Conciliation and mediation: The way forward for the WTO?

Over the course of his first term in office, President Trump made no secret of his skepticism towards the World Trade Organization (WTO). In 2018, he threatened to withdraw the United States from the WTO if it did not “shape up”.  During a White House press briefing in September of 2020, he stated that “the WTO, as far as I’m concerned, was created to suck money and jobs out of the United States, to the benefit of China and other countries” and that the WTO has been “not good for the United States”.

Robert Lighthizer, the U.S. Trade Representative in President Trump’s first administration, echoed this sentiment. In response to the WTO Panel Report on United States-Tariff Measures on Certain Goods from China (DS543), Lighthizer asserted that “the WTO is completely inadequate to stop China’s harmful technology practices”. Writing in the Wall Street Journal, he expressed concern about the WTO’s dispute settlement mechanism and the difficulties in addressing distortions from non-market economies. He has also expressed dissatisfaction with the appointment of WTO Director-General Ngozi Okonjo-Iweala, calling her inexperienced and “China’s ally in Geneva”.¹

There is no indication that President Trump will reverse course when he retakes office in January. Indeed, on the campaign trail, he promised more tariffs and threatened to invoke the renegotiation provisions in CUSMA.

Should President Trump’s second administration continue along the same path as his first, there is a non-zero possibility that the United States will severely curtail its engagement in the WTO, demand structural changes that will be unacceptable to the other Members, or even withdraw entirely.

The expected stance of the second Trump administration towards the WTO can be characterized as an escalation rather than a repudiation of the last eight years of American trade policy.

Indeed, the WTO has been in the doldrums since the Obama administration. President Biden did not take active steps to rectify the dispute settlement problem.² In this respect, President Trump’s re-election may simply have fast-tracked the inevitable.

Where does that leave the rest of the world?

Historically, international organizations have not fared well in the absence of U.S. participation. The refusal of the United States to join the League of Nations is often cited as a death knell for that organization. Similarly, the failure of the U.S. Congress to ratify the Havana Charter prevented the International Trade Organization from ever becoming a reality.

In a recent insight, we highlighted how the Dispute Settlement Mechanism (DSM) of the WTO is at a standstill. What would happen if the United States – one of its largest users – definitively loses interest in the WTO DSM?

It’s time to reconceptualize things.

In a paper submitted to the Membership of the WTO in Geneva and canvassed in international fora, Rambod Behoodi advocated for the creation of a Conciliation and Mediation Facility (CMF) that could serve as a complementary dispute settlement mechanism within the WTO framework. That paper was prepared in response to the Thirteenth WTO Ministerial Conference, when Ministers were instructed to “accelerate discussions in an inclusive and transparent manner” to achieve a well-functioning dispute-settlement system for all Members.

Given the uncertainties of the present moment, its conclusions are arguably more pressing than ever.

A complex and lengthy process

Binding dispute settlement through a mechanism with mandatory jurisdiction and automatic “adoption”³ of quasi-judicial findings was one of the key innovations⁴ of the Uruguay Round. It continues to be essential to the full functioning of the WTO.⁵ And because the WTO remains central to global trade,⁶ we can expect the WTO DSM to stay relevant to its regular users, whether it continues as a two-stage process – through a reformed Appellate Body or other appellate mechanisms – or a modified panel procedure.

Even the most active users of the WTO DSM consider that formal dispute settlement is not optimal for all matters of trade concern: multi-pronged triage is an essential part of domestic decision-making related to the management of matters of trade concern before they become trade disputes. This is because a trade dispute requires considerable resources on the part of governments and private sector interests alike, and may well have an impact on diplomatic relations between parties. Even functioning exactly as intended and respecting all deadlines, formal dispute settlement is complex and time-consuming; despite the admirable record of most Members in implementation, the settlement of a not-insignificant number of formal disputes remains uncertain. A small number of disputes drag on with no real prospect of a satisfactory settlement – not just in terms of implementation, but real and effective withdrawal of concessions to rebalance, at least in some measure, the denial of benefits.⁷ These challenges are exacerbated for developing and less developed countries.

The WTO identifies at least four barriers to the participation of developing and less developed Members in dispute settlement:

1. lack of specialized resources;
2. complexity of WTO law and dispute settlement procedures;⁸
3. length and uncertainty of WTO disputes, even in the case of effective implementation;⁹ and
4. structure of dispute settlement, in which impugned measures continue for the duration of the dispute, including the implementation phase.

