Progress in WTO Reform Expected at Upcoming G20 Summit

The upcoming G20 Osaka Summit is expected to achieve notable progress in the reform of the World Trade Organization (WTO), an urgent endeavor to safeguard the rules-based multilateral trading system.

Among all the topics concerning the reform, the fate of the WTO’s dispute resolution mechanism came high on the list, and was possibly a crucial consideration in setting the date for this year’s G20 summit, said Chen Fengying, former director of the World Economy Institute at the China Institutes of Contemporary International Relations.

In an exclusive interview with China.org.cn on Monday, Chen said dispute settlement is considered the most important and credible function of the WTO, but the mechanism is now in danger of collapse.

WTO’s Appellate Body, the main part of the mechanism, is composed of seven members, and a division of three is selected to hear each appeal. However, there are now only three appellate judges remaining, with the terms of two set to expire in December.

Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics, also emphasized the urgency to salvage the mechanism, saying that if the court of appeals ceased to function, there would be no way to adjudicate any violation of WTO rules.

He said the G20 summit offers an opportunity for WTO reform, as all the G20 economies are influential WTO members. “This doesn’t mean the G20 will make a decision for the WTO, but the group can work together to promote the reform.”

However, Tu noted that with wide-ranging concerns aired by different parties, it is difficult to predict how much progress can be made at the summit.

Chen, who is more optimistic about the possible deliverables, said judging from the results of the G20 Ministerial Meeting on Trade and Digital Economy, a document on WTO reform is highly likely to be issued at the end of the summit.

According to the official website of the WTO, the meeting held in Tsukuba, Japan on June 8-9 resulted in a commitment by ministers to “work constructively with other WTO members to undertake necessary WTO reform with a sense of urgency.”

The ministerial statement concluding the meeting includes a section on “WTO reform and Recent Developments in Bilateral and Regional Trade Agreements.”

It highlighted a number of areas where further action is needed, including “regarding the functioning of the dispute settlement system consistent with the rules as negotiated by the WTO members.”

Japan, assuming the G20 presidency for the first time, has expressed its explicit commitment to rebuild trust in the global trade system.

In his speech to the World Economic Forum in the Swiss Alps earlier this year, Japanese Prime Minister Shinzo Abe said “Japan is determined to preserve and committed to enhancing the free, open, and rules-based international order.”

“We have to make the WTO a more credible presence. We have to make reforms to make it more credible. Japan would like to play a leading role in WTO reforms,” he said.