Questions on WTO' role in the 21st Century

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THE GLOBAL SOUTH NEEDS A MULTILATERAL APPROACH

 

Business Standard, 06 November, 2011

 

By Faisal Ahmed

 

The real challenge that the world faces today is to develop modalities of strengthening international cooperation and build common minimum commitments. Hovering between the hope of implementation and the fear of closure on the one hand, and the alternative choices of Plan A and Plan B on the other, the Doha Round has definitely lost its sheen, if not the mandate, to strengthen multilateralism. Complete negotiation and implementation of the Doha Agenda does not seem to be possible in the near future. But its closure at this juncture would also be unworthy and undemocratic, as it would force disadvantages on the countries of the global South. The global South, comprising more than 150 developing and Least Developed Countries (LDCs) of the world, suffers from some of the most rudimentary development challenges.

 

The World Trade Organisation (WTO) essentially promotes a rule-based multilateral trading system. However, amidst such critical anomalies associated with the negotiations on the Doha work programmes, the real challenge that the world faces today is to develop modalities of strengthening multilateralism. This in turn will also help countries inculcate preparedness for the Doha Agenda.

 

In a recent address to CUTS International in September, Pascal Lamy, the director general of the WTO, chose not to speak on "the future of the multilateral trading system", but preferred to voice his views on "the multilateral trading system of the future". He argued that political leadership, pragmatism and the spirit of compromise, and the spirit of realism, were the three factors that needed urgent attention….

 

Moreover, another congregation with potential to lead such an initiative is ECOTA. Apart from strategically located Turkey, ECOTA comprises of the geopolitically vibrant and resource-rich Afghanistan, Pakistan and Iran, and the naturally endowed Central Asian republics of Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. ECOTA's total exports are estimated to be $289 billion. Intra-ECOTA development cooperation can itself support the respective government's preparedness for multilateral negotiations.

 

It is therefore important to see whether the forthcoming WTO Ministerial at Geneva can introspect not merely about what is deterring the negotiations, but necessarily what can enhance global preparedness for negotiations.

 

The complete article can be viewed at:

http://www.cuts-citee.org/article-The_global_South_needs_a_multilateral_approach.htm

 

http://www.business-standard.com/india/news/faisal-ahmed-the-global-south-ne

 

 

 

 

THE WTO AND THE DOHA ROUND: WALKING ON TWO LEGS

 

World Bank Note

 

By Bernard Hoekman

 

The Doha Round of the World Trade Organization (WTO) negotiations has been ongoing for 10 years, and given political cycles in major countries, there is not much hope for a rapid conclusion. The topics on the table are important, and in principle there is enough substance for all countries to gain from an agreement, but, unfortunately, too much emphasis has been placed on gains through market access alone. The Doha Round is about much more than market access. Concluding the talks arguably requires greater recognition of the value of trade policy disciplines that will be part of any agreement…..

 

The Economic Premise notes are produced by the Poverty Reduction and Economic Management (PREM) Network Vice-Presidency of the World Bank. The views expressed here are those of the authors and do not necessarily reflect those of the institution.

 

To read more, please click here: http://siteresources.worldbank.org/INTPREMNET/Resources/EP68.pdf

 

 

 

 

From: Dr. David E. Lewis Vice President Manchester Trade Ltd.

 

WOULD THE WTO'S DOHA AGENDA GENERATE SUBSTANTIAL IMPROVEMENTS IN MARKET ACCESS?

