appeal, or such other time as the parties agree to, shall result in the appeal terminating with no decision. In such situations the Dispute Settlement Body will consider adoption of the panel report but rights of the complaining party under Articles 21.6 and 22 of the DSU shall not apply.

The Appellate Body will supply the Dispute Settlement Body with a description of steps taken by the Division to complete any such appeal within 90 days and any modifications to Appellate Body procedures and practice that will be pursued by the Appellate Body to ensure such failure to comply with the 90 day rule is not repeated.

1 Such agreement may also be made in instances of force majeure.

Municipal Law

The ‘meaning of municipal law’ is to be treated as a matter of fact and therefore is not subject to appeal. Where the Appellate Body nonetheless addresses the meaning of municipal law in an Appellate Body report, either party may request that the paragraphs of the Appellate Body report dealing with such issue or issues and any conclusions drawn therefrom be striken, and the Appellate Body will reissue the decision without such paragraphs forthwith. Compliance with the 90 day requirement will be measured from the date of the revised decision.

The DSU does not permit the Appellate Body to engage in a ‘de novo’ review or to ‘complete the analysis’ of the facts of a dispute.

Consistent with Article 17.6 of the DSU, it is incumbent upon Members engaged in appellate proceedings to refrain from advancing extensive and unnecessary arguments in an attempt to have factual findings overturned on appeal, under DSU Article 11, in a de facto ‘de novo review’. Where Article 11 is invoked by a Member seeking review on appeal of whether the panel failed to make an objective assessment, any other party may file an objection. The Appellate Body will consider the claim only in extraordinary circumstances of facial bias in the assessment by the panel. A Member raising such a claim that is dismissed will be assessed costs to the Member who filed an objection.

Advisory Opinions and Appellate Body Economy in Decisions

Issues that have not been raised by either party may not be ruled or decided upon by the Appellate Body. Where issues not raised by either party are addressed in the Appellate Body report, the addressing of such issues constitutes the provision of an advisory opinion and is inconsistent with DSU Article 17.12 . Either party may request that the paragraphs of the Appellate Body report dealing with such issue or issues and any conclusion based thereon be striken, and the Appellate Body will reissue the decision without such paragraphs forthwith. Compliance with the 90 day requirement will be measured from the date of the revised decision.

Consistent with Article 3.4 of the DSU, the Appellate Body shall address issues raised by parties in accordance with DSU Article 17.6 only to the extent necessary to assist the DSB in making the recommendations or in giving the ruling provided for in the covered agreements in order to resolve the dispute. The Appellate Body’s indicating that other issues raised need not be addressed to resolve the dispute satisfies the requirements of DSU Article 17.12.

Precedent

Precedent is not created through WTO dispute settlement proceedings.

Consistency and predictability in the interpretation of rights and obligations under the covered agreements is of significant value to Members.

Panels and the Appellate Body should take previous Panel/Appellate Body reports into account to the extent they find them relevant in the dispute they have before them. The Appellate Body shall not reverse a panel decision on any issue solely on the basis of the panel not conforming to a prior Appellate Body report where the panel has identified different factual and/or legal issues.

‘Overreach’

As provided in Articles 3.2 and 19.2 of the DSU, findings and recommendations of Panels and the Appellate Body and recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements. In a large number of Panel and Appellate Body reports, one or more parties and/or third parties have raised concerns about the Panel or Appellate Body adding to or diminishing the rights and obligations contrary to Articles 3.2 or 19.2 of the DSU.

To clarify situations where rights and obligations are being added to or diminished, Panels and the Appellate Body will not fill gaps in agreements, construe silence to indicate obligations or construe ambiguities in language of existing agreements to require a particular construction. Any such actions by a Panel or by the Appellate Body is inconsistent with Articles 3.2 and 19.2 of the DSU.

