JOB/GC/201  
 
24 September 2018  
(18-5917) Page: 1/8 
  Original: English  
 
STRENGTHENING AND MO DERNIZING THE WTO: D ISCUSSION PAPER  
COMMUNICATION FROM C ANADA  
The following communication, dated 21 September 2018, is being circulated at the request of the 
delegation of Canada  for information . 
 
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BACKGROUND  
Despite clear evidence that trade has contributed to unprecedented global prosperity and 
development, the rules and institutions that facilitate trade seem increasingly fragile. The challenges 
facing the multilateral trading system cannot be attributed to any single cause or any single country. 
The structural transformation of the global economy, combined with technological change, has 
disrupted national economies and societies, some more so than others. The resulting insecurity and 
inequality have led to g rowing concern that the benefits of trade have not been shared fairly and 
that the existing rules no longer reflect a fair balance of rights and obligations. These pressures 
exacerbate existing differences among Member s of the World Trade Organization (WTO ) in their 
need, capacity or willingness to take on new commitments.  
 
The vast majority of trade continues to take place in a secure and predictable environment. However, 
the combination of disruption and paralysis has begun to erode respect for rules -based trade, and 
the institutions that govern it, paving the way for trade -distorting policies. As a result, all three main 
functions of the WTO are currently affected: the monitoring of existing commitments appears unable 
to contain escalating trade tensions;  beset by the increasing complexity of disputes, the dispute 
settlement system struggles to cope with demand; and longstanding negotiations to update the 
trade rules to reflect modern economic realities have delivered only modest results.  
 
In this context,  action to restore confidence in the multilateral trading system and discourage 
protectionist measures and counter -measures will require leadership, creativity and patience. In the 
absence of a single WTO Member  with the capacity, willingness or credibilit y to lead, an alliance of 
Member s who share a commitment to the multilateral trading system can engage in a deliberate 
and transparent process to develop a progressively broader consensus on how to strengthen the 
WTO and modernize the trade rules.  
 
In supp ort of such a process, this discussion paper outlines a number of pragmatic and realistic 
actions and confidence -building measures. This is not an exhaustive list but rather is illustrative of 
some possibilities with the aim of starting a discussion . This includes actions and measures to: 
(1) improve the efficiency and effectiveness of the monitoring function; (2) safeguard and 
strengthen the dispute settlement system; and, (3) lay the foundation for modernizing the 
substantive trade rules when the time is right. Some of these can be pursued immediately, others 
may take more time and discussion to develop and implement. A range of instruments can be used 
to modernize and strengthen the WTO incrementally, in most cases without amending existing 
agreements.  
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  THEME 1: IMPROVING TH E EFFICIENCY AND EFF ECTIVENESS OF THE WT O MONITORING 
FUNCTION  
Monitoring the implementation, administration and operation of existing agreements is central to a 
well-functioning rules -based trading system. Transparent information -sharin g and deliberation helps 
Member s learn about each other 's measures and how to achieve policy objectives with the least 
trade restrictive effect. Informed policy dialogue can mitigate the temptation to take trade -distorting 
measures, diffuse potential trade  disputes and support discussions of the need for negotiations on 
new commitments. More broadly, transparency builds confidence in the trading system and provides 
certainty in international markets. Improving the monitoring function involves making the reg ular 
bodies of the WTO more efficient and effective. Action might be contemplated in three areas.  
 
1.  Improve notification and tr ansparency of domestic measures  
Effective deliberation depends upon the availability of reliable and objective information. Fo r this, 
action must be taken to improve the notification record of Member s. This might begin with a 
comprehensive review of the notification requirements to ensure they are not unnece ssarily complex 
and burdensome.  Based on this review, updates to the requ irements could be considered or 
incentives and technical assistance could be provided to countries that have fallen behind. Counter -
notifications from other Member s and independent information gathering by the Secretariat might 
fill in the remaining gaps. A high -level endorsement of the importance of notifications and 
transparency would generate momentum to develop effective solutions.  
 