 

Controversy swirls around whether the WTO's Doha agenda promises enough market access to make it worth pursuing. That reflects the extraordinary complexity of the proposals related to Doha, as well as uncertainty about how members would use the flexibilities included in the agreement. In a recent working paper, David Laborde, Will Martin and Dominique van der Mensbrugghe offer a detailed analysis of the latest modalities for tariffs and for countries' real incomes. They show that the formulas used to cut agricultural tariffs would halve tariffs in industrial countries. In non-agricultural sectors, the formulas would sharply reduce the maximum tariffs facing developing countries and cut average industrial country tariffs by more than one-third. The authors use a political-economy framework to assess which products are likely to be sheltered from the tariff-cutting formulas. They illustrate that, despite those exceptions, worthwhile gains in market access are likely:

 

Applied tariffs facing developing countries would be cut by about 20 percent in agriculture and 27 percent in non-agriculture sectors. Industrial countries would also see sizeable cuts in tariffs. The estimated benefits of an agreement include global-income gains of up to $160 billion per year from market access reform. These estimates, which are very conservative, use a new approach to overcoming the deficiencies of traditional evaluation methodologies based on weighted-average tariffs.

 

World Bank Policy Research Working Paper 5679

http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=469372&piPK=64165421&menuPK=64166093&entityID=000158349_20110622134741&cid=decresearch

 

http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2011/06/22/000158349_20110622134741/Rendered/PDF/WPS5701.pdf

 

 

Dr. David E. Lewis

 

 

 

 

AMERICA’S FREE-TRADE ABDICATION

 

Project Syndicate, 29 September, 2011

 

By Jagdish Bhagwati

 

The indifference and apathy that one finds in Washington from both the Congress and President Barack Obama on the Doha Round of world trade talks, and the alarm and concern expressed by statesmen elsewhere over the languishing negotiations, mark the end of the post-1945 era of American leadership on multilateral free trade.

 

The complete news item can be viewed at:

http://www.project-syndicate.org/commentary/bhagwati17/English

 

 

 

 

THE WORLD BANK'S INTERNATIONAL TRADE DEPARTMENT HAS LAUNCHED A DISCUSSION ON THE FUTURE OF TRADE POLICY.

 

This event is one of the official Program of Seminars that will take place during the 2011 Annual Meetings of the World Bank Group and the International Monetary Fund.

 

The debate is also part of an ongoing series of Global and Regional Development Debates that provide a platform for capturing, distilling, and disseminating knowledge on current cross-cutting topics.

 

The Doha development round of trade negotiations has failed so far to deliver its promise. Developed and emerging countries are claiming the other side bears responsibility for not putting on the table substantial offers. Wherever responsibilities may lie, an inescapable fact is the growing influence of emerging nations in the global trade arena. By fueling global trade growth in recent years, the impact of the 2008 crisis was dampened.

 

Panelists will discuss the "quiet trade policy diplomacy" of the growing economic power houses and its impact on other developing economies. Emerging economies are active trade policy reformers using preferential regimes, bilateral relations and lowering transaction costs; as a result South-South trade has grown faster than average, but protection remains higher in the South. Finally, the roundtable will lead to a reflection on what the new balance of power means for future multilateral and regional cooperation on trade.

 

The complete details is available at: http://wbi.worldbank.org/wbi/event/future-trade-policy-growing-role-south

 

 

 

 

From: Nikolai Fuchs, President Nexus Foundation, Geneva

 

I want to come back to an issue, which was launched by CUTS in the CUTS trade forum in February 2011. This discussion might as well contribute to the current debate about the WTO' role in the 21st Century. The topic is:

 

Ref.: Efficiency and Not Self-Sufficiency is the Key for Agricultural Development in Africa, says Pascal Lamy, DG of the World Trade Organisation

 

to help to remember, CUTS wrote in February:

 

Geneva, February 21, 2011

 

Delivering his key note address at the CUTS international conference in Geneva on 21 February, Pascal Lamy, DG World Trade Organisation stated that the African agriculture needs to become more efficient, and in that efficiency it needs to discover “specialization”. CUTS Geneva Resource Centre had organized this conference on the theme “Harnessing Agriculture for Development through Trade” to present the findings of its research on agriculture-trade-development linkages in five African countries.(...)

