‘Notification and review’ sounds dull but is essential for WTO reform

The proposal would apply to notifications under 14 agreements and decisions covering almost the whole of trade in goods

Old sign with old lettering saying information

Posted by Peter Ungphakorn
JULY 18, 2022 | UPDATED JULY 27, 2022

On July 14, 2022, a group of 57 World Trade Organization member governments renewed their effort to strengthen work that is essential for the WTO to functioning properly — transparency.

They circulated the latest version of their proposal on notifications. It’s an activity most people find deadly dull, but without it the WTO’s trading system simply would not work.

The proposal is certainly the least glamorous part of the effort to “reform” the WTO, one of the priorities that WTO trade ministers set for themselves and their Geneva delegations at their June 2022 conference.

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WTO reform | The transparency proposal | A response | See also

WTO reformBack to top

The ministers did not spell out what “WTO reform” involves except to recognise that it includes settling the problems that have blocked appeals in legal disputes. But even on dispute settlement, they only set a deadline, without mentioning the various issues that have been raised.

‘WTO REFORM’
in Ministerial Conference Outcome Document:


… We commit to work towards necessary reform of the WTO. While reaffirming the foundational principles of the WTO, we envision reforms to improve all its functions. The work shall be Member-driven, open, transparent, inclusive, and must address the interests of all Members, including development issues. The General Council and its subsidiary bodies will conduct the work, review progress, and consider decisions, as appropriate, to be submitted to the next Ministerial Conference.

… We acknowledge the challenges and concerns with respect to the dispute settlement system including those related to the Appellate Body, recognize the importance and urgency of addressing those challenges and concerns, and commit to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024.

The rest of “WTO reform” is undefined. None of the other topics that have been raised under the heading are mentioned at all in the Ministerial Conference’s “outcome document”.

Not the status and treatment of developing countries other than “development issues”, which could mean anything.

Nor how to negotiate new rules when there is no consensus even to start talking.

Nor relaxing the consensus rule or finding other ways to unblock decision-making.

Nor reassessing the Secretariat’s role.

Least of all was there any reference to strengthening transparency in how governments are implementing their obligations under the WTO agreements — the detailed and technical routine WTO work that keeps trade flowing smoothly.

This is sometimes called “monitoring” but it is more than that.

It is about the speed and quality of information that members notify to each other through the WTO, their ability to ask questions, receive clarification and discuss concerns they may have about each other’s trade measures, and to resolve problems without going to court.

It is about “notification and review”. This is key to keeping international trade ticking over smoothly, with a minimum of hitches and avoiding costly legal challenges.

So while unblocking appeals in WTO dispute settlement is a vital part of “WTO reform”, so is strengthening WTO activities that avoid litigation in the first place.

How is it doing? The WTO’s purpose is free-flowing trade | CC BY-SA 2.0. Click the image to see it full size
How is it doing? The WTO’s purpose is free-flowing trade | CC BY-SA 2.0. Click the image to see it full size
The transparency proposalBack to top

Full details, including the latest text and its evolution since 2018, are here.

The latest revision of a four-year-old proposal on notification and review was circulated on July 14, 2022, a month after the Ministerial Conference, and three months after the most controversial provisions were removed completely from earlier drafts in an effort to get consensus support from the WTO’s membership.

The proposal focuses on how to ensure that members are as up-to-date as possible with the notifications they are required to supply to each other through the WTO. It is about “compliance”.

This is separate from other efforts to improve the quality of information that members are asked to supply. For example, the agriculture negotiations also include proposals on improving the content of notifications. The purpose in that case would be so that the negotiations can be based on better factual analysis.

The compliance proposal — “Procedures to Enhance Transparency and Improve Compliance with Notification Requirements under WTO Agreements” — would apply to 14 agreements and decisions covering almost the whole of trade in goods.

It is now sponsored by 57 WTO members (counting the EU as 28). They include both developed and developing countries (but none in Africa), and are: Albania, Argentina, Australia, Brazil, Canada, Chile, Colombia, Costa Rica, EU, Iceland, Israel, Japan, Rep. Korea, Liechtenstein, Mexico, Moldova, Montenegro, New Zealand, North Macedonia, Norway, Paraguay, Peru, Philippines, Singapore, Switzerland, Taiwan, Thailand, UK, US and Uruguay.

The latest is the 12th version (11th revision) since the first was circulated in November 2018.

For three and a half years, until April 2022, the proposal was unlikely to receive consensus agreement even though it gradually gained support from more WTO members.

The problem was the controversial carrot-and-stick approach.

The carrot was assistance for developing countries to meet their obligations to notify.

The stick was penalties. They included fines, not being eligible to chair committees, and naming-and-shaming — going to the back of the queue before being called to speak, with a public reminder each time that the country still hasn’t handed in its homework.

Then in April 2022 the controversial provisions were deleted leaving only the “carrot” of streamlining how notifications are prepared and compiled, with improved assistance for developing countries. The July 2022 version further strengthens that. It covers:

  • Reaffirming existing commitments
  • Engaging in WTO councils and committees to improve compliance — 10 points including simplifying notifications, better use of online electronic methods and enhancing factual reports on members’ compliance
  • Trade policy reviews — standardised and improved reporting on members’ compliance in the reviews
  • Technical assistance and capacity building – stronger provisions to help developing countries meet their notification requirements.
  • Review of progress and future work — after three years
Two responseBack to tops

Full details are here and here

In 2019 a group of developing countries — the African Group, Cuba, India and Oman — circulated a paper in response to the proposal as it stood then.

This was then included in a broader paper on Strengthening the WTO to Promote Development and Inclusivity, the latest version revised in July 2022, sponsored by the African Group, Cuba, India and Pakistan but not Oman.

The original 2019 paper did not deny that transparency is important. But it raised concerns of its own in two broad areas.

One is the lack of resources or capacity constraints in developing and least-developed countries, causing them to struggle to meet obligations to notify. The paper complains about new demands for more notifications.

The other argues that rich countries also fail to notify in a number of important areas, including domestic support in agriculture, movement of natural persons in services, incentives rich countries are supposed to provide for their companies to transfer technology, the origin of genetic material and traditional knowledge used in patented inventions, and complex tariffs.

The response paper also rejects as “invalid” the use of counter-notifications (those concerning one country’s measures but notified by other countries) except when specifically included in an agreement.

It concludes with a call for WTO meetings and other work more generally to be more be transparent and inclusive.

By July 2022, it was clear that this group were opposing even the toned-down transparency proposal that by then focused only on compliance.


See alsoBack to top

Updates:
July 27, 2022 — adding references and links to the second response paper

Image credits:
● Main photo | Roman Kraft, Unspalsh licence

Author: Peter Ungphakorn

I used to work at the WTO Secretariat (1996–2015), and am now an occasional freelance journalist, focusing mainly on international trade rules, agreements and institutions. (Previously, analysis for AgraEurope.) Trade β Blog is for trialling ideas on trade and any other subject, hence “β”. You can respond by using the contact form on the blog or tweeting @CoppetainPU

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