To this we could add – at least in certain cases – lack of effective recourse in the event of failure to implement.¹⁰

Of course, to identify the challenges of the mechanism is not to question the relevance, importance, or – indeed – the centrality of the WTO DSM to the multilateral framework: there will be a class of trade disputes between a class of Members that will require, and that will result in, formal dispute settlement.

Rather, this background explains the relative restraint of even the most active user-Members of the WTO in launching formal disputes, effectively limiting the WTO DSM to the most intractable matters of trade concern. And, using the same metrics, it also explains at least in part why most Members of the WTO have not engaged the formal dispute resolution mechanism.

In this light, access to dispute settlement procedures needs to be reconceived: this is not just about having more cases brought to the WTO, but establishing complementary procedures that make it possible for developing and less developed Members that have been left out of the dispute settlement framework to participate in the process. Reviving or operationalizing flexible non-adversarial procedures will also provide an additional mechanism for all Members in respect of those disputes that, in their view, remain of concern but that do not require recourse to formal dispute settlement.

Launching and managing a WTO dispute

According to the WTO, a panel was established in almost 60 per cent of the 621 cases launched up to 31 December 2023, giving rise to almost 290 distinct panel reports and 191 appeals. That is, 40% of consultations brought under the WTO Agreement do not proceed further. And these are cases that survive the rigorous triage that takes place in trade and foreign affairs ministries in all active¹¹ participants in WTO dispute settlement.

That “triage” starts with the assessment by a Member of the potential WTO inconsistency of the measures of another Member and includes cost-benefit analysis of litigation that any potential litigant engages in. After that, the analysis gets complex, reflecting the fact that states and not private interests conduct and manage WTO disputes. To ensure that a decision is fully informed, trade officials try to put the matter of trade concern in its proper commercial, policy, and political perspective.¹² This means:

• To understand a trade problem and how it affects the country – before deciding what to do with it – trade policy officials must embark upon a series of consultations inside the government and with affected industries.
• A trade issue arises typically because of adverse or potential impact on jobs or profits; this, in turn, gives rise to a political dimension, requiring additional analysis and consultations, and adding another layer of complexity to the management of a WTO dispute.
• No matter how carefully it is managed, a trade dispute will have a disruptive impact on a Member’s diplomatic relations with the adversary.
• Once a trade dispute is launched, choosing which arguments to advance is not simply a matter of winning or losing the case at hand, but must also include systemic and strategic considerations, including cross-sectoral effects.
• In the event of a “win”, planning must include non-implementation, compensation, and retaliation as possible outcomes, each of which will have its own attendant trade, economic, and social policy, and political challenges.
• Certain Members or disputes may involve “cost-sharing” between governments and private interests; this is open to some sectors or industries, but not to all, giving rise to internal equity issues or concerns.
• Launching a case for one sector or industry could well be used by other sectors or industries as a “precedent” for launching disputes in their sectors or industries; limited recourse to the WTO DSM would also deal with a potential public choice problem.

Formal disputes are only the most visible tip of a vast iceberg of ongoing trade issues between Members of the WTO that get triaged for “other means” of settlement; these matters of trade concern are hidden from sight but, in many cases, no less challenging for Members to resolve. A simple diagram helps illustrate the point:¹³

Structural barriers to developing country participation in WTO disputes

The expertise to properly assess the various dimensions of a trade dispute and to manage it through its lifecycle does not reside in a single person, or even a single government department. In most regular users of WTO DSM, highly trained bureaucracies put together teams of subject matter experts, trade policy specialists, and trade counsel that are, in turn, supported by counsel and analysts hired by affected private interests. Developing countries benefit from the support of intergovernmental organizations such as the ACWL or counsel engaged by private interests, but many developing countries and most least developed countries do not have the governmental recourses necessary for effective decision-making in and management of a WTO dispute.¹⁴

This is not just a question of trade litigation counsel: where there is a strong enough commercial interest, counsel can be found to litigate it.¹⁵ Rather, formal dispute settlement requires:

• identifying the trade law issues raised by a commercial problem;
• translating the commercial problem and the trade law concerns into a trade policy framework – including gathering the information necessary to examine and analyse it;
• developing a strategy that takes into account the policy and political dimensions of a trade dispute; and 
• supporting a trade dispute, once it has been launched, over its three-year timeframe.

