This week, the European Union circulated a proposal for WTO reform focusing on the organization’s deliberative function. The EU is upfront and direct in saying that its top priorities for reform are still the same—getting dispute settlement back online, building on multilateral and plurilateral negotiations, and the development dimension. However, the EU also acknowledges a “third vital pillar” of the WTO that could be utilized more frequently and more effectively—its deliberative function. The WTO’s deliberative function provides space, through the WTO’s various committees and subsidiary bodies, to discuss both specific trade issues and broader topics that Members are concerned about. The committees in particular play an important role in addressing trade frictions and promoting dialogue that can build consensus and shared baselines on emerging and long-standing trade issues. Bolstering their work should be a central component of WTO reform.
Before I get into the specifics of the EU proposal, let me first explain some committee basics. While most people generally know about the WTO’s dispute settlement mechanism and the highest level meeting of trade ministers (the ministerial conference), there is much less awareness of the broader institutional structure of the organization outside of WTO experts. The WTO has over thirty standing bodies and thirty ad hoc bodies with various roles. A major part of the WTO’s day-to-day work is its administrative arm, which comprises the numerous specialized councils, committees, working groups, and working parties that assist the Ministerial Conference and General Council and carry out the functions enumerated to them by the various WTO Agreements. While each of these bodies reports to the higher political bodies, the committees in particular are relatively independent in function. While the legal texts leave significant ambiguity about what the committees can do, they play an important role in monitoring the implementation of the various agreements that make up the WTO treaty.
Importantly, the work of these administrative bodies has no binding legal effect. While the committees are not the official forum for discussing disputes at the WTO, issues related to potential disputes are regularly brought up there. In my doctoral research, I describe how one aspect of this non-judicial treaty mechanism (specific trade concerns) provides Members with pre-litigation preference revelation. Essentially, Members use the committees to gauge the reactions of their peers to proposed measures. This peer audience is important because it allows for a broader discussion of the merits of certain regulatory actions.
In the Technical Barriers to Trade (TBT) committee, there is no official record of whether an issue is resolved or if a mutually agreed compromise is reached, but evidence of regulatory adjustment can be observed if a member changes their policy following discussions in the Committee. Some trade frictions are resolved, which means they disappear from subsequent meeting minutes. The types of marginal adjustments that occur as a result of this dialogue are varied, with one notable example being contestation over Chile’s nutritional labeling.
Commenting on the work of the committees, the EU claims that “deliberation per se has been overshadowed by monitoring Members’ compliance with rules and obligations.” I was not surprised to read this since the EU has criticized the specific function of the committees before, and proposed in 2019 for Members to limit how much they say in raising a specific trade concern, especially if it was previously raised, and instead opt to refer Members to previous comments. This proposal faced opposition by developing countries (which happen to be very active in committees), and, as I’ve argued, “any limitation on how much states can say in these meetings detracts from their vital purpose,” that is “giving states space to share their opinions on a matter. While some statements may sound repetitive, there is still variation from meeting to meeting, which is important if you care about making sense of other members’ reasoning on an issue.” While the TBT committee is a standout (along with SPS) in the use of STCs, there are other areas where this can and should be developed further. For instance, in 2020, Simon Lester and I suggested that STCs could provide useful in a newly established committee on national security.
The aspect of the deliberative function that the EU calls on to expand is the normative function of the committees, described by Erik Wijkström as “the development of guidance (soft law, informal, best-endeavor in nature).” For example, in 2000, the TBT Committee adopted the Six Principles for the Development of International Standards, which were meant to synthesize best practices of standardization bodies around the world, highlighting transparency, openness, impartiality, and consensus, to name a few. This guidance was developed by consensus and provides important clarification in the design of international standards—an issue that has come up in a few WTO disputes. Wijkström explains that this function “has lent dynamism to the treaty texts.” But:
It is important to stress that these are not agreed amendments or changes to the treaty texts, they are the additional building blocks that, taken together, form “best practices.” They serve no other purpose than that of facilitating implementation. To date, much of the focus of this normative work—in both the SPS and TBT areas—has been on refining procedures in the area of transparency. The nature of this work is iterative. In other words, while the TBT or SPS Agreements may be “carved in stone” and are not (currently) being renegotiated, the foundation is being built on.