 

Just coming from Kenia, I would like to come back to this issue, to which, I think, only one contributor - Ode Ojowu, Country Policy Centre, Nigeria - on the 28th of February yet respondet. He made the valuable point, that "...It is critical in taking agricultural development in Africa to the next level. It is however important to note that efficiency and self-sufficiency are not mutually exclusive. In fact, they should be seen as causally linked..."

 

I want to respond to Pascal Lamy's saying, that "... African agriculture needs to become more efficient, and in that efficiency it needs to discover specialization."

 

I think nobody would disagree with Pascal Lamy, that efficiency in african agriculture can be raised and, in fact should be raised. The reasons can be either GDP growth, food security or even climate change. But the issue becomes more critical, when it comes to specialization. I have seen flower farms at lake Naivasha and pineapple farms north of Thika (besides small holder farms). From all of which I heard, read and have been seeing specialized farming nearly always collides with the environment. Lake Naivasha for example is close to a tipping point of ecological no return. Lake Naivasha is a hotspot for Kenyan tourism, with many Kenians depending on it. The pineapple fields are burned after harvest, together with the plastic sheet which covers the ground the pineapples are planted in, which has quite an impact on the environment, besides sprinklers running over the day (remember the hunger tragedy in the north of Kenya because of a drought), etc..

 

What I want to point out is: Having already crossed the planetary boundaries in most of the ecological parameters, the environment and its protection is somewhat existential, no longer a issue of "can" (if economically affordable), it is an issue of "must" (see as well Marrakesh preamble of sustainable development). This said, agricultural specialization has to be handled with care. It is not a recipe for the future to be just discovered and then followed. A short historically scroll back: wasn't it the Washington Consensus which IWF and World Bank proposed as medicine against too much a socialist impetus in the 70s in developing countries to reach self-sufficiency? Did not specialization already take place during the last 25 years? The limits and constraints of this strategy become more and more visible, bringing high officials to announce the Washington Consensus to be dead. Isn't there a second historical blunder, to be corrected?

 

In the book which was launched by CUTS on 21st of February ("Agriculture in Development of Select African Countries") in the conclusions and recommendations for Kenya one finds the following sentences: "Over concentration on export-oriented policies at the expanse of local agricultural sector has proved to be detrimental to the country." "... for instance there seems to be a disconnect between trade policies and food security policies." "At the global level, it is time for agricultural trade policy to leave its autarchic past and get in step with the needs and realities of the marketplace." "Moreover, creating an open, equitable global food system requires bringing trade, investment and technology together in a much more coordinated way than is possible in traditional trade negotiations." (all page 77)

 

If specialization is an issue it needs thorough balancing with environmental issues. Self-sufficiency is and will be an issue in Africa, because rural areas being home to most of the hungry need a striving rural economy, having to be balanced with export agriculture. To make my point: Having this in mind I would opt for a diversification strategy for Africa. Diversification may include a share of specialised agriculture - but always balanced with self-sufficiency needs (diverse local farming can be run very efficient, too) and in as much as possible harmony with the environment (I let aside the social discussion).

 

Trade negotiations are challenged to deal with this complex (diversification) matter: having rural economies with self-sufficiency aspects and at the same time export oriented agriculture. For my opinion that needs after the two historical blunders a "3.0 trade negotiation approach". This might be inspired by what economy nobel prize holder of 2009, Elinor Ostrom found out about the management of commons (like fish): the most efficient management of commons is neither (statly) centralization, nor privatisation. It is about the stakeholders making the appointments including rules and their control mechanisms by themselves. Seeing the world as a global village, the "villagers" (the stakeholders) are the states. The WTO enfolds 153 of them. Given the right to food, agriculture has a side where it is a common. Taking this into account the WTO could be the place where the stakeholders (perhaps including the private sector and the civil society) meet and manage the trade related to the common agriculture - inter alia for the sake of food security.