Any party to an Appellate Body report that raised at the DSB meeting considering adoption of the Appellate Body report concerns about the creation of rights or obligations inconsistent with Articles 3.2 or 19.2, will have 90 days from the adoption of this General Council decision to request a review of the Appellate Body decision. Such request will be for the limited purpose of having the Appellate Body determine whether on the specific issues raised where the party complained of creating rights or obligations the clarification of meaning provided in this General Council decision would result in a changed decision on the particular issue. The Appellate Body will render decisions on all such requests within 90 days and will accept no additional briefing or argument from parties. Where the report would have been different on one or more particular issues, it is sufficient for the Appellate Body to so indicate. Where the same decision on an issue would have been made, the Appellate Body shall provide a detailed explanation.

Panels and the Appellate Body shall interpret provisions of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (“antidumping agreement”) in accordance with Article 17.6(ii) of that Agreement. Any party to an Appellate Body report that raised at the DSB meeting considering adoption of the Appellate Body report that Article 17.6(ii) was not applied in interpreting the antidumping agreement, will have 90 days from the adoption of this General Council decision to request a review of the Appellate Body decision. Such a request will be for the limited purpose of having the Appellate Body determine whether a different outcome on one or more issues would have resulted had the Appellate Body applied Article 17.6(ii) of the antidumping agreement. The Appellate Body will render decisions on all such requests within 90 days and will accept no additional briefing or argument from parties. Where the report would have been different on one or more particular issues, it is sufficient for the Appellate Body to so indicate. Where the same decision on an issue would have been made, the Appellate Body shall provide a detailed explanation.

Regular dialogue between the DSB and the Appellate Body

The DSB, in consultation with the Appellate Body, will establish a mechanism for regular dialogue between WTO Members and the Appellate Body where Members can express their views on issues, including in relation to implementation of this Decision, in a manner unrelated to the adoption of particular reports. Such mechanism will be in the form of an informal meeting, at least once a year, hosted by the Chair of the DSB.

The Appellate Body Secretariat will prepare and circulate to the DSB at least 60 days in advance of such a meeting a document which reviews:

(a) for any Appellate Body member whose term is or has expired in the last 12 months, assignments to appeals within 90 days of the end of the term and any appeals on which the AB member continued to work after his term expired and whether such continuation was authorized by the parties to the appeal;

(b) the time from notification of intent to file an appeal to the AB decision in each case filed in the last twelve months (and for the first such report and any subsequent reports where appeals are not current with the 90 day requirement) to an AB report (or revised report where paragraphs are requested to be deleted as addressing issues not raised by any party) and copies of any write-ups filed where reports were not filed within 90 days;

(c) a list of AB reports where paragraphs were requested striken and time from request to rerelease of AB report;

(d) a list of requests for review in appeals pursuant to Article 11 of the DSU of panel decisions as not being an objective assessment, how each request was resolved, and for such claims that were not properly filed whether costs were paid by the party raising the issue;

(e) the number of AB reports where parties requested review based on statements made at prior DSB meetings that rights or obligations were being added to or diminished and/or that Article 17.6(ii) of the antidumping agreement was not applied or was applied inappropriately, timing of resolution by the Appellate Body and the number of issues where a different decision was rendered.

Where the Appellate Body has been unable to comply with the requirements of the DSU as clarified by this General Council Decision, it is expected that the Appellate Body Chairman will present at the informal meeting the action plan being pursued by the Appellate Body to achieve full compliance with the terms of the DSU and this Decision.

To safeguard the independence and impartiality of the Appellate Body, clear ground rules will be provided to ensure that at no point should there be any discussion of ongoing disputes or any member of the Appellate Body other than as it relates to compliance with this General Council Decision.

Background Materials on WTO Appellate Body Reform Challenges — The Critical Issue of “Overreach”

Terence P. Stewart · November 12, 2019 · Uncategorized · "Overreach" by Appellate Body, Appellate Body reform, WTO Dispute Settlement · No Comments

I have written over the years many articles on the concerns certain WTO dispute settlement reports have raised for WTO Members that panels and the Appellate Body were creating obligations not contained in the various WTO agreements. One of the early cases where the issue was raised was U.S. – Wool Shirts and Blouses, DS33, where Costa Rica claimed that “The observations of the panel and the Appellate Body had diverged
from past practice and had modified the balance of rights and obligations which they claimed to be seeking to protect.” (WT/DSB/M/33, p. 12 (June 25, 1997)). That was only two and a half years after the WTO came into existence and was more than twenty-two years ago.

