WTO Leader Calls for Discussion on Key MFN Rule Amid Reform Push

Discussion on Most Favoured Nation Principle

By Olivia Le Poidevin

Context of WTO Reforms

GENEVA, Feb 11 (Reuters) - The head of the World Trade Organisation on Wednesday urged members to consider major reforms and hold discussions on its core Most Favoured Nation concept, as trade ructions threaten the global trade watchdog's relevance. 

Global Trade Landscape

"The status quo is not enough," Ngozi Okonjo-Iweala told reporters in Geneva.

Responses from WTO Members

"One should never be afraid to engage on the issues of the day, including foundational principles, especially at a time when you're trying to in a world of uncertainty and geopolitics, you should have a conversation," she added in response to a question about MFN.

"I believe ministers should have a conversation that looks at these key issues... Maybe then ministers will have a chance to reaffirm or not reaffirm, as the case may be," she said. 

WTO members are considering a programme of reforms ahead of a ministerial conference in Cameroon in March, amid concerns that future global trade could be decided outside the 30-year-old watchdog unless it reforms itself quickly.

Global commerce was rocked last year after U.S. President Donald Trump unleashed sweeping tariffs on global trade partners, and companies are having to struggle with a rapidly shifting landscape.   

The U.S. said in a position paper on WTO reforms in December that MFN - one of the organisation's foundational principles -was no longer suitable in a modern trading system, and favours moving towards a system where members can apply differentiated, non-MFN, and reciprocal trade measures.

In an opinion piece in the Financial Times in January, the European Union's trade commissioner, Maros Sefcovic, also said members should question whether MFN remains fit for purpose. 

The MFN principle requires WTO members to treat others equally. The share of global trade conducted under MFN terms declined from about 80% to 72% since Trump imposed higher import tariffs on most trading partners, according to WTO data.

Sefcovic said countries should be allowed to change their tariffs more easily when their economies are threatened, adding: "Access to lower tariffs cannot be unconditional: it must be earned through stronger, credible commitments to the core principles of free and fair trade."

(Reporting by Olivia Le Poidevin; editing by Matthias Williams)