France signals readiness to work with US on WTO reform

WTO director general Dr Ngozi Okonjo-Iweala with French economy and finance minister Bruno Le Maire, 1 April 2021. (Credit: WTO)

France’s finance and economy minister Bruno Le Maire said on Thursday it is prepared to work with the United States on leading the reform of the World Trade Organization’s (WTO) appellate body, echoing appeals made by the European Union in its recent trade strategy. 

In comments made to journalists during a visit to the WTO Geneva headquarters to meet with its director general, Ngozi Okonjo-Iweala, Le Maire said the WTO needed to move ahead with certain “concrete reforms” in order to reassert its place mediating global trade disputes.

“We do not want to see a return of the commercial tensions between the United States and China, or between the United States and the European Union,” he said, adding that “the WTO has a decisive role to play”.

One of the main areas of priority, he said, was reforming the appellate body, the final arbiter of the WTO’s dispute settlement system, which today sits empty of judges, severely curtailing the organisation’s capacity to resolve trade disputes.

Le Maire acknowledged that certain criticisms expressed by the US administration were well-founded. “We are therefore ready to work with the US on the transformation, and the improvement of, the appellate body”, he said.

His comments come after the European Union published its updated trade strategy in February in which it conceded that the US had some valid concerns and suggested that, in the run-up to the WTO’s twelfth ministerial conference, the EU and the US “could intensify their engagement on all aspects of WTO reform”.

Decision-making dilemmas. Reforming the WTO’s paralysed dispute resolution body is an urgent priority for the organisation and its new chief, Okonjo-Iweala.

Its appellate body, which hears appeals against reports issued by panels in disputes brought by WTO Members, has been immobilised since the Trump administration blocked the appointment of any new members to the body, primarily over complaints that the body was persistently overstepping its mandate and not complying with WTO rules.

Joe Biden’s administration so far has stood by those concerns, saying in February that it still could not agree to appoint new members. It will fall on the US new trade representative, Katherine Tai, to review this decision.

Team goals. According to trade policy experts, the EU’s trade strategy signalled a renewed effort on the part of the European Union in working with the US after previously being perceived as being reluctant in endorsing the US’ critiques of the appellate body flaws.

“Whether any such movement will be far enough for Washington remains to be seen,” said Jennifer A. Hillman, senior fellow for trade and international political economy, and Alex Tippett, research associate for international economics, at the Council on Foreign Relations in a recent blog post.

“It may depend on the degree to which the Biden administration links dispute settlement reform to other changes at the WTO that have also frustrated the United States, such as the application of “developing-country status” and member states’ lack of compliance with the WTO’s transparency and notification requirements.”

Speaking at the press conference, Okonjo-Iweala said the WTO had held “substantive discussions” with Le Maire and French foreign trade minister Franck Riester on issues ranging from fisheries to trade, health and climate change, and in ensuring the trade body “maintains a level playing field in the multilateral trading system”.

Their meeting comes after the G7 trade ministers’ meeting on Wednesday during which Liz Truss, Britain’s international trade secretary, urged her trade counterparts to “reverse the fragmentation of global trade” and work to revive the World Trade Organization.

In an interview with the Financial Times ahead of the meeting, Truss said it was also “time to get tough on China and their behaviour in the global trading system”. The UK and other member states argue that China benefits from exceptions to the rules which are now outdated and no longer fit its economic standing, like its developing country status.

Truss was chairing the inaugural meeting as the UK is currently president of the G7 group of nations. In her statement on behalf of the group, Truss said the trade ministers will use the G7 meeting in June “to advance the agenda of the 12th WTO Ministerial Conference and provide vital political momentum to the WTO reform debate.”

“Trade Ministers will explore reforms that can enhance the WTO as a forum for negotiations, recognising the positive role that the plurilateral initiatives have played in engaging a broad spectrum of WTO members. G7 Trade Ministers also acknowledge that important work on transparency, special and differential treatment, and dispute settlement needs to be undertaken in the WTO.”