Dozens of WTO Members have raised concerns over the years. In past publications or presentations, I have cataloged a number of the disputes. An early U.S. complaint occurred in US – FSC, DS108, in 2000, nineteen years ago. During 1995-2019, the U.S. has identified problems of overreach and other issues in cases the U.S. has won at the WTO, lost at the WTO or where it has been a third party. Indeed, Congress was concerned enough about the issue of WTO dispute settlement overreach (creating obligations or diminishing rights) that it required a report on how to address the situation within the WTO as part of the Trade Act of 2002 (19 U.S.C. 3805(b)(3) – some seventeen years ago. As stated in the Congressional findings to that Act, “support for continued trade expansion requires that dispute settlement procedures under international trade agreements not add to or diminish the rights and obligations provided in such agreements.” 19 U.S.C. 3801(b)(3). The crisis in the WTO on dispute settlement flows from a host of issues, but none is more important or long standing than the failure of the WTO Membership to correct the problem of panel and Appellate Body overreach. Unfortunately, the proposal contained in the Draft General Council Decision on Functioning of the Appellate Body, basically to simply restate what Articles 3.2 and 19.2 of the Dispute Settlement Understanding have said since the start of the WTO is a non-starter for the U.S. See my post of November 4.

A paper (“The Broken Multilateral Trade Dispute System”) prepared for a program at the Asia Society Policy Institute on February 7, 2018 is attached and provides additional background on a number of the U.S. concerns. While the paper looks at disputes through 2017, the problems of overreach and the other issues raised by the United States have continued to the present time.

Terence-P.-Stewart-Asia-Society-Paper-re-dispute-settlement-WEB-VERSIO.._

WTO’s Appellate Body Reform – The Draft General Council Decision on Functioning of the Appellate Body

Terence P. Stewart · November 4, 2019 · Uncategorized · Appellate Body reform, Appellate Body vacancies, Draft General Council Decision on Functioning of the Appellate Body, WTO, WTO General Council · No Comments

At the October 15, 2019 General Council meeting, agenda item 4, involved a report from H.E. Dr. David Walker (New Zealand) as the Facilitator on the informal process he had been assisting related to the functioning of the WTO Appellate Body. More specifically, Ambassador Walker, who is also serving this year as the Chairman of the Dispute Settlement Body, has been working with WTO Members as they attempt to address the U.S. concerns with the operation of the Appellate Body (“AB”) and obtain removal of the U.S. blockage of starting a process of filling Appellate Body vacancies. Amb. Walker submitted under his own authority, after several months of meetings with WTO Members and review /discussion of a range of submissions by various Members suggesting approaches to address U.S. concerns, a draft General Council Decision.

The Appellate Body’s membership will be reduced to one (vs. seven when the Appellate Body has a full number of members) after December 10, 2019 as two of three existing AB members terms expire then. After December 10^th, the AB won’t have three members to assign to hear appeals filed after that date absent removal of the blockage and new members being appointed. This is not new news, but the draft General Council Decision is an important effort to move the process of finding solutions to the problems identified by the United States (and other countries). The draft General Council Decision can be found as an Annex to JOB/GC/222. https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/Jobs/GC/222.pdf.

Unfortunately, while there are sections of the draft decision that address each of the major issues raised by the United States, the draft falls short of actually providing any assurances that the problems of the past won’t continue going forward. The U.S. Statement on the agenda item at the General Council meeting on October 15 makes the U.S. ongoing concerns abundantly clear:

“We thank the Facilitator, Ambassador David Walker, for his considerable efforts to date and for his report to Members.

“We have also listened carefully to the discussions. As we have explained, the fundamental problem is that the Appellate Body is not respecting the current, clear language of the DSU. While a number of Members have expressed concern with actions or approaches by the Appellate Body, others appear willing to tolerate – or even encourage – those actions. If we WTO Members cannot agree that we should be concerned that the Appellate Body has broken the plain rules that Members agreed to in the DSU, then it is difficult to see how we can find solutions to a “problem” we do not agree exists. By denying that they are concerned about persistent rule-breaking by the Appellate Body, some WTO Members seek to avoid the deeper question: why did the Appellate Body feel free to disregard the clear text of the agreements?

“We cannot find meaningful solutions without understanding how we arrived at this point. Without an accurate diagnosis, we cannot assess the likely effectiveness of any potential solution. It is possible that some explanations may cut across several of the issues and be of a systemic nature. For instance, one cause could be the ongoing challenges facing the WTO negotiating function and its oversight function, leading to unchecked “institutional creep” by the Appellate Body as Members push to achieve through litigation what they haven’t achieved or can’t achieve at the negotiating table.

“Another cause could be that some WTO Members believe that the Appellate Body is an “international court” and its members are “judges” who inherently have more expansive authority than is provided in the DSU, for example, to create “jurisprudence” and fill gaps in the WTO agreements. This view may be shared by some who have served on the Appellate Body. It is also possible that some explanations for why the Appellate Body felt free to depart from the clear text of the DSU may be specific to the concerns that have been raised.

“For example, Article 17.5 of the DSU could not be more clear or categorical that appellate reports must be issued within 90 days. While the DSB minutes record that some WTO Members raised concerns about the Appellate Body’s exceeding 90 days, particularly without even consulting the parties, the minutes also record a few Members excusing the breach of our agreed rules. Did the attitude of these Members contribute to a mindset among the Appellate Body that the WTO’s rules and deadlines did not need to be respected?

“On so-called “cogent reasons”, the Facilitator’s Report suggests that Members agree that “precedent” is not created through WTO dispute settlement. If this is so, then why did some WTO Members advocate for the Appellate Body to assert that its interpretations must be followed by panels absent unidentified cogent reasons? And why then does the Appellate Body assert a precedential value for its reports like an authoritative interpretation that only WTO Members in the Ministerial Conference or General Council can give?

“As a result of these fundamental questions not yet being addressed, we do not see convergence among Members with respect to an understanding and appreciation of the concerns raised.

“It is important to recognize that suggested convergence on statements in the Facilitator’s Report that largely reflect the existing text of the DSU does not indicate convergence on the understanding of the problem and the situation in which Members now find themselves. It simply will not work to “paper over” the problems that have been identified with new language that the Appellate Body and some Members could subsequently argue means the Appellate Body can continue operating the way that it has.

“To find a solution to the concerns raised, WTO Members will need to reach a shared understanding that the Appellate Body has failed to follow the rules agreed by Members and the role assigned to it by the Members. And let me repeat – the purpose of this process is not to re-negotiate the rules already agreed by Members to establish and govern the WTO dispute settlement system. Rather, we need to find a way to ensure the system operates as agreed by Members. Consequently, simply re-affirming the current WTO rules that have been broken persistently does not resolve the problem.

“In addition to these threshold considerations, we question whether there is convergence on the suggestions presented in the Facilitator’s Report. For example:

