2 The World Trade Organization
5.1 WTO Decision-Making in Theory
The WTO Secretariat has an internship programme for graduate students who wish to gain practical experience and deeper knowledge of the activities of the WTO. Only a limited number of internships are available. The eligibility requirements, as well as the terms and conditions of the internship and the application procedure, are set out on the WTO website.
Questions and Assignments 2.15
What is the main task of the WTO’s specialised councils, committees, working parties and working groups? How do these WTO bodies differ from each other? Where do the Doha Round negotiations take place? In your opinion, should the WTO have an executive body and/or a consultative assembly? Is the WTO controlled by ‘faceless international bureaucrats’? Discuss the role and the powers of the WTO Director-General and the WTO Secretariat.
5 Decision-making in the WTO
The WTO decision-making process has been criticised for being undemocratic, non-transparent and accountable to no one. A decade ago, in 2003, War on Want, a British NGO fighting poverty in developing countries, noted:
From formulating the agenda to reaching a decision, the process is dominated by the most powerful and richest countries. As such, negotiations at the WTO are fertile ground for horse-trading that inevitably favour those with greatest financial and political might. To keep on top of the massive agenda at the WTO, rich countries, such as US, EU, Japan and Canada, have large teams of well-resourced specialists in Geneva. Half of the poorest countries in the WTO cannot even afford one.322
This section examines WTO decision-making in theory and in practice, and will, by discussing participation in WTO decision- making, allow the careful reader to assess what extent the criticism by War on Want and others was valid in 2003 and/or is still valid in 2013.
the practice … is that some countries that have difficulty with a particular decision will nevertheless remain silent out of deference to countries with a substantially higher stake in the pragmatic economic consequences of a decision.329
Decision-making by consensus involves a degree of deference to economic power. It is ‘only’ when important national, economic or other interests are at stake that a WTO Member would consider blocking the consensus.330
As Hoekman and Kostecki noted, decision-making by consensus is a useful device to ensure that only decisions which have a good chance of being implemented are adopted because the decisions adopted are all decisions to which there was no major opposition. However, Hoekman and Kostecki also observed that, as further discussed below,331 decision-making by consensus:
reinforces conservative tendencies in the system. Proposals for change can be adopted only if unopposed, creating the potential for paralysis.332
If consensus cannot be achieved, Article IX:1, second sentence, of the WTO Agreement provides for voting. For a decision to be adopted, it must have a simple majority of the votes cast. Pursuant to Article IX:1, third sentence, each Member has one vote.333 However, there is one exception to this rule. Article IX:1, fourth sentence, states:
Where the European Communities exercise their right to vote, they shall have a number of votes equal to the number of their member States which are Members of the WTO.
In a footnote to this sentence, it is further explained that the total number of votes of the European Communities, now referred to as the European Union, and the EU Member States shall in no case exceed the number of the EU Member States. It is thus clear that either the European Union or the EU Member States (each individually) will participate in a vote. Who participates in a vote is not a matter of WTO law but of EU constitutional law. For reasons relating to the practice of WTO decision-making, discussed below, the fact that the European Union currently has twenty-seven votes and the United States, China and India only one, does not have much, if any, impact on the political decision-making processes at the WTO.334
As already discussed above, it should be pointed out that, as a rule, the European Commission speaks for the European Union and the EU Member States at meetings of WTO bodies, even if those bodies deal with matters that are not within the exclusive competence of the European Union.335 Delegates from the EU Member States attend the meetings but do not speak. The EU Member States speak (and vote, if a vote is called) only with regard to budgetary, finance and administrative matters.336 Furthermore, the Ministers of the EU Member States make short formal statements at the biennial sessions of the Ministerial Conference.
Questions and Assignments 2.16
What is decision-making by consensus? Does decision-making by consensus amount to a veto power for each WTO Member? Can WTO bodies take decisions by voting? Do all WTO Members have the same number of votes? How many votes do the United States, the European Union, China, Belgium and Saint Lucia have? In your opinion, should the number of votes of Members be related to the size of their population or their share of world trade?
5.1.2 Special Procedures
In addition to the standard decision-making procedure, provided for in Article IX:1 of the WTO Agreement and discussed in the previous sub-section, the WTO Agreement sets out a number of decision-making procedures which deviate from the standard procedure. This sub-section briefly discusses these special procedures.337
With regard to decision-making by the DSB, Article 2.4 of the DSU states that the DSB shall take decisions by consensus. As discussed in detail in Chapter 3, the DSB takes certain decisions, such as the decisions on the establishment of a panel, on the adoption of dispute settlement reports, or on the authorisation of retaliation measures, by negative consensus.338 Other decisions, such as the appointment of Members of the Appellate Body, are taken by a positive consensus.339
With regard to authoritative interpretations of provisions of the WTO Agreement and the multilateral agreements of Annex 1, 2 and 3, Article IX:2 of the WTO Agreement states that the Ministerial Conference and the General Council shall have the exclusive authority to adopt such interpretations,340 and that the decision to adopt an authoritative interpretation shall be taken by a three- quarter majority of the Members.341 To date, the WTO has not made any explicit use of the possibility to adopt ‘authoritative interpretations’. The Doha Ministerial Decision on Implementation-Related Issues and Concerns contains a number of provisions which are obviously interpretations of provisions of the WTO agreements. However, in its Preamble, the Decision does not explicitly refer to Article IX:2 of the WTO Agreement and at least some of these interpretations were adopted without a recommendation of the relevant specialised council.342 Note that the Appellate Body ruled in US – Clove Cigarettes (2012) that paragraph 5.2 of this Decision – which defines the term ‘reasonable interval’ in Article 2.12 of the TBT Agreement was at least six months343 – was not an authoritative interpretation because it was not based on a recommendation of the Council on Trade in Goods.344 The Appellate Body emphasised that:
the recommendation from the relevant Council is an essential element of Article IX:2, which constitutes the legal basis upon which the Ministerial Conference or the General Council exercise their authority to adopt interpretations of the WTO Agreement.345
With regard to decisions on the accession of new Members, Article XII:2 of the WTO Agreement provides that such decisions are taken by the Ministerial Conference (or the General Council) by a two-thirds majority of the Members. However, on 15 November 1995, the General Council agreed that, for decisions on accession, it will first seek to reach consensus.346 Only when a decision cannot be arrived at by consensus shall the matter be decided by a two-thirds majority vote.347 To date, only the 1995 decision on the accession of Ecuador was taken by majority vote.