 

 

Nikolai Fuchs

 

 

 

Efficiency and Not Self-Sufficiency is the Key for Agricultural Development in Africa, says Pascal Lamy, DG of the World Trade Organisation

 

Geneva, February 21, 2011

 

Delivering his key note address at the CUTS international conference in Geneva on 21 February, Pascal Lamy, DG World Trade Organisation stated that the African agriculture needs to become more efficient, and in that efficiency it needs to discover “specialization”. CUTS Geneva Resource Centre had organized this conference on the theme “Harnessing Agriculture for Development through Trade” to present the findings of its research on agriculture-trade-development linkages in five African countries. Mr Lamy also stated that the Doha Round will help level the playing field for Africa, correcting historical injustices in the world trade rule book.

 

DG Lamy’s views were echoed by Ann Tutwiler, Deputy Director General of the Food and Agriculture Organisation. In her address to the conference, she stated that development of agriculture in Africa requires a multi-pronged approach combining policy and practice, private and public partnership, and national and multilateral synergies.

 

Pradeep S. Mehta, Secretary General of CUTS International in his Welcome Address appreciated the role that many development partners are playing for the development of Africa, particularly of agriculture. He stressed the positive contribution of CUTS in this respect and invited all development partners to join hands for inclusive and broad-based African growth.

 

While inviting DG Lamy to launch the CUTS research publication, Ramamurti Badrinath, Director CUTS Geneva Resource Centre elaborated on CUTS unique strengths, i.e. grassroots linkages, inclusive approach, and interlinked research, advocacy and networking activities.

 

The day-long conference was attended by a large number of African and Geneva-based representatives of governments, international organisations, NGOs and research institutions. The presentations and discussions affirmed that CUTS research study has set out a relevant menu of recommendations.  These include the need to increase agricultural productivity, promote regional trade, improve infrastructure, build capacities of farmers and traders, and early conclusion of the Doha Round with development-friendly outcomes.

 

For further details, contact Josiane Rufener at gen...@cuts.org.

 

You can send your views to CUTS-Tr...@googlegroups.com

 

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From: Alejandro Jara, Deputy Director General, World Trade Organization

 

The attached letter speaks for itself and contrasts sharply with other who want to put an end to any effort to conclude the DDA

 

 

Alejandro Jara

 

 

 

 

END THE CHARADE IN TALKS ON GLOBAL TRADE

 

Financial Times, 24 August, 2011

 

By Jean-Pierre Lehmann

 

"There is a global trade crisis. Unlike the financial crises, it is not making headlines. But it is potentially far more dangerous. It is true there are no significant trade conflicts at the moment. But the whole institutional framework is breaking down. When a big trade conflict arises – and it is surely “when” not “if” – the system in all likelihood will not be able to cope." opines Jean-Pierre Lehmann, founding director of the Evian Group at the IMD business school, Lausanne, Switzerland. He further provides some suggestions for getting out of the current impasse.

 

The full article is available at

http://www.cuts-citee.org/article-End_the_charade_in_talks_on_global_trade.htm

http://www.ft.com/cms/s/0/2eff29ac-ce3c-11e0-99ec-00144feabdc0.html#axzz1W8PQV6iJ

 

 

 

 

From: Michael Hindley Former President of the European Parliamentary Friends of Hong Kong

 

Dear All

 

The “world” is focussed on some other mighty events – Arab Spring turning into chilly autumn, massive loss of confidence in the Euro as a project, failure of western and US economies to revive – the quiet death of Doha will cause nothing more than a ripple.

 

Doha was a product of a more optimistic era, but never a real programme for trade led development.

 

A sensible acceptance that the WTO is GATT+ and not an engine for world growth or development would be the way forward.

 

 

Michael Hindley

 

 

 

 

The GATT-WTO System in a Different World from that which Originated it: Can a renovating boost be expected from the Geneva Ministerial Conference?

 

"The upcoming Cannes G20 Summit and the Geneva WTO Ministerial Conference offer an opportunity for organised regions to take up an active role in the redefinition of the architecture of the international trade system", says Félix Peña in his monthly newsletter. Pena is Director of the Institute of International Trade at the Standard Bank Foundation and Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF), Beunos Aires, Argentina.