All of this imposes costs that few developing and less developed country ministries are capable of bearing or willing to accept. And so, although the right exists for each Member of the WTO to challenge the trade-distorting and potentially WTO-inconsistent measures of any other Member of the WTO, and even though the institutional support might also be found to litigate a case, as a practical matter, most Members are simply not in a position to exercise that right effectively.

Addressing matters of trade concern

The question of resources and the challenges facing developing and least developed countries, as important as it is, obscures a deeper and more basic feature of WTO dispute settlement: the vast majority of matters of trade concern simply do not belong in formal dispute settlement regardless of whether there are counsel to litigate or governmental resources to manage the case.

We know this to be case because there have been only about 600 formal disputes launched by Members in over twenty-five years of operation covering hundreds of trillions¹⁶ of dollars of international trade. At a minimum, the size of a given commercial interest is a key, if not a determining, factor in whether the matter should or would be pursued through years of litigation; as we have seen, state interest, diplomatic considerations, regional and cultural factors, international reputational profile, and domestic political and policy considerations (among others) have an impact on turning a matter of trade concern into a trade dispute.

Just as there are matters that will inevitably end up in formal dispute settlement because of their particular profile, there are matters of trade concern that are at once unlikely to be settled through bilateral diplomacy and not given to formal dispute settlement.¹⁷ This does not mean that the matter goes away on its own, or that Members necessarily channel – or should channel – such matters through formal dispute settlement.

A simplified taxonomy of “matters of trade concern” could help clarify the reach of both diplomacy and formal dispute settlement¹⁸:

This article addresses¹⁹ levels 3 and 4 matters of trade concern.²⁰ It is hypothesized²¹ that for these types of disputes, conciliation and mediation might well form a viable path to the resolution and settlement because third-party non-adversarial processes:

• represent an escalation from bilateral diplomacy without plunging the parties into legal and juridical procedures and engagements; and
• can be valuable in itself in clarifying issues of a commercial nature, and focussing minds and attention on the most salient problems that are capable of resolution, rather than win-loss findings of legal violation.

The presence of a disinterested third-party can in principle help disputing parties:

• correct, to some extent, an imbalance of power between them in a purely diplomatic context;
• establish an agreed or common understanding of the underlying facts that could form the basis of settlement negotiations;
• identify potential win-win solutions that may not be apparent to them, given each party’s incomplete information about the other’s position, or given parties’ entrenched focus on “rights” or “legal positions” rather than “solutions” and “interests”; and
• provide a degree of external pressure on responding countries – in the form of a credible solution with some authority behind it – that may help them to overcome internal blockages to a negotiated outcome.

Conciliation and Mediation in the WTO

It has been argued that “Mediation is the continuation of negotiations by other means.”²² This observation, clear on its face, hides a multitude of complexities: negotiations take place between friendly as well as antagonistic parties; they are shaped by “the context and characteristics of the situation”, which includes not just the subject matter of the specific underlying dispute, but also national attitudes, conduct, and geopolitical considerations, among other variables and considerations.²³

Mediation is an ad hoc procedure that enables parties to a dispute to extend their existing “conflict management” framework, through a voluntary process and the intermediation of a third party, with the objective of:

• changing the dynamics of bilateral negotiations;
• benefitting from the mediators’ ideas, knowledge, and experience;
• affecting the dispute in such a way – for example, by reducing or removing one or more of the problems of a negotiating framework²⁴ – as to make it more susceptible to settlement;²⁵ or
• benefitting from a third-party’s expert and considered recommendations for a compromise settlement or a mutually acceptable solution.²⁶

The DSU

Mediation is a standard feature of international diplomacy.²⁷

Article 5 of the Dispute Settlement Understanding (“DSU”) reflects this by setting out “Good offices, conciliation and mediation” as “procedures that are undertaken voluntarily if the parties to the dispute so agree.”²⁸ “The dispute” refers to the “matter” identified in a “Consultation request” pursuant to Article 4. The reference to the agreement of “the parties” and the inclusion of the word “voluntarily” means that unlike Articles 4²⁹ and 6, involvement in the Article 5 procedure is not mandatory.

