The WTO – The facts?
Many observers have a tendency to equate the existing round of trade negotiations, the Doha Development Agenda, with the WTO. Although this is simply not the case, there are risks in this widespread perception as the danger is that the WTO’s constituency may conflate the fate of the main one with the fate of the other. It really is, therefore, important to think about what the WTO is.
- First, and foremost, the WTO may be the world’s basic trade agreement .
- Second, the WTO administers the many WTO agreements.
This administration must be a policy-oriented one which ensures the correct implementation and monitoring of the sixteen separate multilateral agreements that constitute the WTO. This important activity has been neglected. For example, notifications to the Committee on Trade and Agriculture from various WTO members have fallen behind. Fortunately, steps have been recently taken up to begin to rectify this issue.
- Third, the WTO resolves disputes among its members.
The WTO’s unique dispute-settlement system is among the most default dispute-settlement system for international trade agreements. The machine has been invoked 427 times that is a real vote of confidence from WTO members.
There exists a direct connection between your health of the WTO itself and the long-term viability of the WTO’s dispute-settlement system. As WTO disputes break new ground – especially on issues where there is little if any negotiating history – the legitimacy of the findings of the dispute-settlement system are called into question. Court decisions are no replacement for negotiations to build up rules highly relevant to new challenges. This issue is becoming much more serious.
- Fourth, the WTO reviews and monitors in the context of the Trade Policy Review Mechanism.
This includes the standard trade policy reviews of WTO members. Because the global financial meltdown of 2008 the WTO has begun providing semi-annual reports identifying trade measures taken by G20 countries. This new work is founded on the authority directed at the Director-General to aid the Trade Policy Review Body (TPRB) to attempt an annual summary of developments in the international trading environment. This is a credit to the Director-General, also to the flexibleness of the WTO as an institution, that the organisation has had the opportunity to adapt this provision to the circumstances of the global overall economy. This reporting by the WTO has helped keep protectionist measures in balance.
- Fifth, the WTO provides technical assistance to developing countries.
Much has been done in this area during the last few years notably regarding aid for trade.
- Sixth, it offers a forum for negotiation .
This heading is split into three parts: accession negotiations, multilateral trade negotiations, and plurilateral negotiations.
Since 1995, 25 WTO members, including China, have negotiated their accession . In 1995 there have been 128 members therefore the new members add significantly to the full total membership. Furthermore 30 countries are negotiating their accession to the WTO including Russia whose accession has been effectively completed. As a whole these accession negotiations represent an extremely significant extension of the scope of discipline and liberalisation supplied by the WTO system. Indeed, nearly 20% of world trade in goods is generated by recently acceded members and countries negotiating their accession.
Another facet of the negotiating function of the WTO may be the negotiation of new multilateral agreements, about which more follows below.
Lastly, I’d remember that the WTO could be a forum for plurilateral negotiations . Currently such negotiations are engaged with a view to improving the provisions and enlarging the coverage of Government Procurement Agreement. These negotiations are progressing well and an effective completion could occur in December.
As the negotiating function is central to the WTO, we’ve seen it isn’t the only function of the important institution.
The last 65 years have observed enormous changes to the multilateral trading system. Only 23 contracting parties signed the GATT in October 1947. Today there are 153 members of the WTO. The numbers tell only a little the main story.
Who the main element players are has changed dramatically as have the informal alliances included in this. The main development because the WTO’s formation has been the accession of China in 2001. China’s share of world merchandise exports has exploded from some 4.3 % in 2001 to 10.4% this year 2010.
My first involvement with the GATT began in 1973 as preparations for the Tokyo Round of negotiations began in earnest. An instant look at how that round premiered tells a lot about how exactly much things have changed. The preparatory process premiered by two separate joint declarations one by the united states and the EC and the other by the united states and Japan. The formal preparatory process in the GATT took significantly less than six months. The merchandise was a draft of the Tokyo declaration with only two sets of square brackets.
In 1973 the developing countries were ready to allow developed countries run the show provided these were given special and differential treatment and the principle of nonreciprocity was applied. The developed countries didn’t at that time start to see the participation of developing countries to be necessary to the development of a reasonable reciprocal package, because their share of world trade was relatively small plus they were not viewed as competitive threats except in a few labour-intensive industries such as for example textiles and clothing. It had been not long following the Tokyo Round that both developed and developing countries concluded this is not really a satisfactory way to proceed.
The first days of the Uruguay Round and its own preparations were the heyday of the old Quad (then comprising the united states, the EC, Japan, and Canada). This grouping met frequently at ministerial level and played a substantial role in shaping the negotiations. However, the role of developing countries was becoming more and more important resulting in other gatherings involving ministers from both North and South. The Cairns Band of agricultural producing countries emerged as a constructive force in the negotiations putting great pressure on agricultural protection. Importantly, this group cut across North-South lines.
