1. China’s WTO Reform Proposal
o China submitted a five-page
proposal, WT/GC/Reform/W/12,
titled “Further Reflections
and Suggestions on WTO Reform” at the 24 September 2026
meeting on Level Playing Field (LPF) issues.
o China called for a “constructive approach”
to updating WTO rules while preserving fundamental WTO principles.
2. China’s Core Principles
o China reaffirmed:
§ Multilateralism
§ Non-discrimination
§ Predictability
§ Transparency
o It also supported maintaining:
§ Consensus-based
decision-making
§ Binding dispute settlement
§ Special and Differential
Treatment (S&D)
for developing countries.
3. China Opposes Conditional MFN
o China criticized attempts by
some members to make Most-Favoured-Nation (MFN) treatment conditional.
o It warned against restoring “power-based trade relations”
under the justification of reciprocity.
4. China Rejects Vague
“Rebalancing”
o Beijing opposed calls to “rebalance rights and obligations”
or promote reciprocity when based on vague concepts or predetermined outcomes
rather than agreed WTO rules.
5. U.S. Position
o The United States sharply disagreed
with the Chinese proposal.
o Washington wants members to
reconsider the MFN
principle and other WTO rules.
o At the LPF meeting, the U.S.
reportedly emphasized transparency
and notification requirements as key priorities.
6. Broader Divide Among Members
o U.S., EU and Friends of the
System:
seek to expand the coverage of WTO disciplines beyond existing rules.
o Developing countries,
particularly LDCs:
emphasize S&D
treatment and policy flexibilities, including differentiated
notification obligations based on members’ respective capacities.
7. China on Subsidies and
Industrial Policy
o China said it remains open to:
§ Updating the Agreement on Subsidies and
Countervailing Measures (SCM Agreement).
§ Increasing transparency.
§ Improving coordination
concerning industrial
policies.
8. China’s Argument on Government
Intervention
o China argued that all governments intervene in markets to
varying degrees using different policy instruments.
o It maintained that WTO rules
have never required all members to adopt a single economic model to ensure fair
competition.
9. Brazil’s Position
o Brazil reportedly objected to
treating burdensome notification
requirements as an LPF issue.
o It argued that notifications
are fundamentally a compliance
matter and warned that excessive focus on notification burdens
could divert attention from substantive LPF issues.
10. Colombia’s Broader LPF
Approach
o Colombia argued that level playing field and reciprocity are
interconnected and should be examined comprehensively.
o It suggested that tariffs are
easier to compare because they are quantifiable,
whereas the LPF encompasses a much wider range of trade measures.
11. Measures Affecting the Playing
Field
o Colombia identified several
measures that can affect competitive conditions, including:
§ Tariffs
§ Government support/subsidies
§ SPS measures
§ Export restrictions
§ Other trade measures.
12. Colombia’s “Tariffication”
Concept
o Colombia proposed examining
whether different trade measures could be expressed in tariff-equivalent terms
for analytical purposes.
o It cited the Uruguay Round agricultural negotiations,
where quotas and other non-tariff restrictions were converted into ordinary
customs duties.
13. No Proposal to Prohibit
Subsidies
o Colombia clarified that its
proposal was not intended
to impose a new discipline prohibiting subsidies, recognizing
that subsidies can serve legitimate public-policy objectives.
o Instead, it suggested greater
transparency regarding the effect of government support on competition.
14. New Remedy Based on Market
Concentration
o Colombia also suggested
exploring a new trade
remedy based on market concentration, drawing on concepts from
competition law.
The 24
September WTO LPF discussion exposed a significant divide over the future direction of WTO reform:
China emphasized preservation of multilateral principles, MFN, S&D and
existing institutional structures, while the U.S., EU and some other members seek broader disciplines
and greater transparency. Developing countries are
simultaneously seeking flexibility and differentiated obligations, making
consensus on a new LPF framework difficult.
The United States sharply disagreed with
China’s proposal on World Trade Organization reform, which called for adopting “a
constructive approach” to exploring “ways to update the rules while upholding the
WTO’s fundamental principles” at a meeting on level playing field issues on 24
September, 2026.