Article 5 provides the following:

• GCM “proceedings” and positions taken by disputing parties must be “confidential”;
• positions taken by disputing parties are “without prejudice to the rights of either party in any further proceedings under these procedures”;
• when the parties engage GCM within 60 days after the receipt of a consultation request, the complaining party must refrain from requesting the establishment of a panel for 60 days (unless the parties “jointly” consider that the process has failed to settle the dispute); and
• the Director-General may, ex officio, offer good offices, conciliation or mediation.

Of note, Article 5 does not define “good offices, conciliation and mediation” (“GCM”); there are no rules or procedures elaborated in respect of these mechanisms. Because it already structurally follows a “request for Consultations”, the WTO GCM is engaged after a Member’s preliminary assessment of another Member’s violation of its WTO obligations, a “triage” as to the engagement of formal dispute resolution, and the launch of the formal mechanism. These factors explain – at least in part – why GCM has not been formally used to date.

Mediation and DSU reform

Early in the DSU reform negotiations a number of developing and least developed Members proposed reforms to strengthen good offices, conciliation and mediation.

Paraguay³⁰ proposed to make recourse to Article 5 mandatory “in disputes involving developing country Members, and at the request of any of the parties.” Jordan³¹ and Haiti³² made similar proposals. Paraguay’s proposal would impose a 90-day maximum on the procedure and add the following paragraph to Article 5:

7. The use of the procedures under this Article as a means of promptly settling trade disputes that arise between Members and of maintaining the balance between the rights and obligations of Members shall be encouraged. [emphasis added]

Paraguay did not explain how making mediation mandatory or linking conciliation and mediation directly to the “balance of rights and obligations” of Members renders the procedure more effective at resolving disputes.

In a narrower proposal,³³ the LDC Group referred to the “due restraint” clause of Article 24.1 and sought to remove the procedural qualifier “upon request by a least-developed country Member” from Article 24.2:

In dispute settlement cases involving a least-developed country Member, where a satisfactory solution has not been found in the course of consultations the Director-General or the Chairman of the DSB shall, upon request by a least-developed country Member offer their good offices, conciliation and mediation with a view to assisting the parties to settle the dispute, before a request for a panel is made.

It is not clear the extent to which the exercise of this qualifier is or would be a problem for a least developed country.

Other mediation frameworks

In 2003, the World Organization for Animal Health (the OIE) presented a paper to the WTO to address “some apparent misunderstandings” about its standards.³⁴ The paper set out, in its concluding section, its “in-house procedure for dispute mediation”:

Subject to the agreement of both parties, disputing countries can request mediation by a panel of independent experts selected by the Director General of the OIE. This process has several advantages, as it is not as resource-demanding as the formal WTO process and allows for technically based solutions. At the end of the process, the recommendations from the panel are communicated by the Director General to both parties.

While this process is confidential and non-binding, should the case eventually result in a formal dispute at the WTO, the documentation from this mediation may be released by either party for use by the WTO.³⁵

In 2006, the OIE provided further elaboration on its mediation facility.³⁶ The paper observes that:

The OIE mechanism is a strictly science-based approach to finding solutions through mediated bilateral consultation. In contrast, the WTO dispute settlement process is rather based on legal provisions. The role of the OIE is to help the parties find a resolution of their differences strictly based on scientific elements and with facilitation by OIE experts.³⁷

Of note, as of 2006, the mechanism had been used twice: by Japan and the United States, and by the EU and the United States. In the latter case, according to the OIE, the “mediation mechanism was effective in facilitating technical discussions that assisted in significantly narrowing initial differences.”³⁸

In 2014, the SPS Committee agreed on an informal mediation mechanism to reduce food safe, and animal and plant health friction. The procedure,³⁹ limited to SPS measures, is integrated into the WTO framework in that a “request for consultations” by one Member to another in respect of a measure must be copied to the Chair of the SPS Committee and the Secretariat. As well, it provides for the Chair of the SPS Committee to serve as “the Facilitator”.⁴⁰ The “schedule, format and place of meetings”, as well as terms and conditions of technical expert involvement and third party participation would be agreed between the Facilitator and the consulting Members.⁴¹ The procedure provides that the consultations should not exceed 180 days. Of note, the Chair “will report the general outcome of the Consultations to the Committee.”⁴²

Non-adversarial dispute resolution remains underdeveloped and unrealized in the WTO.

The Chair’s text

On February 14, 2024, the Chair of the DSB submitted a report to the General Council setting out the results of the informal discussion process for DSU reform that had been launched the year before. The report included a detailed explanation of the process and outcomes by the Convenor of the informal process, as well as a proposed text for a Ministerial Decision.

The process

In respect of the process, the Convenor noted that:

I would like to recall that the process that I am facilitating is not the traditional negotiations based on positions. The informal dispute settlement process follows a solution-oriented, interest-based, bottom-up approach.⁴³

An interest-based approach offers the key advantage of reducing power imbalances and fostering inclusive dynamics, allowing every Member to contribute meaningfully. By centering discussions around interests and concerns rather than leverage, this approach ensures fairness and equality for all Members, regardless of their size or status. This commitment to valuing every perspective equally ensures that our collective pursuit of optimal solutions remains untainted by external factors.⁴⁴

At the same time, the process continued to adhere to the traditional approach of Members to DSU reform negotiations:

During the informal process on dispute settlement reform, we have adhered to the principle that nothing is agreed until everything is agreed.⁴⁵

The substance

In this section, we will focus on Title I: “Alternative Dispute Resolution Procedures and Arbitration”, Chapter I: “Good Offices, Conciliation and Mediation”.

The Chapter starts with a definition of the procedures in the title. Of note:

conciliation means the participation of an impartial and independent third person, known as a "conciliator" to facilitate and assist dialogue between the parties with a view to reaching a mutually agreed solution;

mediation means the participation of an impartial and independent third person, known as a "mediator", to facilitate and assist dialogue between the parties with a view to reaching a mutually agreed solution, and who may offer advice or propose solutions for the parties to consider.

Under “General Principles”, the Text clarifies that the procedures are, unlike Article 5, available “before the initiation of consultations under Article 4 of the DSU.” The next section sets out a hortatory “Request for Information” procedure, providing for a 30-day timeframe in which to do so. Under Paragraph 13, the procedure may be initiated through a written request:

Any Member may make a request to another Member to use any procedure pursuant to Article 5 of the DSU, with respect to any measure affecting the operation of any covered agreement taken within the territory of the latter. The request shall be submitted in writing and shall give reasons for the request, including identification of the measures at issue and an indication of the concerns of the requesting Member.

The next section establishes a notification framework.⁴⁶ Section VI sets out the appointment procedures for mediators and conciliators. There is reference to an indicative list adopted by the DSB or, potentially, appointment by the Director General. Appendices 1 and 2 set out model rules of procedure for conciliation and mediation.

Assessment

Throughout this article, reference has been made to “complementary” rather than “alternative” dispute resolution. In a real sense, mediation and conciliation complement and re-enforce formal dispute resolution, providing a full suite of procedures, rather than serving as an “alternative” to the dispute resolution mechanism. As well, the literature, state practice, and the practice of international organizations such as ICSID generally provide that “conciliation” is an expert-driven exercise and mediation as facilitated bilateral diplomacy. These are, however, issues of nomenclature. The challenges of the proposed approach are of a bigger order of magnitude, of which there are at least four.

First, and most important, the proposed procedures appear to be based on a theoretical model of adversarial dispute resolution:

• Section III: “Request for information” ignores the fact that, if state practice to date is any guide, recourse to dispute resolution necessarily comes after diplomatic engagements in the course of which parties will have exchanged information as well as legal positioning. It is doubtful in the extreme that in the context of what ought to be a non-adversarial procedure, a formal request subject to a deadline would be conducive of cooperation.
• Section IV: “Initiation [] of procedures” compounds the problems of Section III by turning what ought to be a bilateral and non-adversarial procedure, sought and consented to by both parties, as essentially a complaint.

By following the patterns of formal dispute resolution, Sections III and IV constitute a category error on the part of the proponents.

Second, elements of the draft appear to have benefited from neither the near-thirty years of experience of the parties in the WTO nor the established and consistent practice of Members at the forefront of “alternative” dispute resolution options and models. Section VI: “Appointment of good officer, conciliator or mediator” is a particularly instructive example.

Paragraph 24 requires (“shall”) agreement within a certain time-frame. It then sets out a number of options, the first two of which are:

a. pre-established list of conciliators and mediators, which the DSB may adopt at any time;

b. the indicative list maintained under Article 8.4 of the DSU; …

The prospects of consensus agreement on a list aside, the question remains whether the indicative list has ever been used as such for panel selection – and why the drafters would consider that more multilaterally agreed lists would be more useful for ADR purposes. As well, considering that conciliation and mediation are essentially voluntary enterprises, paragraph 25 appears at best redundant:

Unless the parties agree otherwise, a conciliator or mediator shall not be a citizen of, or affiliated with, either party.

