Mark Halle, Executive Director, International Institute for Sustainable Development, Europe (IISD-Europe)
Professor Robert Wolfe, Queen’s University, Canada
Professor Petros Mavroidis, Global and Regional Economic Law, European University Institute (EUI)
Mr. Erik Wijkström, Counsellor, Trade and Environment Institute, WTO
Dr. Ahmed Irfan Aslam, Counsellor, Permanent Mission of Pakistan to the WTO
Moderator Mark Halle opened the session by posing the question: without progress on negotiations, how do issues advance in the WTO system? Much attention has been brought to bear on dispute settlement procedures (DSP) – but there are there other mechanisms too. This session focused on transparency.
In particular, panellists discussed the preliminary findings of a research project on the role played by notifications and specific trade concerns (STCs) in the context of the Technical Barriers to Trade (TBT) committee and the Sanitary and Phytosanitary (SPS) Measures committee. This project is being conducted under ENTWINED, a research consortium focused on trade and environment issues, funded by the Foundation for Strategic Environmental Research (MISTRA).
Panellists explained that under the TBT and SPS committees, there is a strong culture of notifying and presenting STCs. Data on the use of these measures indicates that there may be a relationship between such processes and a relatively small number of formal disputes, as they allow countries to clarify rules and share information. At the same time, it was observed that these processes are not employed to the same degree by all Members or all committees. Compliance with notification obligations in particular is very variable across the WTO.
WTO Counsellor Dr. Aslam concluded by reminding participants of political realities: many of the forces driving notifications and STCs are domestic political lobbies; and the apparent “resolution” of an issue might in reality be due to shifting interests in domestic lobbies and deals brokered on other issues.
Presentations by the panellists
Professor Robert Wolfe
Queen’s University, Canada
Professor Wolfe focused his presentation on preliminary research for a project under the ENTWINED research consortium. The research has explored the extent to which notifications and specific trade concerns have been used as an informal mechanism to resolve disputes in the WTO’s committees on Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS measures).
He illustrated activity in the legal order as pyramid: at the base, millions of informal interactions governed by an understanding of legal requirements; and at the very tip, the tiny proportion of issues that ever result in disputes. Between these two extremes are a range of more and less formal interactions. Among these, the TBT and SPS committees employ: i) notifications: announcements of measures that “might have an effect on other members” as defined by legal obligations; ii) specific trade concerns (STCs): raising an issue as a specific area of concern to foster dialogue.
It is difficult to measures the “universe of conflict” in WTO committees other than SPS and TBT, since the culture of notifications can vary greatly and STCs only exist in the context of TBT and SPS. This inconsistency of information makes it hard to determine if there’s a relationship between the use of these informal mechanisms in the TBT and SPS committees and a smaller number of formal disputes.
His research project looked at the role of these informal mechanisms in resolving environmental issues in the TBT and SPS committees by dividing such issues into those which resulted in:
- immediate dispute
- an STC or equivalent, and then dispute
- only an STC
Preliminary findings from the research indicate that notifications and STCs respond to incomplete transparency or information asymmetry; and that disputes arise when there is no notification, or no agreement on what to notify. This implies that having these transparency mechanisms can help end disputes ‒ though notification may be hard to do in many cases. He invited his colleagues to discuss the specific findings in more detail.
Professor Petros Mavroidis
Global and Regional Economic Law, European University Institute (EUI)
Mr. Erik Wijkström
Counsellor, Trade and Environment Institute, WTO
Professor Mavroidis stated that the central question of his research had been to explore the relationship between transparency and dispute settlement. The review of the record regarding STCs had proved most appropriate for this purpose because of the enhanced notification requirements in the TBT/SPS-context, and that the record of notifications in these committees has been judged more than satisfactory.
Data was collected on TBT and SPS committees over the period 1995-2012. Having no formal definition, STCs were defined as concerns about the practices of other members.
Mr. Wijkström presented the data. He explained that few specific trade concerns raised in the TBT Committee have turned into disputes: only 4 fully-fledged TBT disputes and 2 pending cases. In the SPS area, the majority of STCs have been related to agriculture; while in the TBT area, due to the broader scope of the Agreement, the products affected are more varied: around 29% related to agriculture, with the rest covering a wide range of measures affecting trade in chemicals, alcohol, textiles and electronics. For TBT, the main objective of the measures discussed typically relate to the protection of human health, followed by the environment.
Member engagement has been strong and even among developed and developing countries in both committees. Most issues are only raised between two countries and relate to matters of clarification. Involvement by LDCs is, however, weak – particularly from Sub-Saharan Africa.
With respect to resolutions, in the SPS committee, the data shows that almost a third of all SPS STCs are reported as “settled”. In the TBT committee, settled STCs are not reported.
In sum: the data indicates that while there are many STCs, few have resulted in formal disputes – whether SPS or TBT. There is strong engagement in committee work with significant input from experts from capital. It appears to be a useful multilateral review process of a large sub-set of NTMs.
Dr. Ahmed Irfan Aslam
Counsellor, Permanent Mission of Pakistan to the WTO
Dr. Aslam began with the principle that not all committees are the same. They vary in terms of work, frequency and participation. Committees are not designed to be forums for settlements of disputes. They’re platforms for people to raise concerns but not to have their issues resolved. That is the role of the dispute settlement procedures.
Committees are structured on a system of countries making notifications, which tend to serve as an early warning system of a complaint. But there is no legal enforcement of this. As a result, there are differences between what is notified and what ought to be notified. Many countries don’t notify. Some very large players in agriculture have not submitted domestic support notifications for 6 to 7 years. When countries do notify, they may notify only fairly insignificant matters, while omitting serious ones. And looking at the number of notifications isn’t a good measure for identifying under-notification: one country might submit 50 notifications, yet only have raised 1% of matters it is obligated to notify; while another country may make just one notification, and in so doing have complied 100% with its obligations.
Looking at the activities of committees in the context of the ENTWINED research project, he argued that three points emerge:
- Capital based dynamics influence committees. Sometimes countries do not notify because they lack the capacity. But sometimes it is because they want to cover an illegality or not draw attention to a short-term policy measure. They may also not notify because a regional power is not notifying the same thing.
- Lobbies play an important role in the domestic constituency. Specific trade concerns will almost always be related to a domestic constituency affected by the trading measure in question. There are also situations where governments are concerned about the impacts on a powerful group, without even being pressured.
- “Settled” concerns are not necessarily resolved. Just because an issue has not been raised a few times does not mean that a measure has been withdrawn or that the country has accepted the resolution. What happens in a lot of cases is that the domestic lobby might have lost interest in the issue; or the government may not find it prudent to keep pressing.
Questions and comments
- Julian Arkell, independent consultant, posed two questions: i) will the analysis be extended to committees looking at services?; ii) are these issues raised in the TPRM reviews? Mr. Wijkström replied that insufficient details are available on services to extend the analysis; and that yes, issues brought up in committees are sometimes raised in TPRs. Professor Wolfe concurred, adding that notifications in services were very poor.
- Ronald Steenblik, OECD, posed two questions: i) do you think that a reversal of burden of proof might help promote subsidy notification?; ii) in OECD research on regulations, we found that large companies are sometime reluctant to be fully transparent about their operations because part of their competitive advantage is having figured out the “run arounds” to get around barriers. Have you run into this problem on notifications? Professor Wolfe replied that the Secretariat had successfully proactively sought out notifications from delegations in the context of responses to the fiscal crisis, becoming a kind of ‘reverse notification’. He agreed that countries might not be fully transparent about bilateral processes around concerns. Mr. Halle observed that mapping incentives and disincentives to notify under different WTO issues could be a useful exercise.
- Stefania Bellemere, WTO Secretariat, expressed a comment: another feature in TBT and SPS to highlight is that issues can be and often are related to draft measures. This creates an opportunity to “multilateralize” a comment before a measure is brought into force.
- Bernard Hoekman, Director of the International Trade Department of the World Bank, asked if there was any correlation between SCT interactions and membership of a preferential trade agreement? You might hypothesize that PTA members would consult outside of committees. Professor Wolfe noted that this was a good question and that the project ought to look at it.
- Sophia Murphy, Institute for Agricultural and Trade Policy, asked what would happen if a committee wanted to reform how it worked? Can they set their own rules for operation? Mr. Wijkström replied that part of a committee’s function is to develop guidance and principles for the work of the committee and in this sense both SPS and TBT committees have changed how they deal with STCs. In some of the latest disputes, the appellate body has given some importance to rules and guidance developed by the committee. Professor Wolfe added that there are different provisions set out in treaty texts, but that any committee is master of its own procedures.
- Ms. Shandan Gulzar Kahn, Permanent Mission of Pakistan to the WTO, noted that within NAMA negotiations Members are looking at a mechanism to address non-tariff barriers before they make it to a real dispute, and that similar proposals are in other committees. We once had something similar in an agreement on textile and clothing – do you know if that was that successful and could it be used as a model? Second – would it help to have more meetings? Mr. Wijkström replied that, first, he was not familiar with the example on textile on clothing, and second, he was not sure that “more meetings” would improve the outcome of committees. Mr. Halle added that it should be remembered, too, that disputes are not necessarily a bad thing – bringing them to the WTO can be a good way to clarify what rules are intended to mean. Professor Wolfe noted that rather than having ‘more meetings’, an issue of greater interest should be ‘who is asking and answering questions in meetings’, and how can we improve the analytical capacity of the membership not currently engaging in this way.
Mark Halle concluded that thinking about how the WTO works has evolved quite a bit over the past years: beginning with an exclusive interest in negotiations; moving to increased interest in the DSU; and now focusing on the more intimate workings of the machine and how it can be improved.
He argued that the panellists had shown that transparency mechanisms are a significant way of dealing with issues. In some areas they work very well, and in others they don’t. Incentives and capacity to bring issues to the table differs greatly between countries and the reasons for not pursuing a dispute might not be very positive. This underlines the reality that Members in the WTO don’t have equal capacities, institutions or access to markets.
He concluded that while most sessions in the WTO Public Forum had found fairly depressing answers to the question “is multilateralism in crisis?”, this one had showed that where issues need to be dealt with, they will go forward. There is, however, a great deal to do to make the system work effectively. He thanked everyone for their participation, noting that the ENTWINED project will continue to dig deeper and refine this work, making all of the results freely available.