Prof. Richard Baldwin at the Graduate Institute of International Studies in Geneva recently warned that the World Trade Organisation (WTO) is facing a threat of being irrelevant to the world trading nations if it "does not adopt to its challenges"! Like other international institutions namely the U.N.(and its largely ineffective Security Council) the IMF and the World Bank, it seems the bug of ineffectiveness is catching up with the newest of these international institutions-the World Trade Organisation (which was only born on January 1995)!
While Prof. Richard Baldwin, had in mind the threat of regionalism in which trading states have resorted in bypassing the WTO most favoured nation (MFN) liberalisation approach to regional or bilateral or unilateral liberalisation of global trade. He contends this would end up making WTO irrelevant as an institution charged with ensuring the rule based trading system! which is its strategic challenge, the immediate problem however (probably hard to adopt), is power, politics and the geopolitical positioning in its membership!
These challenges are not new though, many have not forgotten the Seattle debacle, when small and poor nations stood up to the rich nation`s bullying and arm twisting at the 3rd WTO ministerial conference that ended up collapsing without a trade treaty signed! similarly at the 5th ministerial meeting in Cancun Mexico that also collapsed without an agreement because of poor nations and developing countries standing up against the expanded agenda that brought on board the so called "Singapore or New Issues".
The poor nations had learned the lessons of using their numerical strength to rebalance the power of their rich counterparts through the coalitions (like the famous G90, G21, G33, G110 and many more Gs that evolved right on the run to the Cancun Ministerial meeting). More than 3/4 of the WTO membership are either Developing or Least Developed Countries!
The core of the problem is that its hard to imagine how its possible to reach an agreement based on consensus under "Single Undertaking" (nothing is agreed until everything is agreed) between very diverse 153 members of this organisation. You have categories ranging from the super Rich countries and blocks like the U.S.(together with NAFTA countries account for 8 percent of world trade), EU [31 percent of world trade (intra-trade) take place here], then Japan and China and other major East Asian Countries control regional trade of about 14 percent of global trade)and poor members for instance African intra-regional trade is hardly 0.5 percent of global trade (actually its only USD 33 billion making it only 0.3 percent of global traded merchandise- even though its the region with the largest membership in the WTO)
With this immense trade power imbalance, its difficult to have states agree amongst themselves on a deal that satisfies every body especially when some members come with mercantilist intentions to the negotiating table, even if one appealed to the moral conscience of the negotiators, definitions of what would be a moral trade deal would differ!
By yesterday, the Chairman of the Trade Negotiating Committee (TNC) who is also the WTO Director General Mr. Pascal Lamy had come face to face with this reality of power, politics and diversity of interests and suspended negotiations in the green room! the logic of calling few a key ministers in Geneva during this summer was to try to minimize friction between the key protagonists, bring the powerful players together to agree amongst themselves before they sell the deal to the wide membership expecting high chances of acceptability then!
This mode of negotiation was adopted in that it would allow afew ministers from key regional coalitions as Coordinators (For instance , currently the Deputy Prime Minister of Mauritius is coordinating the ACP group in the negotiations)to join the big powers in the green room and they would emerge out occassionally to brief their constituencies on the progress.
The model gathered almost 30 ministers and senior officials, together in the so called "Green Room" but the points of divergences were so divergent that Mr. Lamy informed yesterday`s informal Heads of Delegations (HOD) TNC that he was changing the mode of negotiations to even smaller groups of ministers over an issue and then he will reconvene everyone in a general membership as a formal TNC to ascend to the deal reached amongst these small groups of ministers! By the yesterday, G7 (your guess is right-U.S., EU, Brazil, India, China, Japan and the unusual suspect, Australia!) had emerged as the core negotiating group thats likely to salvage the Round!
But the problem is that other politically insignificant delegations and their ministers had started feeling frustrated and locked out of the process, many of which have left Geneva already! This threatens the consensus amongst the membership and even if the deal was to be reached by the G7 consensus is likely to be difficult to reach in these circumstances (Mauritius minister warned this morning in the ACP/ and G90 coordination meeting).
Poor countries` ministers are heard complaining in the corridors of the WTO about the lack of transparency and inclusiveness of the whole process and that they will be no way they will ascend to a deal they have not negotiated and does not meet their minimum demands from the Round! Things are bad and they seem only to get worse for the MTS!
I will follow the events from inside from now-keep your eye on this space!
1 comment:
Dick,
Regionalisation per se might not be WTO greatest threat. Quite to the contrary, regionalisation may in fact help the multilateral trading system by helping address some of those difficult challenges that members at the WTO are failing to address. As more barriers to trade are dismantled across regions, it will be easier to reach consensus at the multilateral stage since the markets will already be open in any case. I rightly agree with the Prof that one of the biggest stumbling blocks to WTO, is this whole concept of single undertaking (nothing is agreed until everything is agreed). Who ever came up with this concept surely knew who frustrate negotiations. How do you expect all the 154 members to reach consensus on everything on the table? This concept prevents countries from focusing on the real issues on the table and instead keep going back and forth to see what is being offered in other sectors. This only serves to make the issues more complex and it becomes difficult if not impossible to ever reach consensus. I think this whole principle should be abandoned and member states negotiate each item separately and reach consensus on that particular item. Otherwise the Doha round will never end. Right now I think that the multilateral trade talks deserve a break for people to cool down a bit and resume when everybody is ready to negotiate not to demand concessions from others without giving anything in return. NOBODY OWES ANYBODY ANYTHING IN TRADE NEGOTIATIONS!!!! Back in 1947 when GATT started it was for those involved to reduce tariffs and barriers to trade and not for some to reduce tariffs and barriers to trade for others. Mercantilists are spoil spots for the multilateral negotiations. They behave as if they never knew when they joined WTO that it was about reducing tariffs and barriers to trade.
Jeffrey Atwine
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