 

Pena's newsletter report takes forward the discussion on pertinent questions on determining the future of the WTO in the 21st century raised earlier in this forum by Ujal Singh Bhatia, former Indian Ambassador to the WTO.

 

The newsletter report says that at least three questions appear as relevant for the much needed debate on the future of the WTO. These are: How would it be possible to prevent the definite collapse of the Doha Round, at least concluding it in a less ambitious version to that which was originally planned? If this were feasible, how could the WTO be preserved from the eventual negative impact that such collapse would have on its effectiveness, credibility and relevance? And even in the case that the Doha Round were recoverable, how could political energy and technical ingenuity be harnessed for the design of a new stage of the WTO that can profit from the accumulated experience, strengthen its essential functions and innovate in its agenda of priorities, work methods and negotiation modalities?

 

The full newsletter is available at

http://www.felixpena.com.ar/index.php?contenido=negotiations&neagno=report/2011-08-can-a-renovating-boost-be-expected-from-the-geneva-ministerial-conference

 

 

 

 

From: MYC Lumbanga, Ambassador & Permanent Representative, Permanent Mission of Tanzania to the UN

 

Once again I wish to join the fray on the important issues raised by Ambassador Ujal Bhatia on the next steps in the DDA by giving my brief views as under:-

 

On Question 1: I don't think the Doha Round is dead. Instead, the truth as we all know, is that the round is deadlocked due to intrenched positions of the major players involved in the negotiations which we are all familiar with. As long as this remains the case WTO as an organization cannot do anything but continue imploring the membership to change course. I don't see a shortcut to that as every member has sovereign rights which they have to protect, the often- repeated rheotoric of the developed economies willingness to assist the poorest of the poor not-withstanding.

 

On Question 2: MC 8 must continue as intended to provide guidance to the negotiators as required from time to time. Their presence in Geneva provides that rare opportunity to keep abreast with WTO issues first hand than when Ministers are in their capitals. Some have suggested that in MC 8 Ministers abandon the single undertaking clause. While I share that view let me remind all that already paragraph 47 of Doha provides for that avenue where issues that have reached an advanced level of consensus among the membership can be harvested without having to wait for closure of negotiations in all other areas of negotiations. That also explains why the Least Developed Countries (LDCs) have been calling for early harvest of some few issues of LDCs interest for the last two years or so in the areas of DFQF Market Access and the Cotton issue both of which were agreed in the Hong Kong Ministerial of 2005 but its implementation remains a dream on the pretext that things have changed since. A third issue being advanced by the LDCs concerns is the granting of a Services Waiver to LDCs which also enjoys substantial support from the membership.

 

On Question 3: I do not see any reason for the WTO itself to reboot itself or change its mandate so as to address the challenges now facing the organization by including other issues like climate change, etc. While these issues are important too but adding them in the new mandate of the WTO will not achieve any benefit. If anything, such a measure will only complicate matters. I see this as equivalent to someone who is unable to lift a bundle of firewood in a forest going back to cut more firewood. It just cannot work in my opinion.

 

On Question 4: Concerns on synergies and complementarity between regional liberalisation and the multilateral process are already being dealt with by individual member countries in their trade policy review processes in which WTO, UNCTAD, and other trade related organizations are assisting member countries in need of such support.

 

On Question 5: As already explained in question 3 above I don't believe there is any need for any institutional changes in the WTO. What is critical is for the membership to re-examine their negotiating positions with a view to achieving a viable Multilateral Trading System that will benefit all-rich and poor, as trade plays an increasing role in country development globally today than any time in the past.

 

 

MYC Lumbanga

 

 

 

 

From: Clive George, Senior Research Fellow, University of Manchester

 

I too was much impressed by Ambassador Ujal’s article, and would like to contribute to the debate with some possible answers to his questions. These come (directly or indirectly) from “The Truth About Trade”, published last year by Zed Books.

