Feedbacks from the meeting

Opening the discussions, participants mentioned that organizations should be open to reform but the scope of such reforms should not be counter-productive (triggering resistance).

Some stakeholders recommend waiting for the Doha Round to end before tackling the issue of the reform of the WTO. However, changes in the current setting of negotiations are being applied de facto and unofficially now often driven by the more important trading nations excluding the majority of WTO members. The reform of the system was thus deemed by the young wolves as an important and urgent issue.

1. Rules vs. liberalization

Some participants argued that it could be helpful to separate market access from rules negotiations. On the other hand, the objective of the WTO is freer and fairer trade. It should be ensured that both legs are addressed and that results are good for all.

It was mentioned that developing countries, in particular poorer ones, have liberalized their economies through the IMF and World Bank processes. Developed countries have not been pressured by similar mechanisms to liberalize. This creates an unbalance in the negotiations.

2. Role of the secretariat

First, participants underlined that the WTO is a member-driven organization. The Secretariat should not drive the process. It would be up to the members to decide to enhance or not the role of the Secretariat in the organization. If the Secretariat was to become powerful, some insurance has to be given that it would remain clearly independent and at the service of all WTO members.

Participants had reservations on a strengthened Secretariat that could submit proposals or "influence" discussions. In particular, they questioned its capacity to remain neutral and impartial. Some also feared that it could become an "UNCTAD" which would we be boycotted by other countries and could be counter-productive. Some young wolves stated that the secretariat was only a "secretariat" and should not be anything more.

Participants argued that a strengthened Secretariat should primarily focus on technical assistance to better equip poorer countries delegations with limited resources and support them on the substance. It could identify and work on themes but always with the impetus from the membership. Smaller countries could initiate this impetus. In the case of TPRM for example, the Secretariat should serve as a policy advisor but should not push for reforms or interfere in national policies (such as the IMF and the World Bank).

3. Coalitions

Several participants underlined that it was difficult to differentiate between lobbying and interest groups. The discussion showed however that there were different kinds of coalitions that did not serve the same purpose. For instance, the African group was based on the regional criteria but did not have a similar economic unity (and thus interests) than a customs union. Also, it was said that coalitions based on interests could go beyond regions and the North-South divide (e.g. "coalition café au lait" during the Uruguay Round)

One participant raised the issue of the regional integration process in Africa (such as through ECOWAS, EAC, SADC, etc.) that could be used to enhance coordination of countries that have, by definition, common trade interests. This could have the following powerful advantages:

-         increase efficiency of the members of the groupings by dividing labor pragmatically (issues could be distributed to each delegation and coordination among them organized; mechanisms could be created to elaborate positions);

-         ensure coherence among members and capacities of the club and among policies (in capitals and in Geneva) building on existing instruments;

-         build on rules and agenda applied by the economic groupings on the ground, ensuring powerful and targeted defense of common interests.

Some participants warned that within coalitions some countries were playing their own cards even when they had a mandate agreed by members of the group.

4. Plurilateral negotiations

Participants raised concerns on this evolution of the negotiations. In particular, they wondered how (through principles, process) the issues to be negotiated would be picked and the effects of decisions on other parties addressed. It was clearly stated that countries, including emerging ones, would push for their interests rather than the interest of the countries they pretend to represent.

5. Round vs. permanent negotiations

Several participants raised the concerns (brought up by the paper presenting this idea "Towards a two-tier system in WTO decision-making") that permanent negotiations without timeline, deadline and scope might not generate sufficient interest, ambition and motivation to allow for results.

6. Participation

It was mentioned that developing countries were increasing their participation in the negotiations but that the major problem pertained to lack of capacities to present concrete, proactive proposals even if talks are becoming more inclusive.

Several participants also mentioned that issues are not well understood in the capitals and that the coordination among capitals and Geneva is not always functioning well which is problematic for proactive and efficient participation in the negotiations.

Feedbacks from the meeting

The discussions focused on ways to ensure that negotiations at the WTO are concurrently efficient, legitimate and inclusive in particular in the framework of the current discussions to reform the system to make it more geared towards results. Some participants added the need for ownership (that could fit under legitimacy).

1. Timing and process

Several stakeholders consider that the reflection on the reform of the multilateral trading system should ideally be part of a post-Doha agenda and thus be discussed after the talks' completion (to avoid jeopardizing the current Round). In reality, however, discussions on the reform of the multilateral trading system are already taking place. It would be dangerous to wait until the end of Doha because the negotiating process is changing and moving informally. Poorer countries have to be prepared as soon as possible to defend their interests in this key discussion. It seems thus reasonable to start the reflection and the awareness-raising on this issue now.

In this framework, participants agreed that steps to improve the multilateral trading system should be incremental. The example of the Indian-led proposal "Strengthening the WTO" showed that caution was needed when introducing ideas to reinforce the system in the WTO. Organizations have a tendency toward inertia. But reform steps could be taken without jeopardizing the Doha Round such as improving consultation mechanisms for coalitions.

Participants also underlined that the reflection in the papers were interesting but that a special focus should be put on how to improve the position of the weakest.

2. Participating in negotiations

Participants discussed involvement of LDCs and poorer countries in negotiations. There were views that results for poorer countries were easily deliverable in the current Round through early harvest (DFQF, S&D, implementation, etc.). Others underlined that the prospect of an early harvest might lead other members to fear a virtual withdrawal of poorer countries from the negotiations if it was accepted. It was suggested that poorer countries could build on early harvest to energize negotiations through a more aggressive stance.

Some participants mentioned that whatever steps were taken by LDCs or poorer countries could only contribute marginally to unlock negotiations. How can the system ensure that these countries, representing a majority of members, do have an impact on the talks?

Others mentioned that although there is progress in the capacities of poorer countries to participate and even table proposals, there is still a need to build and reinforce these capacities. Along the same line, the link with the capitals should be reinforced to help them better understand the issues and stakes as well as the Geneva process in order not to loose them in the negotiations.

LDCs may also consider a stronger implication of their Ministers or Head of States (such as in the cotton initiative) to give impetus to issues of interest to poorer countries.

3. Coalitions

The following issues were raised:

-         There is a lack of good preparation of coalitions (in particular in the case of regional groupings) on the issues negotiated;

-         There is no real mechanism to ensure consultation of the coordinator with the rest of the group during negotiations;

-         The election procedures of coordinators (e.g. through alphabetical order) does not necessarily lead to the most efficient choice of representation;

-         Some countries are not part of a group and thus don't have the power of number to defend their concerns.

Furthermore, when there are issue of common interest, members from the groupings are represented but when it is not the case there can be problems of representation. There are two types of coalitions at the WTO: (i) blocs based on lobbying (such as the African group, ACP, LDCs, etc.); (ii) alliances based on issues (Cairns group, C4, etc.) that can go beyond the regional/identity criteria.

According to some participants, it is difficult to separate lobbying from negotiations:

a.      The lobbying group helps understand the ins and outs of the issue and the concerns related to the issue. It can help define a general common position;

b.     The coalition should then delegate negotiations to a smaller group of members best suited to negotiate and defend the interests of the wider coalition membership.

These groupings, however, become ineffective when interests among members of the same coalitions differ too much. How can coalitions move from a general position that rallies all members to a more refined and focused one that might not suit all? Could smaller coalitions emerge from this process and collaborate with other members beyond the North-South divide?

4. How to improve transparency and inclusiveness

The traumatizing experience of July 2008 when Ministers from developing countries came to Geneva for 10 days without being able to participate in any formal or informal discussion has to be avoided at all costs. The damage caused to the system was not negligible and could be worsen if the situation was reiterated.

The issue is to ensure transparency and inclusiveness in the negotiations while making negotiations more effective. There is a need for concentric circles but how to ensure that the majority of members which represent a small fraction of trade are included in the decision-making? Even though the G-19 or G-20 represent improvements from G4, G7 or G8, developing countries are only marginally included. A majority of actors is excluded and their interests are not or ill represented¹. While bilateral and plurilateral discussions are needed, they should not take hostage the rest of the membership. There should be a mechanism to mitigate risks of discussion in smaller groups that will always exist to enhance ownership and to report/consult from the small groups to the wider membership (TNC, General Council).

5. Role of the WTO secretariat

There were diverging opinions on the role of the secretariat:

-         Some participants welcomed the proposal to strengthen the role of the secretariat by enabling it for instance to have a more proactive role in the negotiations. It is already informally the case for instance in the green room process as the secretariat convenes the meetings and decides on the attendance.

-         Other participants were clearly opposed to strengthening the Secretariat as it should not dictate the membership and there might be a risk of influence or suspicion of influence from one (group of) member or the other.

 Identification of the most important issue(s)

The discussion revealed that the group clearly feels that the coalition issue is the most promising one to propose improvements in the functioning of the negotiations at this stage of the play.

On the basis of the discussions, the following elements came out as key to increase inclusiveness and transparency:

• Improving the mechanisms within coalitions in relation to representation, consultation, etc. to enhance focused and constructive participation in the negotiations;
• Building on existing lobby coalitions to organize smaller negotiating groups representing focused interests;
• Reinforcing the role of coalitions as tools to enhance inclusiveness and transparency (mechanism of consultation from smaller negotiating groups to wider membership).

¹ See above bullet point on coalitions.

1.     Context

In Crans-Montana – a conference organized by the Geneva Trade and Development Forum (GTDF) in September 2008 – a dozen Ministers from developing and developed countries discussed ways and means to ensure that trade policies at the international, regional and national levels contribute to the development of all members of the WTO.

Subsequently, the GTDF constituted a small group of Geneva-based delegations to continue work on the functioning of the WTO. At its first meeting in October 2009, the group discussed the issue of coalitions in the negotiating process and requested IDEAS Centre – together with think tanks of the South – to draft an issues paper (see paper attached). They also suggested kicking off the process by consulting Ministers during the WTO Ministerial Conference of 30 November-2 December 2009 to provide political guidance.

The informal ministerial meeting organized at this occasion was a brainstorming session among several Ministers with two objectives:

-         provide inputs to the Ministers for the discussion on this subject during the WTO Ministerial Conference of 30 November - 2 December 2009;

-         provide political guidance on the priorities to be addressed by the Geneva governance group.

2.     Overall assessment of the functioning of the WTO

Minister reaffirmed their commitment to a strong rule-based system and a strong institution supervising the functioning of international trade:

-         poorer countries need a strong multilateral system. Unlike big powers, they have no alternatives: FTAs are not a substitute to a functioning multilateral system;

-         multilateral rules have to take into account the interest of all countries;

-         WTO needs credibility otherwise the trade system will collapse. Credibility implies transparency, inclusiveness and participation of all members;

-         WTO is a rule-based system built on contractual arrangements. Rules are only useful if they are adhered to, if they are respected. WTO as the guardian of the rules (surveillance and DSM) has to be respected if we want the rules to be adhered to;

-         Free trade needs rules to be functioning correctly. Situations and needs of the global system evolve: the rules have to be constantly adapted. Institutions that do not reinvent themselves stagnate and loose relevance and respect;

-         If the WTO is unable to reform itself, to perfect its institutional set up, its rules and its methodology, the G-20 will do its work – at the exclusion of the majority of countries.

WTO’s credibility, the respect of its rules and the efficiency of its procedures have been put into question during the last years and need to be restored:

-         WTO is no longer the only or maybe even the most important engine of liberalization: unilateral liberalization and FTAs are today more important than WTO as trade liberalization instruments;

-         Respect of the rules is threatened by so called murky protectionist measures and by an increasing tendency to accept retaliation rather than reform to resolve trade disputes;

-         Multilateral trade negotiations are not delivering. The continuous non-respect of self-imposed deadlines to finish the Doha Round has seriously eroded the respectability of the multilateral trading system;

-         The negotiation process – in particular the July 2008 ministerial conference during which many ministers were not at all involved in the negotiation process – has seriously eroded the credibility of the system;

-         The length of the Doha Round negotiations risks to undermine the relevance of the multilateral system. Doha tackles the problems of the 20^th century; the new issues of the 21^st century such as food security, climate change, migration and energy are not addressed.

3.     Content of discussion

Reforms of both the institution and the functioning of the institution are urgent and important. This was acknowledged by the Ministers present. The meeting touched upon different aspects and concerns of poorer countries related to this question. It also showed the importance of continuing and strengthening reflection from the perspective of poorer countries to ensure their positions are introduced at an early stage of reflection on those issues.

