Exclusive-Reform proposals emerge to fix WTO by early 2024 - document

By Emma Farge

GENEVA (Reuters) - World Trade Organization members have begun reviewing reform proposals designed to address U.S. concerns in what a key negotiator called the "last chance" to restore the trade watchdog's ability to settle trade disputes.

The draft proposals seen by Reuters represent what WTO delegates say is the most serious attempt so far to fix the broken dispute settlement system. It envisages such reforms as time limits on resolving disputes and a new way to allow countries to give feedback on rulings they disagree with.

However, it does not yet tackle the central question of whether its top court, known as the Appellate Body, will be revived - a move seen as critical to restoring faith in global trade rules.

The WTO's ability to settle multi-billion dollar trade disputes has been hobbled since December 2019 when the United States, calling for an overhaul, paralysed the Appellate Body by blocking judge appointments. Since then, countries can still file complaints to a lower body but if they do not accept its findings, the case ends up in legal limbo where some 30 unresolved appeals now sit.

Countries are in negotiations to fix it by next year and have submitted dozens of ideas, trade sources said.

"For many reasons, I'm convinced this is the last chance to restore the system," Marco Molina, Deputy Permanent Representative of Guatemala to the WTO, who is coordinating the talks, told Reuters. "If we don't reach a proposal by the ministerial conference, there won't be another window of opportunity like the one we have today," he added.

The next ministerial meeting is in Abu Dhabi in February 2024. Molina declined to give further details, citing the sensitivity of ongoing negotiations.

Earlier this week, Molina told senior officials of WTO members that negotiators were "not far" from a deal. Many delegates say progress is needed urgently since the U.S. presidential election in November 2024 may cool U.S. commitment to WTO reform - with trade a hot button issue for voters.

CAR WITHOUT AN ENGINE?

A draft document dated Oct. 2 and marked "confidential" showed proposals for the February meeting that address U.S. criticism of the 28-year-old trade body, such as allegations of judicial overreach and inefficiency.

It envisages a new mechanism allowing countries to review and give feedback on legal interpretations of trade rulings to inform future judgments.

It also seeks to encourage and simplify informal resolution of disputes, an option that exists but is little-used, and to introduce new, tighter, deadlines for resolving disputes - nine months for standard cases and a year for complex ones. Some WTO disputes have taken years, or in some cases like Airbus-Boeing over a decade, to complete.

New WTO rules must be agreed by consensus of all 164 members.

Deputy United States Trade Representative Maria Pagan said Washington fully supported the negotiations, without commenting on the specific proposal. "If we are able to maintain the collaborative and constructive pace we have set for ourselves, we are confident that tangible progress can be achieved."

WTO Director-General Ngozi Okonjo-Iweala was also optimistic, saying this week there was "a lot of political will" for dispute settlement reform.

However, there is no agreement yet on any future appeals chamber and the text leaves this section blank, calling it a "work in progress". Without this, any deal would have little meaning, one WTO delegate said: "You can change the parts of a car and replace its wheels and repaint it, but the car won't run without an engine."

(Reporting by Emma Farge; editing by Philip Blenkinsop and Tomasz Janowski)