By Pascal Lamy, Shashi Tharoor and Pradeep S. Mehta
The setback to prospects of reform of the World Trade Organization (WTO) at its 14th Ministerial Conference (MC-14) in Yaoundé, Cameroon, needs to be seen in a particular context.
WTO members were not able to agree on a structured negotiating agenda for reform. Any multilateral agreement is a mutual exchange of policy space. If we want to trade, we cannot achieve a lot without conceding nothing.
Growing geopolitical fragmentation, declining trust among nations and a shift from consensual to flexible plurilateral approaches are some factors that explain the stasis. Members could not even agree to a ministerial declaration with an anodyne paragraph on the imperative of the WTO. While this is disappointing, it is not unprecedented, and it certainly does not mark the end of the WTO.
Till recently, there was divergence among WTO members on the contours of reform. This was particularly the case for systemic issues such as consensus-based decision making, its two-tier dispute settlement mechanism and the extent of special and differential treatment of WTO members based on their development status.
The WTO is now being tugged in different directions. Existing impasses remain and new fronts are being opened. Now there is divergence not only on the contours of reform, but also on what the fundamental architecture of the WTO system should be.
Underlying these normative considerations are systemic concerns of overcapacity and oversupply, and a shift from protectionism (protecting producers from foreign competition) to ‘precautionism’ (protecting citizens and consumers from a range of risks) in international trade.
Yet, economies such as China and India are dependent on international trade for economic growth. By extension, they are reliant on a well-functioning, rules-based multilateral trading system (MTS) as a global public good to underwrite trade stability and predictability.
Regional and bilateral free trade agreements (FTAs) can complement the MTS, not substitute it. FTAs cannot insulate businesses and consumers against unpredictability in global trade in the same way a robust MTS can.
Innovative models are now under discussion, such as the proposed cooperation between the EU and economies of the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP). The effort here will be to establish bridges between these trading systems, such as through common rules of origin.
While welcome, such approaches remain second best to a functioning MTS. But this raises a question: what are the prospects of one in the prevailing environment?
The MC-14 saw a new approach of ‘operating within the impasse.’ A group of WTO members agreed upon interim arrangements to operationalize the Electronic Commerce Agreement, while saying that they will continue efforts towards its full incorporation into the WTO rulebook.
This indicates a shift in the approach of some members in favour of results-oriented progress, rather than continuing to grapple with seemingly irreconcilable positions.
In a well-functioning system, this would be rightly seen as circumvention and subversion. However, in the context of the WTO today, it is being seen as a sign of moving forward.
The WTO is caught in a vicious cycle. As long as systemic issues cannot be resolved, limited progress will be achieved on substantial trade matters of interest to its members.
At the same time, the list of systemic issues seems to be expanding, taking energy away from finding a way forward on a core set of issues. One of the architects of the system is now acting as its very bulldozer.
While it is too early to conclude that the grand bargain represented by the WTO has failed, it is increasingly clear that the system is unlikely to go back to the form in which it began.
Since 1995, the WTO has endured as an organization whose members complain but cooperate, contest but co-exist. Institutionally, it has proven able to absorb setbacks before, but the present stalemate is one of its greatest tests of resilience and relevance yet.
At a time when the MTS finds itself under assault from all directions, we need to make a strong case for it. Its benefits include the predictability and stability it offers producers large and small as well as consumers around the world. Businesses and business chambers have been making a case for aspects of the WTO that are of commercial interest, but they need to do more to garner support for the WTO system at large.
Together, we need to foster a positive narrative around the enduring centrality of the WTO in the global trade architecture. Unless there is a conducive environment, there will be no political interest in meaningful WTO reform. To generate support, we must demystify and democratize discussions related to international trade and the organization. That international trade affects all of us should be the key message that goes out.
We also need to review the way the WTO operates to make it more efficient, speed up decision-making and make better use of its Secretariat’s high-quality resources.
This is the focus of a new CUTS initiative, ‘Trade, Not Just Aid,’ co-chaired and steered by the three of us. This outreach aims to take WTO reform related issues around the world, raising awareness about its indispensable role in the daily lives of people—who should know what is at stake.
There is a long road ahead if the WTO is to turn the corner. Our fervent plea is to not write off the MTS with the WTO at its core. For decades, we have seen first-hand the benefits of a freer, fairer, rules-based multilateral trade regime with the WTO at its centre. We have also seen the perils of protectionism and unilateralism.
Overall, we are at a critical juncture in the history of international trade policy. We cannot afford to be despondent. It is time to put the world back in the World Trade Organization.
The authors are, respectively, former director-general, World Trade Organization, former foreign minister of India, and secretary general of CUTS International.
This Article can also be viewed at: