climate change

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

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, (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,; 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,; November 10, 2020, 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, C; Alan Wm. Wolff, Saving the WTO, A Roadmap to the Future of the World Trade Organization, April 29, 2021,; Alan Wm. Wolff, presentation slides, Saving the WTO, A Rodmap to the Future, April 29, 2021,

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.


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.

Recent G7 Trade Ministers Meeting — WTO issues of interest

The United Kingdom has the presidency of the G7 (Canada, France, Germany, Italy, Japan, United States and United Kingdom, with European Union as a guest) in 2021. On March 31, trade ministers had a virtual meeting which included WTO Director-General Ngozi Okonjo-Iweala. On the U.K. G7 web page, the objectives of the Trade Track of the G7 during the UK Presidency is reviewed. See G7 Trade Ministers,

“The UK’s 2021 G7 Presidency will feature a dedicated Trade Track at the G7 for the first time, led by the Department for International Trade. The Trade Track will be an opportunity for the UK to work with our G7 partners to shape a bold global vision for economic recovery that sees us build back better together – greener, more prosperous, resilient, and fair. 

“To do so, the Trade Track will focus on four priority areas:

“- WTO reform

“- trade and health

“- digital trade

“- trade and climate policy”

The Chair of the G7 Trade Track released a statement on March 31. The Chair in 2021 is the U.K. Secretary of State for International Trade and President of the Board of Trade and Minister for Women and Equalities, the Rt Hon Elizabeth Truss MP. See G7 Trade Ministers’ Meeting – Chair’s Statement, The statement is copied below.

G7 Trade Ministers’ Meeting – Chair’s Statement – G7 UK Presidency 2021

“Today, the G7 Trade Ministers held their first meeting under the inaugural G7 Trade Track. Trade Ministers underlined the vital role global trade has played in tackling the impacts of the Covid-19 pandemic, welcomed the contribution trade can make to a strong economic recovery, and emphasised the need to build back better. They reaffirmed the importance of the rules-based multilateral trading system and welcomed Dr Ngozi Okonjo-Iweala, the new WTO Director-General, to their meeting.

“The G7 Trade Track has a bold purpose – to make the case globally for free and fair trade. G7 Trade Ministers are convinced that when the world’s leading democratic trading nations unite behind a shared agenda to make the global trading system fairer, more sustainable, and responsive to the needs of our citizens, this is an agenda that partners across the world will be ready to share in and help shape.

“Free and Fair Trade

“G7 Trade Ministers support a global trading system that is free and fair and works for all countries and peoples. This year represents a clear inflection point for the world and the global economic architecture. G7 Trade Ministers recognised the importance of providing the leadership needed to respond to the challenges faced by the multilateral trading system. Trade Ministers expressed their determination to provide the sustained effort and momentum necessary to ensure progress is made in the reform of the WTO to help secure shared prosperity for all. Therefore, G7 Trade Ministers will use this year’s G7 to advance the agenda of the 12th WTO Ministerial Conference and provide vital political momentum to the WTO reform debate. Trade Ministers will explore reforms that can enhance the WTO as a forum for negotiations, recognising the positive role that the plurilateral initiatives have played in engaging a broad spectrum of WTO members. G7 Trade Ministers also acknowledge that important work on transparency, special and differential treatment, and dispute settlement needs to be undertaken in the WTO.

“The multilateral trading system can be a force for good. It has increased competition and economic growth, helped raise living standards, and lifted millions out of poverty. It must serve the needs of all its members and provide the basis for free and fair trade. G7 Trade Ministers recognised that global trade should work for democratic and open-market systems and that these should not be undermined by unfair trade.

“Yet, not all of our citizens have felt the benefits of trade. Moreover, practices that distort markets and competition lead to decreased efficiency and reduced perceptions of fairness and trust in the system. Echoing the G7 Leaders’ Statement at Charlevoix in 2018, G7 Trade Ministers recalled the importance of fostering a truly level playing field. Trade Ministers will discuss the impact market-distorting practices, such as harmful industrial subsidies, including those causing excess capacity in some sectors, are having on our economies and chart a way to address these collectively.

“Modernising Trade

“G7 Trade Ministers believe that the multilateral trading system is in need of reform to reflect changes in the global economy and environment. As the world transitions to net zero, Trade Ministers acknowledged the risk of carbon leakage to the environment and the potential ways of mitigating this. Acknowledging the role of trade in tackling the accelerating climate and biodiversity crisis, Trade Ministers recognised that 2021 will be a crucial year to drive international efforts to address climate change and protect nature, including at the UNFCCC COP26. Trade Ministers will therefore deepen discussions on the nexus between trade and climate and the environment with a focus on identifying opportunities for collaboration and facilitating sustainable supply chains. Additionally, G7 members are committed to reaching a meaningful conclusion in the WTO negotiations of fisheries subsidies – which have a clear impact on sustainability.

“Stressing that trade has to be at the service of citizens, G7 Trade Ministers underlined the importance of advancing women’s economic empowerment through trade, particularly to support the Covid-19 recovery. They shared the view that greater representation of women in trade as leaders, business owners, and fairly compensated workers will ultimately deliver more and better jobs and more growth in our economies. G7 Members will promote deepened studies and more cross-cutting analyses on trade policy and gender equality by international organisations, such as SheTrades Outlook. Recognising the progress that is being made on trade and gender equality at the WTO, Trade Ministers intend to use their next discussions to explore new opportunities to improve the evidence base to support women in trade and discuss their priorities in this area for the next WTO Ministerial Conference.

“G7 Trade Ministers also agreed to further consider the ways in which trade policy can develop to support trade in health products, and increased supply chain resilience, as we work to build back better from Covid-19. The scale and pace of the spread of the virus, and an uneven global recovery, are challenging all our economies. G7 Members also encourage cooperation among governments, manufacturers, and other industry players to identify policies which support ramped-up production and distribution of vaccines.

“Digital Trade

“G7 Trade Ministers recognised the importance of digital trade to growth, innovation, productivity, and prosperity. They recalled the immense opportunities that it offers to our people and our businesses, and they underlined the central role that it can play in the economic recovery from the pandemic. G7 Members are united in their support for open digital markets and their opposition to digital protectionism. As a group of market-based economies governed by the rule of law, they believe that digital markets should be competitive, transparent, and accessible to international trade and investment. They agree on the importance of data free flow with trust, safeguards for consumers and businesses, and digital trading systems that allow goods and services to move seamlessly across borders. G7 Trade Ministers resolve to promote digital trade worldwide and to pursue global governance that is fair and inclusive. They agreed to further develop a set of high-level principles during this Presidency that will guide the G7 approach to digital trade.

“Digital trade remains an important area for the creation of new rules at the WTO. The rules governing digital trade should be responsive to innovation and emerging technologies, so that businesses, consumers, and workers can harness their full potential. G7 Trade Ministers committed to redoubling their efforts to advance the Joint Statement Initiative on E-commerce at the World Trade Organization. They aim to achieve substantial progress by the 12th WTO Ministerial Conference.

“G7 Trade Ministers look forward to strengthening their dialogue and further advancing a shared agenda at their next meeting in May.”

The statement from the Chair was not surprising considering the composition of the G7 and the focus of the members on getting the pandemic under control, reviving economic and trade activities (“building back better), restoring relevance to the WTO by achieving positive developments at the 12th Ministerial Conference and pursuing WTO reform on a host of areas including updating rules to address distortions (e.g., industrial subsidies) not adequately addressed in current agreements, operation of special and differential treatment, transparency, and dispute settlement. Most G7 members also support the Joint Statement Initiatives on a range of topics, including digital trade, domestic services regulation, SMSEs, empowerment of women in trade and gender equality, and trade’s role in addressing the climate crisis.

While some G7 members have different views on specific issues, the opening G7 trade ministers meeting lays out a positive broad-based agenda for having trade help get the world through the pandemic, return to greater prosperity, and address longstanding challenges at the WTO both to relevance in the 21st century and to different economic systems rendering current rules only partially relevant.

Statements by several of the trade ministers who participated add some individual country focus. For example, USTR Amb. Katherine Tai participated in the meeting. A press release from USTR dated March 31 identifies the U.S. views. See USTR, Statement from USTR Spokesman Adam Hodge on Ambassador Katherine Tai’s Participation in the First G7 Trade Ministers Meeting, 03/31/2021,

“WASHINGTON – United States Trade Representative Katherine Tai today virtually participated in the G7 Trade
Ministers Meeting hosted by the United Kingdom and chaired by Secretary of State Liz Truss. Ministers were joined in
this meeting by WTO Director General Dr. Ngozi Okonjo-Iweala. This was the first meeting of the G7 Trade Ministers.
Ambassador Tai and other G7 Ministers discussed the challenges facing the global trading system from non-market
forces and the need to work collectively to advance free and fair trade. Dr. Okonjo-Iweala and the Ministers discussed
pathways to achieving meaningful outcomes for the 12th WTO Ministerial Conference scheduled later this year.
Ministers also discussed their plans for future work on digital trade, women’s economic empowerment, and climate
change objectives. Ambassador Tai emphasized the Biden-Harris Administration’s objective to ensure that trade policy
focuses on benefitting workers, in addition to businesses and consumers. The Ministers are united in their desire to
support policies that will facilitate a rapid end to the pandemic and recognize that trade can contribute to a strong and
equitable recovery.”

Similarly, Canadian Minister of Small Business, Export Promotion and International Trade Mary Ng participated in the G7 trade ministers meeting. The following press release was issued on March 31 by the Canadian government. See Government of Canada, Minister Ng participates in first G7 trade and investment ministers’ meeting, March 31, 2021,

“As the Government of Canada continues to address the COVID-19 pandemic, collaborating with international partners is essential to fighting the virus and ensuring a sustainable and inclusive global economic recovery from the pandemic.

“Today, the Honourable Mary Ng, Minister of Small Business, Export Promotion and International Trade, participated in the first G7 trade and investment ministers’ meeting, which was hosted by the United Kingdom under its G7 presidency for 2021. The ministers agreed to pursue an ambitious G7 trade and investment agenda that responds to the challenges posed by the pandemic and to support an inclusive and sustainable recovery with the WTO at its core.

“Minister Ng welcomed the discussion with Ngozi Okonjo-Iweala, the new WTO director general, on the future of the WTO. The G7 ministers agreed to work together to advance concrete outcomes in advance of the 12th WTO Ministerial Conference in November.

“Pursuing trade and investment policies that support women and Indigenous and racialized communities is key to ensuring Canada’s economic recovery from COVID-19 is inclusive and meaningful. During a session on women’s economic empowerment, Minister Ng highlighted initiatives that Canada has undertaken to support women’s success in international trade. The Minister encouraged G7 members to participate in the implementation of the WTO trade and gender initiative and, as a specific example, encouraged member countries to use the SheTrades Outlook, an interactive policy tool that helps governments put in place policies to improve women’s participation in international trade.

“During the meeting, Minister Ng also emphasized the importance of digital trade and highlighted Canada’s work on a number of initiatives, such as the ongoing WTO negotiations on e-commerce.

“Minister Ng reiterated Canada’s support for the United Kingdom-led G7 work plan to enhance the capacity of the trading system to respond to public health emergencies. Ministers discussed the Ottawa Group’s Trade and Health Initiative, which seeks to strengthen the resilience of global supply chains and facilitate trade in essential medical supplies and vaccines.

“The trade ministers acknowledged the impacts of unfair trade practices on their economies and agreed to work together to address them. Recognizing the important role that trade has in tackling climate change and ensuring a sustainable environment, the ministers agreed to continue their efforts to take action on climate change through initiatives such as the WTO trade and environment sustainability initiative.”

The Canadian press release also provided a quote from Minister Ng:

“’Canada continues to work closely with our international partners to support Canadian businesses, workers and communities as we fight the pandemic and support an inclusive, sustainable economic recovery through rules-based international trade that works for everyone. We will make sure that the interests of Canadians across the country are at the forefront of our discussions as we work toward ensuring a strong, sustainable, and inclusive economic recovery.’

“- Mary Ng, Minister of Small Business, Export Promotion and International Trade”

The press reported reactions within China to the G7 trade ministers meeting with a focus on G7 concerns with addressing reforms to industrial subsidies. See, e.g., South China Morning Post, G7 pressure on China over subsidies ‘doomed to fail’ even as Biden administration gathers coalition, 1 April 2021, (“Trade ministers from the Group of 7 (G7) – the United States, Germany, Britain, France, Canada, Italy and Japan – on Wednesday pledged collective action against ‘harmful industrial subsidies’ without naming China directly. China responded by saying it ‘won’t accept any accusation’ of its trade practice as it ‘has always honoured its commitments since it joined the World Trade Organization (WTO) at the end of 2001.”).


The G7 is a potentially important grouping, particularly to articulate a vision for the future of the multilateral trading system. While the changes in global trade over the last quarter of a century ensure more voices need to be considered than those in the G7 (or those aligned with them), there is no forward movement without them.

The WTO, if a static organization, will continue its slide into irrelevance. The organization suffers a myriad of structural problems which have reduced the effectiveness of all of its core functions. There is a lack of common purpose among the WTO Members. Its rules reflect the world of the 1980s with no significant update in the rules since then.

The pressing global challenges flowing from the pandemic, from climate change and changing technology need a World Trade Organization that is up to date, nimble and driven by an agreed vision to promote sustainable development and greater equitable participation and benefits.

The initial articulation of G7 objectives from trade ministers is a step in the right direction. Time will tell whether the G7 can internally agree on the details of a trade agenda, can translate that into support among a large group of WTO Members and lead to meaningful agreements and reform. The opposition to meaningful reform from China and others within the WTO and the consensus principle of decision making renders it highly unlikely that the WTO will prove up to the needs of the moment. But efforts of the G7 and other groups is critical if a global trading system is to survive. One can only hope for success from the G7 efforts.

Trade elements of EC President von der Leyen’s State of the Union address at the European Parliament Plenary on 16 September 2020

State of the union speeches in countries are typically a time for optimism with a review of the challenges that are presently being addressed and a host of policy initiatives to take the country in the direction the Executive believes is important. The European Commission’s President von der Leyen presented her State of the Union 2020 Address earlier this week before the European Parliament. The Address lays out the vision the Commission has for the road forward to “building the world we want to live in”.

The starting part of the address deals with COVID-19 and the EU response and actions needed to prevent the same type of challenges in the future. When the address turns to moving Europe forward, the first topic is the efforts to address climate change, focusing on the European Green Deal and various initiatives to make the Green Deal operative and effective. Other areas of focus include digital with attetion to data, technology and infrastructure.

President von der Leyen then turns to the need for collaboration to address global issues such as the pandemic citing both sharing of protective equipment to countries in need and the EU effort to set up fund “research on vaccines, tests and treatments for the whole world.” “Vaccine nationalism puts lives at risk. Vaccine cooperation saves them.”

The EU supports cooperating in international bodies whether the UN, the WTO or the WTO. The EC President recognizes the pressing need to “revitalize and reform the multilateral system” and wants the EU to lead reforms in both the WTO and WHO.

On China, EC President von der Leyen notes the complicated relationship and the need for China to live up to its commitments in areas like climate change. “There is still hard work to do on fair market access for European companies, reciprocity, and overcapacity. We continue to have an unbalanced trade and investment partnership.”

On the topic of trade generally, the EC President had this to say:

We will continue to believe in open and fair trade across the world. Not as an end in itself – but as a way to deliver prosperity at home and promote our values and standards. More than 600,000 jobs in Europe are tied to trade with Japan. And our recent agreement with Vietnam alone helped secure historic labour rights for millions of workers in the country.

We will use our diplomatic strength and economic clout to broker agreements that make a difference – such as designating maritime protected areas in the Antarctica. This would be one of the biggest acts of environmental protection in history.

We will form high ambition coalitions on issues such as digital ethics or fighting deforestation – and develop partnerships with all like-minded partners – from Asian democracies to Australia, Africa, the Americas and anyone else who wants to join.

We will work for just globalisation. But we cannot take this for granted. We must insist on fairness and a level playing field. And Europe will move forward – alone or with partners that want to join.

“We are for example working on a Carbon Border Adjustment Mechanism.

“Carbon must have its price – because nature cannot pay the price anymore.

“This Carbon Border Adjustment Mechanism should motivate foreign producers and EU importers to reduce their carbon emissions, while ensuring that we level the playing field in a WTO-compatible way.

“The same principle applies to digital taxation. We will spare no effort to reach agreement in the framework of OECD and G20. But let there be no doubt: should an agreement fall short of a fair tax system that provides long-term sustainable revenues, Europe will come forward with a proposal early next year.

I want Europe to be a global advocate for fairness.” [Emphasis in original]

The full text of President von der Leyen’s Address is embedded below.


The State of the Union — WTO Reform Priorities for the EU and Potentially Problematic Priorities

While EC President von der Leyden indicates she wants the EU to lead reform in both the WTO and the WHO, there is no set of agenda items identified as such in the State of the Union. That said, there are many areas addressed within the State of the Union where WTO reforms could be helpful. One can start with keeping markets open for the movement of goods and services during pandemics. Other pandemic response issues are more relevant to possible reforms at the World Health Organization.

The EU has been an active participant in the plurilateral negotiations on digital trade at the WTO and the Address’s focus on digital issues supports the need for completing those negotiations.

Similarly, the central place of addressing climate change and implementing the European Green Deal suggest that the EU would support greater activity in the Trade and Environment Committee as well as its work on the Paris Agreement on emissions reductions. Moreover, the carbon tax issue mentioned in the Address may require WTO negotiations to ensure WTO consistency or result in serious WTO disputes and possible unilateral responses by trading partners.

EC President von der Leyen’s discussion of the EU’s bilateral relationship with China raises issues on “fair market access, reciprocity and overcapacity”. This presumably includes the EU’s efforts with the US and Japan to address industrial subsidies, state-owned enterprises, forced technology transfer and more.

Finally, the digital services tax issue, while potentially being addressed within the OECD and G20 has the potential to result in serious trade consequences with the United States if not resolved to the U.S.’s satisfaction.


The European Union is a critical global player in trade and many other areas. The State of the Union Address by EC President von der Leyen at the European Parliament Plenary given on Wednesday this week lays out a comprehensive set of objectives for Europe, many of which have trade implications.

While the EU has an important role in the WTO, time will tell whether its desire to lead the reform process plays out. While it views itself as having been a constructive player in the Appellate Body impasse, as viewed from the U.S., the EU is one of the largest reasons for the departure of the Appellate Body from its agreed-to mandate. While the EU led a number of Members to create an interim arbitration system, from the U.S. perspective, the interim system attempts to shift arbitration to being a pseudo Appellate Body and is more objectionable in some respects than the now dysfunctional Appellate Body.

With the need for comprehensive reform of the WTO understood by most delegations, constructive leadership by any of the Members is certainly welcome. Hopefully, the EU will be such a leader in 2021.