2. Improve the capacity a nd opportunity for deliberation  
Engaged and informed deliberation is critical to helping Member s understand the complex challenges 
of trade cooperation in the modern world. For this, the work of the regular bodies of the WTO might 
be organized to allow for more timely and relevant deliberation on thematic issues that involves 
multiple bodies and inf ormation from diverse sources. A number of steps could be taken to improve 
the capacity and responsibility of the Member  representatives leading such discussions, as well as 
that of the Secretariats supporting them. High -level support will be crucial for d eveloping new and 
innovative approaches to multilateral dialogue on trade.  
 
3. Improve the opportunities and mechanisms to address specific trade concerns  
Discussion in some regular bodies of concerns about specific trade measures can lead to clarification  
and even resolution without the need for formal dispute settlement proceedings. Opportunities for 
such exchanges could be improved by making more robust mechanisms available in all regular 
bodies, sharing information about specific concerns between releva nt bodies, and providing for 
referral to confidential third -party mediation and conciliation when appropriate. High -level support 
for addressing specific trade concerns in the regular bodies will provide momentum for new ideas in 
this area.  
 
 
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  THEME 2: SA FEGUARDING AND STREN GTHENING THE DISPUTE  SETTLEMENT SYSTEM  
The availability of compulsory, binding and impartial dispute settlement is critical for the preservation 
and support of rules -based trade. A number of significant challenges need to be addressed t o 
safeguard and strengthen the WTO dispute settlement system.  
 
1. Diverting some dispu tes or issues from adjudication  
Aging trade rules, the increasing complexity of disputes and an erosion of self -restraint combine to 
overburden the dispute settlement sys tem. Adjudication has taken on a more prominent role in 
sustaining trade cooperation than originally envisaged, in some cases substituting for negotiation. 
Diverting certain disputes or issues from adjudication can be accomplished through a renewed 
commitm ent to self -restraint, the improvement and use of alternative mechanisms such as 
mediation to settle disputes or at least narrow their scope, and possibly even formal exclusion of 
certain types of disputes or certain issues from the jurisdiction of adjudic ation. High -level 
endorsement of actions that would reduce reliance on formal dispute settlement would help 
safeguard and strengthen the system.  
 
2. Streamline adjudicative proceedings  
The complexity and increasing length of dispute settlement proceedings undermine the system’s 
accessibility, creating incentives for short -term trade -distorting measures and unilateral counter -
measures. The adjudicative procedures could be made more flexible and adaptable to the diverse 
nature of disputes. This might include developing alternative procedures tailored to specific kinds of 
disputes, supplementary procedures for specific features of existing proceedings and a mechanism 
for more interaction between panel and appeal levels (i.e., remand). High -level endorsement of the 
need to streamline the dispute settlement system and make it more adaptable would generate 
momentum in the stalled discussions of improvements.  
 
3. Updating and ensuring appellate review  
The impasse over the appointment of Appellate Body members threat ens to bring the whole dispute 
settlement system to a halt. Resolving it and restoring the Appellate Body to a full contingent of 
members will require addressing concerns raised about the functioning of the Appellate Body and 
perhaps even about perceived i mbalances in the rights and obligations of Member s. Beyond the 
specific solutions that might be required to address the concerns, the most important contribution 
that Ministers can make would be to acknowledge the concerns expressed by some Member s and 
indicate a willingness to work with those Member s to find mutually agreeable solutions.  
 
The first set of concerns relate to whether the Appellate Body has, through its clarifications of WTO 
provisions, added to the rights and obligations of WTO Member s. Addr essing concerns about specific 
obligations raised in past disputes may require agreement of Member s to override those 
interpretations, which may be difficult. In the meantime, mechanisms might be developed that allow 
Member s more opportunity to provide bin ding and non -binding guidance to adjudicative bodies on 
specific issues. This might include holding thematic discussions of issues that arise in disputes, and 
developing a formal pathway for some of these discussions to progress to the adoption, by 
consens us, of "authoritative interpretations " (a decision -making option already available in the WTO 
Agreement) of the WTO obligations in question.  
 