To summarize the Uruguay Round, it became clear that there would have to be considered a meeting of minds between your US and the European Communities. And even, the Blair House agreements set the stage for the ultimate conclusion of the negotiations on agriculture and subsequently the complete package. While there is a whole lot of griping about the actual fact that the united states and the EC had ‘set the terms’ of the ultimate package there is also recognition that was most likely the only way the negotiations will be taken to a conclusion. Things have changed. No more can the united states and the EU dictate the terms of the results. The G20 led by Brazil has turned into a major force and several think that what’s had a need to conclude the Doha Round is a gathering of minds between your US and China.
The changing issues
The topic matter of international trade negotiations can be changing dramatically.
The brand new challenges include:
- The implications for trade of national and international efforts to lessen carbon emissions. Schemes to lessen carbon emissions come across difficult territory when contemplating how to approach imported goods stated in a different national regulatory environment. Many schemes envisage some kind of border restriction. Instead of embracing dispute settlement, it really is clearly preferable that such problems be discussed, and if you need to negotiated, among governments in the WTO.
- The formation and spread of global supply chains. The ‘made in the world’ phenomenon has changed how international business is conducted and has obliterated the original distinctions between trade in goods, trade in services, investment, and intellectual property. We are in need of a complete discussion in the WTO about the implications of the development for the WTO system.
- Another major challenge of the trading system comes from the development of regulations and their use. Systems of regulation are expanding and so are having a direct effect on trade as is seen by looking at the agendas of the Dispute Settlement Body, the Committee Technical Barriers to Trade, or the Committee on Sanitary and Phytosanitary Measures. WTO members have to consider how to react to these developments.
- The growth in bilateral and regional free trade agreements and negotiations. Practically all members of the WTO are actually in at least one FTA. This example poses important systemic challenges. The WTO must consider the type of its role in this new era, including which negotiations are best done in the WTO and how it could foster the multilateralisation of regionalism. Why don’t we not forget that a lot of businesses, whether large or small, think it is much easier to use in a global with one global group of trade rules rather than many regional and bilateral disciplines.
- The security of way to obtain various primary commodities. The WTO requires a policy-oriented discussion regarding the increasing usage of export restrictions both in agriculture and the industrial sector. Once more something more creative than dispute settlement is necessary.
These issues already are upon us. WTO members have began to deal with them which process will continue. How these issues are addressed could have major implications for the trade rules and the WTO system. The WTO must begin to handle these issues comprehensive. The Ministerial Conference in December will be a good possibility to consider the need for this task.
Doha Development Agenda
The negotiations in the Doha Round during the last a decade have produced many important and valuable potential results. However, it is becoming painfully clear that the negotiations will not be concluded soon based on what is now up for grabs. Frankly, the complete negotiating effort is in serious trouble. WTO members should never let the failure to summarize the Doha Development Agenda impair the WTO itself.
Even high-level political involvement hasn’t brought needed progress on the floor in Geneva. There’s been a disconnect between leaders’ statements and what officials have already been ready to negotiate. Unfortunately there appears to be too little understanding at political levels about the need for trade and the WTO system to the functioning of the global economy also to the prosperity of every WTO member.
Among the reasons members are experiencing trouble concluding the Doha Round, is basically because the preparatory process for the round was inadequate. To a significant extent the Doha Round agenda is a continuation of that which was negotiated in the Uruguay Round, and is dependant on the task programme that had its origins in the first 1980s. That work programme emerged at the GATT ministerial meeting in 1982. It provided the intellectual capital for the Uruguay Round. This programme was very broad and occurred across international institutions, in capitals, in think tanks and in addition heavily engaged the business enterprise community. The task also engaged ministers and after much debate, generated a good consensus about what would have to be done and why it had been important.
New thinking needed
New thinking is necessary in the WTO. The approaches of twenty years ago are no more adequate to today’s challenges. That is a period for reflection and soul-searching. We have to begin a process that may revitalise the WTO and equip it to cope with the challenges that lie ahead. Failure to take action would put the project of international trade cooperation at risk.
The procedure of reflection and thinking has recently begun in a variety of quarters including in the WTO notably through successive world trade reports. The recent report by task force of the united states Council on Foreign Relations on US Trade and Investment Policy demonstrates there is valuable new thinking on these matters going on in america.
We need a fresh work programme in the WTO like the one undertaken by ministers in the GATT in 1982. This might take the time. But heading down this road may offer us the very best prospect of harvesting what WTO members have elaborated through a decade of work in the Doha Development Agenda negotiations.