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WEDNESDAY, OCTOBER 31, 2018
Click HERE for Monday's quote from Amb. Stephen de Boer of Canada.
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THE EU CONFRONTS THE WTO CRISIS
"We like rules, the rule of law. We do not like the rule of lawyers."
Tomas Baert
October 17, 2018
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It was just about a month after the European Commission issued its concept paper on reform at the WTO when Tomas Baert, the new Head of the Trade and Agriculture Section at the EU delegation in Washington, addressed that issue at a GBD event. He was the third speaker on a panel of three. And he was compelling. Clearly, the EU believes there is a crisis at the WTO, that in important ways the system is broken and needs to be fixed. EU Trade Commissioner Cecilia Malmström made that point when the concept paper was published on September 18. She described the WTO as "indispensable in ensuring open, fair and rules-based trade," but, she said, "The world has changed, the WTO has not."
We will return to the concept paper in more detail later. Here we shall limit ourselves to what Tomas Baert said about the paper and about the underlying developments when he spoke at GBD on October 17. Today's quote, as you have probably guessed, was directed at the freezing up of the dispute settlement system, largely over some of the rulings by the Appellate Body and some of its practices. For its part, the United States has strongly objected to what has been referred to as "gap filling," making the case that countries cannot be bound by rules to which they never agreed. Mr. Baert seemed to express some sympathy for that view but virtually none at all for the U.S. decision to block further appointments to the Appellate Body, which is the final arbiter of WTO disputes.
At the start of his presentation, Mr. Baert noted that "There are WTO incompatible, unilateral measures that are proliferating, [and] there is blockage at the WTO Appellate Body." Today's featured quote came further on. Mr. Baert fleshed it out this way:
We like rules, the rule of law. We do not like the rule of lawyers. So we are not trying to have an Appellate Body or a dispute settlement organization engaged in judicial activism, that tries to fill the gaps in the rulebook. We rather want to fill those gaps as members ourselves. And so, we are putting forward a number of ideas about what can be done to update the rulebook. And that is not so much a new question, but it is one which has become very, very timely. As the world has changed, the WTO has not or not sufficiently at least, and so we need to look at the rulebook. In areas like e-commerce, digital trade, state-owned enterprises, the broad issue of public footprints on private markets, that is where we believe we can do a lot better and we can improve and upgrade the rulebook so as to have a rules-based open trading system, one that provides certainty and predictability.
The EU Commission believes that, in effect, all three of the principal pillars of the WTO are broken: the negotiating function, the disputes settlement system, and what Mr. Baert referred to as transparency and decision- making.
We have prepared a transcript of Mr. Baert's comments. That will be on the GBD website soon, along with the tape of his remarks, and so we will not try to squeeze everything in here. Just a few things. He talked about "the elephant in the room," China, and so should we. As mentioned, he highlighted some of the issues that feature prominently in critiques of China's participation in the WTO, including the outsized role of state-owned enterprises.
He was also quite clear, however, that there are limits to what the system can or should do vis-à-vis China. Mr. Baert said:
There is not going to be a second WTO accession [for China]. We are not going to ask the Chinese to take, unilaterally, a certain number of [new] commitments.
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Of course we have reactions to what Mr. Baert said on October 17. At some point, those thoughts will find a home in a separate discussion about the WTO. We shall conclude this entry with what, for us, was the core segment of Mr. Baert's presentation. He said:
The system has real value. It's really about the systemic value of providing rules that apply to all of us, that apply erga omnes
. We are engaged in a very successful bilateral agenda, I believe. We've set the standard pretty high, including with Canada through our Comprehensive Economic and Trade Agreement, CETA. But really we need to go to the WTO to deal fundamentally with issues that are in the rules sphere that have to do with, for example, subsidies, industrial subsidies, fishery subsidies. And we have said that also would include a conversation about agricultural subsidies at that point. So that is just to highlight and to stress the value of the World Trade Organization.
So when it's broken, let's fix it. I think we do share a diagnosis with a lot of members about the problem. Right now the discussion, I think, should be about sharing the prescription, about agreeing how we are not going to waste this crisis, about how we are going to move forward and really fill the hole in the rulebook, strengthening the litigation function, and the regular decision-making function of the WTO.
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On Reform at the WTO is the page of the GBD website devoted to materials from GBD's October 17 program on the World Trade Organization, including the recordings of the various presentations. One of those recordings is entitled the Remarks of Mr. Tomas Baert, and it was this recording that was the source for today's featured quote.
The Concept Paper. On September 18 the Commission of the European Union issued a concept paper on reform at the WTO. The link takes you to the press release about that paper and, indirectly, to the paper itself.
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R. K. Morris, Editor
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