Ambassador Shea’s Statement at the WTO General Council Meeting (agenda items 4, 6, 7)

U.S. Statements Delivered by Ambassador Dennis Shea
WTO General Council Meeting
Geneva, May 7, 2019

AS DELIVERED

 ITEM 4: INFORMAL PROCESS ON MATTERS RELATED TO THE FUNCTIONING OF THE APPELLATE BODY

For the sake of clarity, let me begin by repeating what I said at last December’s General Council meeting: if WTO Members say that we support a rules-based trading system, then the Appellate Body must follow the rules we all agreed to.

And, so, the Appellate Body must circulate its reports within 90 days of an appeal.

A person who has ceased to be an Appellate Body member may not continue deciding appeals as if his term had been extended by the Dispute Settlement Body.

The Appellate Body may not make findings on issues of fact, including but not limited to those relating to domestic law.

The Appellate Body may not give advisory opinions on issues that will not assist the DSB in making a recommendation to bring a WTO-inconsistent measure into compliance with WTO rules.

The Appellate Body may not assert that its reports serve as precedent or provide authoritative interpretations.

And the Appellate Body may not change Members’ substantive rights or obligations as set out in the text of the WTO agreements.

The United States has been making many of these points not just for 16 days, or 16 months, but for 16 years, across multiple Administrations.

In short, no country has been more constructively and consistently engaged on these substantive issues than the United States.

The United States appreciates that certain Members are now, in recent weeks, beginning to engage on the substantive issues raised by recognizing that the DSU does provide for rules, and those rules have been broken with impunity by the Appellate Body.

On the other hand, it is striking that a few Members appear to be taking the view that the DSU does not provide for these rules. They will not acknowledge that the Appellate Body has been acting contrary to the unambiguous text of the DSU.  In fact, my colleague from the European Union just said that the EU generally does not share our concerns. We would like to understand how it is Members can supposedly understand the same, clear words in such disparate ways.

As we have previously explained, it is vital that Members understand how it is that we have come to this point where the Appellate Body, a body established by Members to serve the Members, is disregarding the clear rules that were set by those same Members.

In other words, Members need to engage in a deeper discussion of whythe Appellate Body has felt free to depart from what Members agreed to.

Equally important is the need to understand why the Membership itself has been so reluctant over the course of so many years to take corrective action in response to Appellate Body rule-breaking.

We must first have these understandings in order to determine howwe can find appropriate and effective solutions to prevent this from happening in the future.

Without these understandings, there is no reason to believe that simply adopting new or additional language, in whatever form, will be effective in addressing the concerns that the United States and other Members have raised.

The United States has made its views on these issues very clear: we will not negotiate a weakening of the rules or a further lack of accountability for the Appellate Body.

ITEM 6.  PROCEDURES TO STRENGTHEN THE NEGOTIATING FUNCTION OF THE WTO – COMMUNICATIONS FROM THE UNITED STATES 

The United States is pleased to continue our discussion of this important reform initiative.

As the Membership is aware, the United States in January submitted a detailed paper on differentiation at the WTO. On that factual and analytic basis, the United States in February submitted to the General Council a proposal to resolve the differentiation problem through a pragmatic approach that recognizes the complexity of this issue.

The U.S. proposal establishes objective criteria for determining whether a WTO Member may continue to avail itself of “special and differential treatment” in current and future WTO negotiations. The four criteria are:

    • A WTO Member that is a Member of the OECD, or a WTO Member that has begun the accession process to the OECD;
    • A WTO Member that is a member of the G20;
    • A WTO Member that is designated as a “high income” country by the World Bank; or
    • A WTO Member that accounts for no less than 0.5 percent of global merchandise trade.

At the February meeting of the General Council, we were encouraged by the generally constructive response from the Membership. Most of the speakers acknowledged the problem and the need to reform, and they expressed their willingness to engage further on this important topic.  In our view, this is how a good conversation begins.

During the last 10 weeks, we have begun to broaden and deepen this conversation with Members, not just in Geneva but also in capitals and in Washington. We recognize that some capitals are not yet familiar with the issue and with the U.S. proposal to resolve it.

Already, our proposal is gaining important support.In March, President Bolsonaro, during his visit with President Trump in Washington, committed Brazil to forego special and different treatment in WTO negotiations, in line with the U.S. proposal. We applaud Brazil for its leadership and for its shared commitment to the viability of the WTO’s negotiating arm.

The discussions that we are having with Members in capitals and in Washington are constructive, sincere, and candid, and they will continue.

We are committed to this effort because the differentiation problem must be resolved if the WTO is to remain a relevant and viable negotiating forum. We cannot pretend this problem does not exist, nor can we wish it away by embracing empty affirmations of shared principles or gauzy calls for drawing inspiration from the past.  On the issue of differentiation, the WTO is mired in the past, not inspired by it.  The WTO needs reform, not sentimentality.