More important, though, paragraph 25 connotes a continued attachment – based on a fundamental category error – to the existing formal framework that is at odds with both the character and function of ADR mechanisms.

Third, as will be seen in the next section of this article, the qualifications – and required training – of conciliators and mediation should follow from their functions, which are fundamentally different from adjudication. (For which panelists do not get training in any event.) This is why a three-line “definition” is inadequate to the task of identifying the parameters of each function,⁴⁷ and why we should expect more from an appointment procedure than being on the DSU Article 8.4 indicative list.

Finally, the model rules of procedures set out in Appendices 1 and 2 are a good start. However, they are both too much and not enough. Too much in the sense that what are essentially bilateral, informal, and voluntary procedures should not be multilateralised in the form of a negotiated model rules of procedure. Not enough because, in fact, such rules of procedures do not reflect the full set of circumstances in which conciliation or mediation may be required or sought.

This is the first time the organization and its negotiators have spent any time meaningfully negotiating a framework for complementary non-adversarial dispute resolution and they should be commended for their efforts. The outcome of the multilateral process underlines, however, the need for a specialized centre of excellence.

A new WTO facility to operationalize conciliation and mediation

Framework considerations

Any proposal aimed at operationalizing “conciliation and mediation” must be based on at least the following eight broad considerations:

• Members engage in diplomatic discussions to address trade irritants across the range of their trade relations, and conciliation and mediation are merely extended forms of diplomacy;
• some trade irritants are, however, intractable – for political, systemic, or economic reasons – and their settlement (however defined) requires recourse to binding adjudication (however elaborated);
• in respect of some trade irritants, the prospect of litigation is an important incentive for settlement;
• developed countries and larger developing countries have sophisticated diplomatic networks and trade policy bureaucracies that they use to mitigate or resolve most matters of trade concern;
• as the OIE experience demonstrates in a narrow context, even Members with both extensive diplomatic services and deep and broad experience in formal dispute settlement have found recourse to mediation-type facilities useful in addressing economically sensitive and politically challenging matters of trade concern;⁴⁸
• for almost all LDCs and low-income developing countries, and in respect of a significant subset of matters of trade concern of advanced economies, formal dispute settlement is impracticable, not feasible, or suboptimal;
• for all Members, conciliation and mediation has the potential to reduce friction in respect of a relatively large subset of matters of trade concern that are irritants but that do not justify the expense and the pressures of formal dispute settlement; and
• “mediation” is essentially an interest-driven exercise rather than a legal or a jurisprudential one.

Characteristics

In the light of the foregoing, a functional and effective conciliation and mediation facility (CMF) would have the following characteristics:

