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G20- Agreeing to reforming the WTO

From 30 November to 1 December, leaders of the world’s largest economies gathered at the G20 Summit in Buenos Aires, Argentina.

Leaders agreed on a joint communiqué that was supported by all countries. Deliberately vague, the joint statement attempted to keep tensions low. Leaders deemed the Summit as successful, and the EU was positive about the shared vision to establish a functioning rules-based system.  

For the first time all members agreed on the need to reform the WTO. However, the real challenge lies ahead. There are clear and important divergences as to the direction these reforms should take. Resulting from trilateral talks between Japan, the US and the EU, a proposal was put forward to penalize WTO Members for failing to notify domestic subsidy and policy measures that influence trade. These concerns mainly relate to China’s poor notification practices. The divergence in views became again apparent through China’s recent WTO reform proposal, which clearly demonstrates that China is against toughening subsidy rules and restricting state-owned enterprises. Countries have yet to react to China’s proposal, but it is very likely that the EU will not accept it. This makes it clear that difficult discussions, particularly with countries such as China, the US and India, will need to take place in order to save the WTO.   

Another major concern is the blockage of the WTO Appellate Body by the US’ refusal to among others appoint new AB members due to numerous concerns regarding the dispute settlement system. Amongst other things, the US has raised complains about the 90-day deadline for appeal proceedings which is not respected, the activist approach of the AB, the power of former AB judges to continue influencing old cases they have worked on and the use of AB decisions as precedents.  

Leaders have agreed to review progress made on WTO reforms at the next G20 Summit, which will take place on the 28th and 29th of June in Osaka, Japan. The next seven months will thus be key in determining the future of the WTO. 

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