“With respect to the issue of Appellate Body members whose terms have expired, the proposal would appear to depart from the DSU and provide for an undetermined term for those former Appellate Body members.
“Regarding the 90-day deadline for Appellate Body reports, the DSU text is already clear, and yet the Appellate Body has failed to respect it. What reason would there be to think this language would ensure a different result?
“With respect to the issue of appellate review of questions of fact, we are concerned that the Appellate Body would say it is already abiding by the text in the Facilitator’s Report, especially since the Appellate Body has interpreted DSU Article 11 to convert questions of fact into questions of law, and we hear WTO Members expressing different views on the meaning of Article 11 of the DSU.
“With respect to advisory opinions, similarly, the Appellate Body presumably considers that it is already abiding by the text in the Faciliator’s Report. What basis is there to consider that this language would have a different result?
“Regarding the issue of precedent, the Appellate Body has relied on the reference in the DSU to security and predictability to justify its “cogent reasons” approach, and we are concerned that the proposed language does not address the issue.
“With respect to the issue of overreach, it is clear that the Appellate Body would say that it already abides by the text of Article 17.6 of the Anti-Dumping Agreement and, in turn, the text in the Facilitator’s Report. The problem is that the Appellate Body has adopted an erroneous interpretation of Article 17.6 that renders it inutile. We have not yet seen convergence on how to address this issue, or other instances in which the Appellate Body has departed from the plain text of other covered agreements.

“And we would note that there are a number of concerns that have been expressed over the years with respect to the Appellate Body’s approach to substantive provisions in a variety of areas, such as national treatment and technical barriers to trade, safeguards, subsidies, countervailing measures, and antidumping duties. Concerns related to the Appellate Body departing from the plain text of the covered agreements and upsetting the careful balance of rights and obligations struck by Members have not yet been part of the discussions.

“In sum, the Facilitator’s Report suggests agreement among some Members that the DSU imposes clear limitations on the Appellate Body. We appreciate that some progress has been made through engagement by Members and the efforts of the Facilitator and others. But we fail to see convergence on how to ensure that those limitations are respected going forward, and what are the consequences for continued failure to adhere to those limitations. To find an appropriate and effective solution, it is imperative for Members to engage in a discussion on how we have come to this point.

https://geneva.usmission.gov/2019/10/15/statements-by-the-united-states-at-the-wto-general-council-meeting/

Other Members have been unwilling to explore how the operation of the dispute settlement system has come to the situation it is in at present. Thus, it is unlikely that one will see meaningful progress in narrowing the differences between the U.S. and others on a core concern of the U.S. That said, there is always the possibility that WTO Members could examine each of the issues from the perspective of how the system can be made to comply with the DSU requirements beyond simply the language of the DSU. Stated differently, what are the consequences for failure to comply with DSU limitations by the Appellate Body?

DRAFT GENERAL COUNCIL DECISION ON FUNCTIONING OF THE APPELLATE BODY

The General Council,

Having regard to paragraph 1 of Article IX of the WTO Agreement;

Mindful of the work undertaken in the Informal Process of Solution-Focused Discussion on Matters Related to the Functioning of the Appellate Body, under the auspices of the General Council;

Desiring to enhance the functioning of that system consistent with the Understanding on Rules and Procedures Governing the Settlement of Disputes (the “DSU”);

Decides as follows:

Transitional rules for outgoing Appellate Body members

Only WTO Members may appoint members of the Appellate Body.

The Dispute Settlement Body (the “DSB”) has the explicit authority, and responsibility, to determine membership of the Appellate Body and is obligated to fill vacancies as they arise.

Appellate Body members nearing the end of their terms may be assigned to a new division up until 90 days before the expiry of their term.

90 Days

Consistent with Article 17.5 of the DSU, the Appellate Body is obligated to issue its report no later than 90 days from the date a party to the dispute notifies its intention to appeal.

1 Such agreement may also be made in instances of force majeure.

Municipal Law

The DSU does not permit the Appellate Body to engage in a ‘de novo’ review or to ‘complete the analysis’ of the facts of a dispute.

Advisory Opinions and Appellate Body Economy in Decisions

Precedent

Precedent is not created through WTO dispute settlement proceedings.

Consistency and predictability in the interpretation of rights and obligations under the covered agreements is of significant value to Members.

‘Overreach’

Regular dialogue between the DSB and the Appellate Body

The Appellate Body Secretariat will prepare and circulate to the DSB at least 60 days in advance of such a meeting a document which reviews:

(c) a list of AB reports where paragraphs were requested striken and time from request to rerelease of AB report;