1. Inspired by the examples of the Enhanced Integrated Framework and the Standards and Trade Development Facility, the CMF would be housed as an administratively independent framework within the WTO.
2. The primary objective of conciliation and mediation is to address diplomatically unresolved matters of trade concern that do not make their way to formal dispute resolution – the “missing disputes”. A successful CMF would eventually “facilitate settlement of a larger share of disputes in a pre-litigation stage and relieve the burden on the WTO adjudicating bodies.”⁴⁹
3. Under the CMF, conciliation and mediation could be engaged before a request for consultation crystalizes multilaterally⁵⁰ (and therefore publicly) the legal contours of a single trade irritant for either party.⁵¹ Because it would be outside the framework of a “matter”, the CMF could potentially address multiple trade irritants in the bilateral relationship.
4. The focus of “settlement” for matters of trade concern through the CMF would not be “nullification and impairment.”⁵² The WTO Agreement forms an important background to any resolution, but the CMF would concentrate on the trade and commercial interests of the parties as against their broader diplomatic, economic, and political relations in arriving at win-win solutions.
5. There is no need for an institutionally agreed rules of procedure. Under the CMF, the parties engaged in conciliation and mediation are and remain masters of the process. The value-added of a CMF would be the expert development of modular model rules that participating Members may adopt by agreement. Specific modules could include, for example, number of hearings, nature of hearings, engagement of experts, and the like.⁵³
6. Conciliation and mediation may well require a global examination of the relations between the participating parties – for example, their other trade and economic arrangements – that would go outside the expertise or, indeed, the mandate of the WTO Secretariat.⁵⁴ For these reasons, as well as to enhance flexibility, consideration might be given to CMF within the WTO that would be outside the existing reporting and staffing framework of the WTO.
7. A quasi-independent CMF under the rubric of the WTO could well rely, in addition to flexible staffing arrangements, on term limits for its management, and an independent budget funded by donor countries.
8. The CMF should, as an expert entity, have the responsibility to identify, maintain, train, and propose a roster of mediators and conciliator.⁵⁵ The objective of conciliation and mediation is to identify, based on a global understanding of the interests at stake, “viable and innovative win-win solutions”⁵⁶ to the parties. This may require the involvement of seasoned trade diplomats with experience in and knowledge of the region, or subject matter experts, or eminent persons.⁵⁷
9. A quasi-independent CMF could also serve as counterparty between disputing Members and mediators; when used by developed and high-income developing countries, it could indeed be run on cost recovery basis. It would require both launch and core financing, and diplomatic support, in four stages:
   1. Initial set up;
   2. Commitment by one or more developed countries to use this mechanism in respect of trade irritants between them and a (smaller) developing Member;
   3. Commitment by one or more developed countries to finance mediation of trade irritants between low-income developing Members, or between less developed Members; and
   4. Commitment by one or more developed countries to finance training, outreach, and advice in respect of the implementation of mediation and resulting agreements.
10. Mediation could be run initially on virtual platforms, but ideally it would be in person, location to be decided jointly (and not necessarily in Geneva).⁵⁸
11. A hard cap would be imposed on the duration and costs of mediation, subject only to the express request of parties to extent the time limits and to accept responsibility for cost-overruns.
12. Mediation reports would be confidential unless a public version is requested by the parties, any redactions to be agreed between the parties and the mediator.

Mandate

WTO Members, in fulfilling the MC12 mandate, would grant the CMF three principal functions: 

• Provision of mediation and conciliation services to the Members of the WTO in respect of disputes related to the WTO Agreement.

To this end, following broad consultation with WTO Members, other instances of arbitration and mediation, and the trade community at large, the CMF will:

• develop modulnd considered approach to state-to-state mediation on trade matters, one that responds to the needs of state parties seeking mediation.

This is a new function in and under international trade law. Following broad consultation with WTO Members, other instances of arbitration and mediation, other trade and regional agreements, and the trade community at large, the CMF will:

• in its first two years, engage in research and analysis of mediation models and modalities, and convene conferences, seminars, webinars, and other in-person and electronic sessions, to identify “best practices” for state-to-state trade mediation; and
• develop training modules for staff, mediators, and other interested persons.
• Provision of advisory activities for officials of developing and least developed countries and consciousness raising for all other potential beneficiaries of state-to-state trade mediation.

To help WTO Members understand the benefits of mediation and conciliation and how to take advantage of this facility, the CMF will engage with:

• international organizations that provide capacity-building and technical assistance to developing and least developed countries on trade matters – such as the WTO, the ITC, and international financial institutions – to participate in and offer capacity building on mediation and conciliation in sessions devoted to dispute settlement; and
• active users of WTO dispute settlement and other WTO Members to seek their support for, promote their use of, non-adversarial dispute settlement.

In carrying out its functions, the CMF will focus on:

• strong users of formal dispute settlement that have an interest in reducing pressure on the system, or are open to non-adversarial dispute settlement in trade matters;
• advanced economies with strong trade-dispute triage frameworks and an interest in non-adversarial dispute settlement;
• LDCs and low-income developing countries with traditionally limited or no access to formal dispute settlement; and
• regions where for cultural or geopolitical reason, formal dispute settlement has not been optimal.

Life outside of the WTO?

A record number of Matters of Trade Concern before the Council for Trade in Goods, and hundreds of outstanding Specific Trade Concerns before other committees, have been raised by both developing and developed countries. These are trade and commercial disputes that are not resolved through diplomacy or WTO committees and that Members have not yet determined to bring to a formal dispute. A specialized conciliation and mediation facility that can be invoked outside the context of a formal dispute would help Members resolve those concerns, and reduce both tensions and pressure on the formal WTO dispute resolution framework.

The foregoing proposal is conceived to function within the confines of the WTO. Given the uncertainties surrounding the WTO’s future, it may be time to consider whether the proposed facility could work independently of that organization.