With regard to decisions to waive an obligation imposed on a Member, Article IX:3 of the WTO Agreement distinguishes between waivers of obligations under the WTO Agreement and waivers of obligations under the multilateral trade agreements of Annex 1.
Decisions on waivers of the first type require consensus and, if consensus cannot be reached within a time period not exceeding ninety days, a three fourths majority of the Members.348 Decisions on waivers of the more common, second type require a three fourths majority of the Members.349 However, on 15 November 1995, the General Council decided that – in spite of Article IX:3 – it would also with regard to this second type of waivers first seek to reach consensus.350 Only when a decision cannot be arrived at by consensus shall the matter be decided by a three-quarters majority.
With regard to decisions on amendments of the WTO Agreement and the multilateral agreements of Annexes 1, 2, and 3, Article X of the WTO Agreement sets out a complex regime. In general terms, the amendment procedure is as follows. Individual Members or one of the three specialised councils (the CTG, CTS and the TRIPS Council)351 initiate the amendment procedure by submitting an amendment proposal to the Ministerial Conference or the General Council. In a first period of at least ninety days, the Ministerial Conference or the General Council tries to reach consensus on the proposal for amendment. If consensus cannot be reached, the Ministerial Conference or the General Council will resort to voting. To be adopted, the proposal for amendment requires a two-thirds majority of the Members. Once adopted by consensus or by a two-thirds majority, the amendment is forthwith submitted to the Members for acceptance in accordance with their national constitutional requirements and procedures. An amendment shall take effect for the Members that have accepted the amendment upon acceptance by two-thirds of the Members.352 As a rule, the amendment is effective only in respect of those Members that have accepted it.353 However, Article X:2 lists a number of fundamental provisions (concerning the MFN treatment obligation under the GATT 1994, the GATS and the TRIPS Agreement, the GATT 1994 tariff schedules and WTO decision-making and amendment) which have to be accepted by all Members before they can take effect. Moreover, a decision to amend the DSU must be made by consensus, and amendments to the DSU take effect for all Members upon approval by the Ministerial Conference. Amendments to the DSU are not submitted to the Members for acceptance.354 Article X:4 also provides that amendments that do not alter the rights and obligations of the Members take effect for all Members upon acceptance by two-thirds of the Members. Finally, Article X:3 states in pertinent part:
The Ministerial Conference may decide by a three-fourths majority of the Members that any amendment made effective under this paragraph is of such a nature that any Member which has not accepted it within a period specified by the Ministerial Conference in each case shall be free to withdraw from the WTO or to remain a Member with the consent of the Ministerial Conference.
While conveyed in diplomatic language, this means, in effect, that a Member that refuses to accept certain amendments may be expelled from the WTO.355 The actual importance of this provision, however, seems limited. Note that this power also existed under the GATT 1947 but was never used.356 It is likely that this will also be the case in the WTO.
The first, and thus far only, amendment to the WTO agreements was adopted by the General Council in December 2005 and concerned an amendment to the TRIPS Agreement.357 Pursuant to the amendment decision, an Article 31bis is inserted after Article
31 of the TRIPS Agreement and an Annex to the TRIPS Agreement is inserted after Article 73 thereof. As discussed in Chapter 15, the amendment concerns a relaxation of the obligations of Members when they export to certain eligible developing countries pharmaceutical products produced under a compulsory licence.358 Pursuant to Article X:3 of the WTO Agreement, this amendment will take effect when two-thirds of the Members have accepted the amendment in accordance with their national constitutional requirements and procedures. As of 1 March 2013, only seventy-two Members had notified their acceptance of the amendment.359 Therefore, this amendment, agreed on in December 2005, has yet to take effect.
Finally, with regard to decisions on the annual budget and financial regulations, Article VII:3 of the WTO Agreement provides that the General Council adopts the annual budget and the financial regulations by a two-thirds majority of the votes cast but comprising more than half of the Members of the WTO.
Questions and Assignments 2.17
How does the WTO decide on waivers of WTO obligations? What is the difference between ‘authoritative interpretations’ under Article IX:2 of the WTO Agreement and ‘amendments’ under Article X thereof? Should Members wish to amend Article III of the GATT 1994 or Article 5 of the DSU, what are the procedural requirements for such amendments? Has the WTO Agreement already been amended?