The five-page Chinese proposal (WT/GC/Reform/W/12),
titled “Further reflections and suggestions on WTO Reform,” reasserts what Beijing
regards as the WTO’s core principles: “multilateralism, non-discrimination, predictability
and transparency.” It also emphasizes the preservation of basic institutional arrangements,
including consensus-based decision-making, binding dispute settlement, and special
and differential treatment.
China criticized “some members” for making
most-favored-nation treatment conditional, while cautioning against reviving “power-based
trade relations in the name of reciprocity.”
The LPF meeting was dominated by discussions
on the Chinese proposal, eliciting mixed views on its positive and negative aspects.
The proposal castigated calls for “re-balancing rights and obligations” or “promoting
reciprocity” when these concepts are based on vague labels or predetermined outcomes
rather than agreed rules.
The United States, which wants members to
revisit the MFN principle and other changes, made known its disagreement with the
Chinese proposal. Washington insisted on transparency and notification requirements
as the most important items of LPF commitments, according to people familiar with
the discussions.
The United States, European Union and the
Friends of the System would “want to expand coverage of disciplines beyond what
currently exists,” while “developing countries, especially LDCs, mention the need
for S&D and flexibilities whatever happens, and a differentiated approach to
notification obligations according to members respective capacities,” a participant
said.
There was a great deal of back and forth
on procedure as well, many cautioning about the “snapshots”, their selective nature
and attempt at prejudging or force guiding conclusions in certain directions, said
another participant who asked not to be quoted.
Brazil responded sharply to the issue of
burdensome notification commitments, arguing that notifications were a matter of
compliance and would not constitute part of the LPF issues, said a person who asked
not to be quoted. Brazil also appeared to argue that by emphasizing burdensome notification
requirements, some members are diverting attention from the real issues that could
be considered under the so-called LPF framework, the person added.
China stated it remains fully open to jointly
exploring updates to the Agreement on Subsidies and Countervailing Measures, enhancing
transparency, and improving coordination on industrial policies, according to the
Chinese trade envoy.
Commenting on the substance of the Level
Playing Field framework, China emphasized that “reform must begin with an accurate
understanding of the real challenges facing the WTO.”
All Governments Intervene
Beijing noted that it is an economic reality
that “all governments intervene in markets to varying degrees, using different policy
tools, to achieve a diverse array of public policy objectives.” It added that “while
these objectives and tools constantly evolve and undoubtedly impact international
trade, this reality itself is not new.”
China maintained that “the rules of the multilateral
trading system have never required all Members to adopt a single economic model
to maintain fair competition, nor have they attributed [issues] to the existence
of different economic systems or so-called ‘interface’ challenges.”
During the discussion on LPF issues, Colombia
offered a novel perspective, suggesting that “leveling the playing field and reciprocity
are intertwined and very broad concepts that should be assessed comprehensibly in
a reform.”
According to Colombia, “tariffs are good
to discuss in a reciprocity discussion because they are easily quantifiable and
comparable,” adding that “a Level Playing Field is broader,” while “any other trade
measure tilts the playing field and in fairness should be reciprocal.”
Colombia contended that “government support,
SPS measures, export restrictions, etc, all of them tilt
the playing field,” an argument shared by several countries.
Colombia’s Proposal
According to Colombia, “in an ideal world,
every trade measure should be ‘tariffied’, that is, expressed in terms of a tariff,”
adding that, “at the end, from the perspective of a business who trades, any trade
measure, any subsidy, impacts the prize of its product in the same way as a tariff
does, and ideally should be levelled.”
Explaining what it means by tariffication,
Colombia said it “did an exercise of tariffication of quotas in the Uruguay Round
in agricultural negotiations” by converting “agricultural quotas and other non-tariff
restrictions into ordinary customs duties.”
In short, Colombia said it is not suggesting
a discipline, “as subsidies can have useful policy objectives as was mentioned by
many, and as the definition of subsidy in the WTO is quite complicated, but yes
an exercise for information and clearing what government support entails for competition
and for the LPF from the perspective of a competing business.”
More importantly, Colombia has “suggested
the need for a new remedy based on market concentration, drawing from competition
law.”