DEPUTY DIRECTOR-GENERAL ALAN WM. WOLFF
Thank you for inviting me to be part of this exchange on transparency and monitoring – and on how the trading system might be improved in this respect.
Eight days ago at the G20 Trade Ministers' meeting, the Saudi chair, in his report on the Saudi Arabian Riyadh Initiative for WTO Reform, stated that all G20 members agreed to a list of principles of the WTO. Transparency was near the top of that short list.
Providing transparency is more than a principle for us in the Secretariat, it is central to our mission. In this we seek to tap into a wide range of resources. We certainly look to the Global Trade Alert as one source of information that we value. We see it as complementary to what we do on trade monitoring in the WTO, particularly with regard to issues such as economic support measures.
Monitoring and transparency are central to the WTO’s work. Members discuss existing and proposed laws and measures in WTO committees. They have obligations committing them to share certain information with each other by filing notifications to the WTO. Members’ trade policies are periodically scrutinized by each other and subject to an objective review by the WTO Secretariat as part of the Trade Policy Review Mechanism and in other settings. And since 2009, the WTO Secretariat has produced regular global trade monitoring reports on how countries are using trade measures, providing a useful snapshot about how trade policy is shifting in response to changing economic and political climates.
This last stream of work is perhaps most relevant to the current discussion, given the COVID-19 pandemic and the deepest economic recession of our lifetimes.
Building on the longstanding monitoring exercise, Secretariat experts have been tracking the growing number of trade measures – both trade restricting and trade facilitating – that Members have introduced in response to the pandemic. A constantly updated list of these measures is available on the WTO’s COVID-19 page. Members and the public have been enthusiastic about having a better handle about what was happening to trade during the pandemic. While trade is down sharply, interestingly it is up by 30% year-on-year for a range of medical goods relevant to COVID-19.
My comparative advantage today is probably to provide context for why WTO monitoring looks the way it does, and to offer some views on the strengths and weaknesses that come with it.
The WTO trade monitoring exercise has its origins in the 2008-09 financial crisis. At the time, many Members were concerned about a repeat of 1930s-style beggar-thy-neighbor protectionism. They expressed interest in having access to what were initially meant to be internal Secretariat briefings on how the crisis in global financial markets was affecting trade. In late 2008 the then-Director-General, Pascal Lamy, announced that the Secretariat would begin circulating the reports – and that the exercise would depend on Members’ cooperation. At about the same time, the G20 asked the WTO, the OECD, and UNCTAD to monitor their trade and investment measures. Both initiatives continue to this day.
The regular monitoring reports covering the entire membership are the only horizontal regular transparency exercise within the multilateral trading system. Every six months, they provide a substantive snapshot of the state of world trade, with comprehensive accounts of activities cutting across the spectrum of issues addressed by WTO rules: tariffs, SPS, TBT and agriculture to trade remedies, services, intellectual property and a host of other areas.
The reports rely heavily on a stakeholder bargain between WTO Members and the Secretariat. Members are full partners of the monitoring exercise, reflected in the rigorous, continuous verification efforts between Members and the Secretariat team. As a result of this back-and-forth, the WTO reports may miss some things, but they capture the trends that are significant. We do not capture a lot of noise with the signal. But the signal does not have everything in it. Let me explain.
On the plus side, Members’ involvement with the monitoring exercise is a product of our political and institutional realities as a Member-driven organization that has some practical advantages. The monitoring process enhances the reports’ relevance, because Members engage seriously with the content of the reports.
This said, there is clearly room for improvement. Members and the Secretariat can be bolder. Members, for instance, should be more enthusiastic about full transparency as it applies to themselves, not just to others. Some Members are very good about this. They do not shy away from looking in the mirror. Others, well, not so much. And in this regard, there is not a developed/developing country divide.
Members who have recently expressed themselves on the subject have made suggestions on how to deliver more transparency. They want to see the Secretariat empowered with greater space and leeway to report independently on issues that clearly fall within the trade monitoring mandate. We should not look into justifications for imposing trade measures, such as the invocation of national security or the application for one reason or another of sanctions. We should simply be able to report on all trade measures. Whatever their rationale.
We can issue reports more often. We can update prior reports when notifications come too late for inclusion in the original report. We can tap into the trove of counter-notifications and specific trade concerns, to seek through Secretariat expertise to discern the measures. Issues will arise, listing anti-subsidy measures is straightforward. But without listing the subsidies, the picture presented would be distorted. But ascertaining what is a reportable subsidy is more difficult than reporting on a new tariff rate. We once reported general support measures without assuming that they had a trade-distorting effect. In this time of governments staving off economic collapse in a time of pandemic, there is a lot more public funding than ever before. Do Members want to see us report on it?
There is also an imbalance between those who notify a lot and those who notify a little or not at all. Again, a distorted picture would be presented. This is acceptable if the notifying Member is comfortable with that outcome. But some are clearly not.
Should we bow to political pressure? Members and the Secretariat can only move ahead together. If the Secretariat got out ahead of the Membership, its monitoring efforts would likely meet less cooperation. The reports would become less credible in terms of their content. Worse, the reports and their content would be taken less seriously by the actors that matter.
Discussions in different WTO bodies – backed by a growing number of proposals – have raised interesting ideas for enhancing the multilateral trading system’s ability to foster transparency and predictability. These range from encouraging more timely and accurate official notifications, to improved information sharing with the WTO trade monitoring work.
A gating question is one of resources. Simon knows this as well as we do. One aspect of transparency is not just what do our Members want to know but what will they support by increasing a WTO budget that has been frozen for the last seven years.
The trade implications of governments’ responses to the pandemic have injected additional energy into the discussions of what to do about transparency. For example, the Ottawa Group released a statement supporting the WTO Secretariat's efforts to monitor COVID-19 related measures and called for a return to quarterly monitoring reports, expanded to cover trade-related economic support measures. The EU and eight other Members have circulated an informal room document with specific proposals for better transparency around trade-related economic support measures. Currently, there does not appear to be agreement among Members on these ideas, but there is considerable scope for active discussion.
I am optimistic about prospects for improving transparency at the WTO. We have a lot more information than we are synthesizing. We could be providing Members with more active support. Members have responded very constructively to the Secretariat’s real-time monitoring of COVID-19-related trade measures. It shows more of what is possible, even in, or perhaps, especially in, a crisis. There is no doubt we can do more.