The second set of concerns involve s systemic and procedural practices of the Appellate Body. Actions 
to address th ese concerns could include:  
 
• narrowing the scope for "advisory opinions " by clarifying that the primary objective of the 
dispute settlement system is the settlement of specific disputes and that only findings that 
are necessary to achieve this objective are required;  
• focusing appellate review on legal issues by clarifying the standard of review to be applied by 
the Appellate Body to panels, especially with regard to factual findings and those related to 
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  • promoting a more robust adjudicative dialogue by allowing for the expression of minority views 
in panel and Appellate Body reports and reiterating that interpretations adopted by the panel 
and Appellate Body apply only to the disputes in which they are adopted; and  
• developing guidance related to consultations with parties when the Appellate Body is unable 
to meet its deadline.  
 
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  THEME 3: MODERNIZING  THE TRADE RULES FOR  THE TWENTY -FIRST CE NTURY  
The ageing trade rules need to be updated urgently to respond to the needs of the modern global 
economy. For most issues, this is unlikely to happen as a single undertaking, at least not for the 
foreseeable future. Instead, alternative approaches to cooper ation and rule -making may be required 
to reflect the realities of a WTO Member ship with increasingly diverse needs, levels of development 
and capacity. This might involve approaches that allow for differentiated participation in negotiations 
and for accomm odating differentiated levels of development.  
 
1. Identifying Priorities for Modernizing the Rules  
While there is a consensus that modernization of the trade rules is essential, there is divergence 
about the priorities. A sustained and open policy dialogue  on possible priorities and identifying what 
is required to facilitate greater convergence should begin immediately. A first task for a group of 
Member s committed to making progress might be to identify those issues that might be subject to 
efforts to achi eve multilateral agreement and those that might be better achieved through 
plurilateral initiatives or other approaches to upgrading the rules. Such a discussion can draw upon 
a combination of issues such as those:  
 
• outstanding from previous negotiations, including issues from the Doha Round such as 
agricultural support and development issues, and especially those fa cing Least -Developed 
Countries;  
• required to modernize the rules for the modern economy and address the social dimensions 
of globalization, such  as digital trade, inclusive trade, sustainable development, MSMEs, 
investment and domestic regulation; and,  
• required to address more recent concerns about distortion of competitive conditions, for 
example through the market -distorting effects of SOEs, ind ustrial subsidies, transfer of 
technology and trade secrets, and transparency.  
2. Means to modernize the rules  
While no WTO Member  should be expected to take on obligations to which it did not consent, likewise 
no Member  should expect to be able to prevent  others from moving forward in various configurations 
in areas where they are willing to make greater commitments which could vary from political 
statements to more ambitious binding agreements, e.g. plurilateral  initiatives. Binding initiatives 
should be inclusive, open and provide clear rules for accession by other Member s or eventual 
multilateralization . They could take on several forms, both inside and outside the WTO legal 
framework:  
 
• "open" agreements where the benefits are extended on a Most -Favoured  Nation (MFN) basis 
(e.g., Information Technology Agreement), if critical mass of coverage is achieved or the risk 
of free -riding is low, do not require agreement of all Member s; 
• "closed " agreements that apply only to the participants (e.g., Government Pro curement 
Agreement) are subject to agreement by all Member s, but might be feasible in certain areas;  
• closed agreements can also be pursued outside the WTO framework (e.g., TiSA), but these 
may be less transparent and may not be subject to WTO dispute settl ement.  
3. The Development Dimension  
It is uncontested that countries with different levels of development have different capacity to 
engage in trade and take on new trade commitments. While these differences need to be 
accommodated in a way that strikes a balance between reciprocity and flex ibility, disagreement over 
how to achieve this has become one of the most intractable barriers to progress in negotiations over 
new multilateral rules. A new approach is required, one that recognizes the need for flexibility for 
development purposes while acknowledging that not all countries need or should benefit from the 
same level of flexibility. The regime for special and differential treatment in the Trade Facilitation JOB/GC/201  
 
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  Agreement (TFA) provides a precedent and a possible blueprint. Based the features of  the TFA, a 
new approach might include:  
 
• recognizing that while the development needs of certain countries justifies transitional 
implementation, the long -term objective is the convergence and full implementation of all 
obligations by all Member s; 
• developi ng categories of need, differentiated by obligation, by country and by the length of 
the transition required, to be applied based on evidence of need and subject to negotiation; 
and, 
• linking implementation of the most onerous obligations, at least for coun tries with the least 
capacity, to the acquisition of capacity to do so, for which other Member s might have an 
interest in providing support and assistance.   
 