Although no consensus existed on how to go about to save the credibility of the multilateral trading system and to define and implement reforms, the following ideas have been discussed:

a.      Divorce the Doha Round from the WTO

Ministers were rather pessimistic about an early conclusion of the Doha Round. Many Ministers feared that the disappointment with the multilateral negotiations will also affect those parts of the WTO (surveillance and DSM and hence the respect of multilateral rules) which still work relatively well. However, opinions diverged whether it was possible to dissociate the Doha round from WTO:

-         everybody agreed that the best solution is to finish the Doha round as soon as possible so that WTO can go on with its other business. Most participants seemed to indicate that any result of the Doha Round is better than no result. A majority seemed to favor an early harvest on some of the subjects where an agreement is possible (trade facilitation, DFQF, agricultural export subsidies, NAMA light, etc.). Some tangible result coupled with an agreement to continue to negotiate on a new basis seemed to have a lot of support;

-         everybody seemed to agree that reforms cannot be brought into the negotiations. This would kill the negotiating process and we would start from zero. “You cannot change the rules during the game”;

-         many participants seemed to propose a parallel approach: keep the Doha negotiations running, but use the time to start reflection on reforms on a parallel track.

b.     Rebalance the three functions of WTO

The WTO (and the multilateral trading system) has three legs:

-         the Doha negotiations;

-         the administration of the agreements, and

-         the DSB.

There has been an imbalance in these three activities. The negotiations have received too much emphasis. Maybe further liberalization is not a priority at this stage. The recession has shown the importance of administrating the agreements and the adherence of all members to their obligations. There might exist other more efficient methods of liberalization such as FTAs or autonomous liberalization. However, there is no other forum as efficient as WTO for multilateral rules, disciplines for subsidies and for dispute settlements. We need to rethink the functions of WTO and shift the emphasis on rule making and rule enforcement.

c.      Aid for trade

Aid has clearly become an important aspect of the discussions at the WTO. Ministers mentioned that aid has become the only concrete element they can sell at home to justify their engagement. This shows that countries have lost faith that the Doha negotiations will reform the rules of the multilateral trading system in favor of development objectives of their countries. Aid for trade is an essential element to overcome supply constraints in poorer countries to allow them to take advantage of the new opportunities the Doha negotiations are supposed to open for them in the international market.

However, the objective of the "Development Round" is to assure that trade, not aid leads to the achievement of the Millennium Development Goals. Aid for trade thus cannot and should not substitute or take the focus away from the main objectives of the round which is to make the multilateral trading system more conducive to the development of poorer countries.

d.     Methodology of negotiating

There was a general agreement that the WTO has not yet fully adapted to its large membership and the new distribution of power among its members.

There is clearly a conflict between the goals of efficiency, transparency, inclusiveness and credibility of the results. Some form of coalitions bargaining system seems unavoidable. Coalitions, however, have different functions:

-         some coalitions are lobby groups: they are generally rather large and their concrete interest might vary. LDCs, Africa Group, APC countries, etc. are example;

-         more homogeneous interest groups for specific negotiations which are based on specific shared interests rather than the status of countries. Those groups may contain developing countries, transition countries and developed or emerging countries.

Negotiating coalitions need clear rules of transparency and decision-making within the group. The EU and its member countries are referred to as a meaningful negotiation coalition.

The principle of consensus amont such a large and diverse group was questioned by some participants. Others pointed out that the consensus system could work as proven by the trade facilitation negotiations.

4. Conclusions

2. Finishing the Doha round is the first priority to reestablish the credibility of the multilateral system. There are sufficient elements on the table to come to a conclusion. An agreement on DFQF access for LDCs, on the phasing out of agricultural export subsidies and disciplining internal subsidies, trade facilitation, cotton and aid for trade as well as a strengthening of disciplines though the elimination or reduction of water both in tariffs and subsidies should be possible and would allow to close the round and get on with the business of strengthening the rule-based multilateral trading system;

3. We need a new system, but it would be dangerous to get into a negotiation on that while the Doha Round is still open. Starting to analyze what a reform of the system might imply can and should be initiated in an informal setting.