The EU has proposed that this aspect of the committees’ deliberative function be specifically expanded to address three thematic areas:
(i) trade policy and state intervention in support of industrial sectors;
(ii) trade and global environmental challenges; and
(iii) trade and inclusiveness.
On the second thematic area, the EU argues for the strengthening of the Committee on Trade and Environment, while acknowledging the need for improved coordination between “other relevant committees,” such as TBT and SPS. While I agree that this is a worthwhile endeavor to deal with a certain set of issues, I would emphasize that it is important for Members to avoid reinventing the wheel. To explain, there are some trade and environment issues that are clearly TBT issues, and should be discussed in that committee—coordination is not required. The TBT Committee is well placed to discuss issues surrounding standards and conformity assessment procedures, for instance, on carbon labeling, and engaging in dialogue on different GHG measurement methodologies. Furthermore, deliberative activity on trade and environment has already been taking place in the TBT committee, and next month it will hold thematic sessions on regulatory cooperation on climate change and plastics regulation. It is important to tie particular discussions to existing rules because it provides a framework for unpacking the problem and finding a solution. Therefore, open-ended deliberation of all trade and environment issues in the CTE is not likely to produce results (the CTE is not linked to a specific WTO agreement).
While I will not get into all three thematic issues the EU highlights, let me point out that the EU is absolutely right in suggesting that increased deliberation on state intervention should be top of the list. With the growth of subsidies and industrial policy around the world, having a forum to discuss state interventions is critical. While the EU does not specifically mention the Subsidies and Countervailing Measures (SCM) Committee, in a forthcoming paper with Jennifer Hillman, we identify it as ripe for reform. The lack of transparency on subsidies has been widely acknowledged, and improving notifications of measures Members are taking is one way that trade frictions can be avoided or diffused.
Furthermore, the SCM committee can provide the space to discuss current and future subsidies to address climate change, for instance. This dialogue would not only improve transparency on measures Members have taken or intend to take, but also lay the groundwork for the development of guidelines on reporting subsidies to further climate goals. For example, this could include a discussion on whether the notification of environmental subsidies should come without the presumption that those subsidies are actionable. Members could also use the Committee to deliberate on whether certain subsidies should be permissible or non-actionable on a temporary or permanent basis. Members could also discuss the possibility of a climate waiver.
The EU proposal is a welcome contribution to WTO reform discussions and gets at the heart of one of the United States’ principal complaints—that WTO rules have remained stagnant and have become too dependent on litigation to evolve. The work of the committees shows that the rules can adapt absent both negotiation and litigation. To date, the United States has focused on the committees as a tool for dispute avoidance and emphasized their role in ensuring transparency of WTO members’ trade regulations. Former USTR Robert Lighthizer even praised the committees as a means to “resolve other Members’ trade actions that do not comply with their WTO obligations.” However, the committees also offer additional avenues to update trade rules. There is plenty of excellent research on this subject that should inform this reform discussion from—Robert Wolfe and Christian Bluth; Petros Mavroidis and Robert Wolfe; (plus many more from Bob); Andrew Lang and Joanne Scott; Marianna Karttunen, Kateryna Holzer; Tim Dorlach and Paul Mertenskötter; Fabian Boheneberger; Henrik Horn; Petros Mavroidis and Erik Wijkström; (also more from Erik); Roberto Echandi; Mona Paulsen; among others (sorry if I missed you!).
Finally, while the EU’s proposal identifies an important area of reform, it is important to keep in mind that this does not replace efforts in other areas. It is complementary to dispute settlement and negotiations, and cannot fix the bigger political problems the organization faces. It can, however, get Members deliberating again. The United States has long asked Members to put proposals for reform forward. They have, and it is past time for all Members to discuss and build upon them.
