Written by Valerie Hughes

The Business Council of Canada's recently-launched Task Force on Canada’s Economic Future, which will conduct broad-based consultations across Canada, is well placed to provide advice and recommendations on Canada's global competitiveness, including proposals on WTO reform.

The Business Council of Canada, which represents business leaders and entrepreneurs across Canada and whose members are responsible for most of Canada’s exports, announced on February 5, 2019, that it would launch a Task Force on Canada’s Economic Future. The task force plans to consult with business leaders and other stakeholders across Canada to develop an agenda for improving Canada’s “ability to compete for jobs and investment within a transforming global economy.”

The task force should include World Trade Organization reform in its consultations.   

Last October, Canadian International Trade Diversification Minister, Jim Carr, was praised widely for his leadership in hosting a meeting in Ottawa of 13 trade ministers from around the globe to discuss reform of the WTO. He and his counterparts expressed deep concern about the rise in protectionism and the risk it poses to the multilateral trading system. They identified three areas requiring urgent consideration:

1. the risk to the WTO dispute settlement system caused by continued vacancies in the WTO Appellate Body; 
2. the need to reinvigorate the negotiating function of the WTO and to amend the rules to reflect 21^st century realities; and 
3. the lack of transparency of Members’ trade policies and the poor record overall of compliance by WTO Members with notification obligations.

The ministers pledged to move forward urgently on these matters and undertook to have their officials engage in discussions to advance ideas. They agreed to review progress at their next meeting, to be held in January, 2019.

At the time, the Business Council of Canada as well as business groups in Australia, Brazil, Europe, Japan, Mexico, and New Zealand acknowledged that the WTO had helped bring about “an enormous expansion in global trade and prosperity.” Business groups concurred that there was a need for urgent action to enhance the functionality of the WTO and they supported the ministers’ reform efforts, including in respect of fixing the WTO dispute settlement system.  

Despite the ministers’ resolve and the encouragement from business groups around the world, it seems that little progress has been made so far. When Minister Carr’s group met in Davos on January 24, they expressed concern that the challenges identified during their meeting in October had “only become more urgent”. Yet we did not hear anything further about ideas or proposals that may have been advanced or discussed since the October meeting. The Davos Joint Communiqué revealed only that the group decided to “begin” consultations with interested WTO Members about the WTO’s deliberative and monitoring functions and the ability to solve trade concerns, with a focus on trade in services, technical barriers to trade, sanitary and phytosanitary measures, and rules of origin. Disappointingly, nothing was mentioned about their work to strengthen the dispute settlement mechanism. Nor were any suggestions offered for restoring the WTO Appellate Body to full capacity, which will have too few members to function when two more judges finish their terms later this year. 

The Task Force on Canada’s Economic Future, which will conduct broad-based consultations across Canada, will be well placed to provide advice and recommendations on the subject.

A modern WTO, the trade disciplines of which better reflect current realities, is best placed to meet the needs of Canadian business. Moreover, a proper functioning trade dispute settlement mechanism is critical for Canadian business, which has been a significant beneficiary of the rules-based trading system. Canadian business, through the Canadian government, has actively utilized the WTO dispute settlement mechanism to bring legal challenges to protect Canadian exports in several sectors including lumber, automobile parts, and agricultural products, and has succeeded in its challenges of trade measures taken by several WTO members including China, Japan, Korea, and the United States. Canada is currently pursuing challenges against the Unites States’ invocation of tariffs imposed under section 232 of the U.S. Trade Expansion Act against imports of steel and aluminum. 

The task force should be well positioned to bring forward to the government ideas gleaned from business leaders for reforming the WTO, both in its deliberative function so that trade issues can be discussed effectively in relevant committees, and in its dispute settlement mechanism, so that the system that has served Canadian business so well can continue to do so long into the future. Without a well-functioning WTO and a fully-operational trade dispute settlement mechanism, Canadian business risks finding itself in a precarious situation. For if any of our trading partners failed to abide by their various WTO obligations regarding technical barriers to trade, non-discriminatory treatment of goods and services, food safety, intellectual property protection, or other areas addressed in the WTO, Canada would be left with little more than its powers of persuasion in seeking to have the offending actions removed. 

Bennett Jones’ WTO experts have direct and deep knowledge in how the WTO works and have extensive experience in WTO dispute settlement procedures. We are available to help develop reform proposals and to work alongside business leaders in advancing ideas with the task force and the Canadian government. For assistance, please contact Darrel Pearson, Head of the Bennett Jones International Trade and Investment practice group, or Valerie Hughes, who leads our WTO practice.