I’d like to spend a few minutes today responding to some of the comments and questions that we have heard from Members regarding our proposal.

First, a few Members have told us that it would be impossible for them to change their declarations of developing country status. I want to be clear that the U.S. proposal does not require any Member to change its declaration of its development status.

Second, some in this town are peddling the view that under the U.S. proposal, S&D would not be guaranteed for any Member, including LDCs. This claim appears intended to persuade LDCs and other Members that we mean to deprive the poorest Members among us of S&D.

This claim is inaccurate. Period.

  • The United States reiterates its longstanding view that S&D should be available to Members having difficulty integrating into the global trading system.The U.S. proposal will ensure that, in current and future WTO negotiations, S&D will be available only for those Members having such difficulty.
  • In addition, the proposal applies to current and future WTO negotiations, not to existing WTO agreements and their S&D provisions. To be clear: if a Member has the right to utilize a S&D provision in an existing WTO agreement, this right will not be affected by the U.S. proposal.

Allow me to pause here to briefly discuss the last sentence of the U.S. proposal. It states that, with respect to sector-specific negotiations, the draft Decision does not preclude Members from reaching agreement that other Members—in addition to those captured in the four categories—may also be ineligible for special and differential treatment.

  • This sentence recognizes the possibility that other Members may be significant players in a specific sector. In a negotiation specific to that sector, it probably would be impossible to reach agreement on obligations that would apply to some significant players in that sector, but not others.
  • It would also be difficult to argue that a significant player in that sector needs special and differential treatment in that sector. If the significant players in a negotiation have no ambition, negotiating is fruitless.
  • Consider a hypothetical. In a sector-specific negotiation, say there are four significant players in the sector, and two of them seek special and differential treatment that would shield them from obligations that would apply to the other two significant players.  Agreement would be impossible.  No Member would take on a sector-specific obligation that would not apply to its competitors.

Third, a few Members have opined that the U.S. proposal is focused on just one Member.This is inaccurate.  Our concerns go far beyond just one Member. There are a large number of relatively wealthy, advanced, and/or influential economies who would seek to avail themselves of S&D in current and future WTO negotiations. We believe a broad-based solution is required.

Finally, we have heard a few Members suggest that the U.S. proposal is “polarizing.” They seem to believe this is regrettable and a sign that we are on the wrong path. We think just the opposite.

Our proposal seeks to address a problem that is hurting us all, and especially the poorest among us. Trade agreements that could open new opportunities for less developed Members and deepen their integration into the global trading system do not materialize because a good portion of the wealthier or more advanced economies will not make trade liberalizing commitments that are commensurate with their status in the trading system.

To address this problem, we must ask these Members to forego such unjustified treatment in current and future negotiations. This is bound to cause some discomfort.  It becomes easy for some among us to brand such requests as “polarizing.”

But if we avoid this discomfort and these difficult conversations, this organization is left on a path toward irrelevance.

We look forward to continuing to engage with Members on this reform proposal.

AGENDA ITEM 7:  PURSUING THE DEVELOPMENT DIMENSION IN WTO RULE-MAKING EFFORTS – COMMUNICATION FROM NORWAY

I would like to begin by noting our agreement with Norway that “an underlying objective of the multilateral trading system is to enable all Members to contribute to the full extent of their capabilities to a set of disciplines that permits them to benefit fully from cooperation among trading partners.”  Norway also states that differences amongst Members “must be adequately addressed to ensure that the benefits of the multilateral trading system are shared in an equitable”

But what in Norway’s paper would actually lead to this happening?  The answer regrettably and respectfully, is nothing.

The “rich menu of lessons” on S&D that Norway refers to is more like a direct path to irrelevancefor the WTO unless we confront reality, which is that the wealthier, morecompetitive economies in the world do not need special and differential treatment when compared to the LDCs and others.  This is not confronted at all in Norway’s paper.

Refusing to take commitments or exempting out of them under the guise of special and differential treatment does not enable development.  In fact, fundamentally, this is perhaps this institution’s biggest problem.  The United States believes that trade and full implementation of the rules are pro-development.  Many others see trade and the rules as anti-development.  That is why some Members want carve-outs and exclusions, rather than assistance in achieving full implementation of the rules.

We have sufficient proof that the current system is broken. The DDA failed because many self-designated developing Members steadfastly refused to undertake commitments commensurate to their status as major traders. Instead, they clung to an increasingly outdated view of their level of development – one not at all defined by the reality of the time.  We cannot pretend they would make a different choice today or in the future.  A prime example is the fisheries subsidies negotiations, where the most capable among us still appear unwilling to do their part.

The United States does not wish to have an academic exercise on special and differential treatment.  We want to have a discussion grounded in the reality of today.  We are pushing for actual change that will enable WTO Members to negotiate and close new WTO agreements.