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  THE WAY FORWARD  
A group of WTO Member s that seek to support the rules -based multilateral trading  system can 
provide leadership through advocacy  and leadership through action : advocacy about the benefits of 
rules-based cooperation on trade and the importance of the WTO as an institution; and actions to 
demonstrate commitment to these principles and bu ild confidence in the various functions of the 
WTO. A number of potential actions have been outlined above. There may be others.  
 
The format of the actions  pursued will require creativity and flexibility. The most realistic choice of 
instrument in the near  term will likely need to be plurilateral in participation. While new binding 
multilateral agreements or significant institutional changes to the WTO are unlikely in the near term, 
alternative instruments may still be feasible. Very few of the actions prop osed above require 
amendments to existing agreements or formal institutional reform. Most can be pursued using 
alternative instruments that work in more incremental and flexible manner.  
 
The next step is to set priorities for action . In the immediate term,  urgent action is required to 
restore the dispute settlement function and improve the monitoring function, in order to restore 
confidence in rules -based trade and build momentum toward new rules. Longer term deliberation 
will be required to develop more am bitious improvements to the regular bodies and to the dispute 
settlement system, to build consensus around the use of plurilateral agreements and accommodating 
different levels of developments, and to developing priorities for issues and formats for formal ly 
updating the trade rules.  
 
Finally, the growing number of initiatives by WTO Member s, pursued in different configurations, 
demonstrate how widely held the view is that action is required to preserve rules -based cooperation 
on trade and to modernize the WTO. These initiatives will eventually need to converge around a 
common vision for the future of the rules and institutions of the multilateral trading system. In the 
meantime, it will be important to maintain frequent engagement and coordination with othe r 
Member s and to progressively expand the dialogue to include others who are ready and willing to 
participate constructively.  
 
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  ANNEX: OPTIONS FOR I NSTRUMENTS OF ACTION  
Plurilateral Instruments  
Available plurilateral instruments may vary from political statements of intention , similar to those 
adopted at the 2017 Ministerial Conference, to more ambitious binding legal agreements  on new 
rules such as the examples provided above under Theme 3. For more operational actions, 
instruments such as plurilateral codes of conduct  or procedural agreements could be considered. 
Examples of this approach are the procedural agreements notified under the DSB Mechanism for 
Developing, Documenting and Sharing Pract ices and Procedures in the Conduct of WTO Disputes  
(see JOB/DSB/1).  
 
Multilateral  Instruments  
In other areas where multilateral consensus may be achievable on operational actions, but where 
treaty commitments are still too ambitious, a number of approaches  are possible:  
 
• WTO bodies could adopt non-binding instruments  (i.e., soft law) covering both the procedural 
aspects of their work and incremental adjustments to existing commitments. The adoption of 
such instruments might require a clear statement that th ey are not intended to affect the 
interpretation of existing obligations;  
• The General Council and the DSB could make greater use of formal Decisions  to administer 
their work. There are limits to the scope of new obligations created by instruments other tha n 
new agreements or amendments. However, the Decision on Export Competition  adopted at 
the Nairobi Ministerial Conference illustrates that even new commitments can made using 
these kinds of instruments;  
• Authoritative interpretations  could be adopted under Article IX.2 of the WTO Agreement to 
clarify certain existing obligations. These might be used to complete previously incomplete 
negotiations, fill gaps that existed or that have emerged through changes in commercial 
practices, or override interpretations that have emerged in past disputes.  
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