 

Question 1 - Is the Doha Round dead for all practical purposes or is it possible to breathe fresh life into it? Will the successful completion of the Round have any significance for the global trading system?

 

The Round is most unlikely to achieve its aims, but it has to be concluded to enable a new start. This may mean a face-saving exercise, which achieves more in rhetoric than in reality.

 

Question 2 - If it is possible and necessary to revive the Doha Round, what concrete steps do Ministers need to take in MC8?

 

Ministers should 1) produce a package of all that has been agreed so far (no matter how little), 2) issue a statement that makes it seem a lot more, and 3) set out some basic principles for what happens next. The first step would be to abandon the single undertaking, as proposed by Ambassador Ujal. It may then be practicable to initiate discussions/negotiations on specific aspects of the agenda for which there is a good chance of getting agreement. Beyond that, see Question 3.

 

Question 3 - What are the key challenges before the WTO? Does it need to reboot itself to address these challenges?

 

One of Ambassador Ujal’s three contexts for debate was that “a number of global challenges which have a bearing on the global trading system are either outside the purview of the WTO or are being inadequately dealt with” (such as climate change, food security, energy security etc.). In this context the WTO cannot proceed satisfactorily in isolation, but needs a new mandate that takes full account of all the issues. Such a mandate can only be set by a global conference of similar stature to Bretton Woods, which addresses all the global challenges and their interactions, and redefines the roles of the relevant institutions. MC8 cannot itself set up such a conference, but it could make an important contribution by identifying the need for it. For such a conference to succeed there may also be a need for in-depth preparatory negotiations between the major parties (USA, EU, India, China, Brazil), equivalent to those which preceded Bretton Woods.

 

Question 4 - Is it possible to develop synergy and complementarity between regional liberalisation and the multilateral process? If so, what should the WTO be doing?

 

Yes, but not until the WTO has produced a proper definition of a region - as a geographical entity. For everything else, efforts should be made to re-establish the WTO’s core principle of non-discrimination.

 

Question 5 - What initiatives should the Ministers launch in MC8 towards institutional reform?

 

See Question 3. First revise the mandate, then reform the institution accordingly

 

 

Clive George

 

 

 

 

From: Huma Fakhar, Managing Director, MAP Services Group

 

Very impressed with Ambassador Ujal's article. At the end of the day it does matter who is delivering on ground. And yes FTAs have been much more dynamic for actual trade while WT0 leadership lost itself in trade negotiations. High time to confront real issues than just advocating WT0 as supreme multilateral discipline without the organization proving to be so, that too for so many years now.

 

Re Alan s comment on finding answers, seems in many cases relevant leadership does not know the real questions.

 

Ambassador Ujals questions could be a good starting point for a debate focusing only on a solution driven dialogue.

 

 

Best

Huma Fakhar

 

 

 

 

From: Alan Beattie, Financial Times

 

Yes, all fine but unremarkable, except for refusing to acknowledge that the death of Doha is beyond question - what we need at this stage is people coming up with answers, not asking questions.

 

 

Alan Beattie

 

 

 

 

From: Jean-Pierre Lehmann, Professor of International Political Economy, IMD

 

Dear Pradeep & all

 

Ujal Singh Bhatia’s style is indeed inimitable and the contents are erudite, profound and challenging.

 

I think the problems of Doha and the WTO are much deeper than the ones that concern the Round (Doha) or the institution (WTO). I think they reflect a much deeper malaise and malfunction of global governance and leadership. In an article I wrote recently, I compared the stage of global governance with Luigi Pirandello’s play, “six characters in search of an author” and suggested that an apt title for the state of the world under the (nudge-nudge, wink-wink) “leadership” of the G20 would be “20 characters (plus all the hangers on) in search of a script”. They are completely lost. The only thing that they can be counted on is to smile and wave for the cameras when the curtain comes down. I thought the alleged rape of a poor African immigrant woman by the Director of the IMF was also a very potent image of our times. The poor are getting screwed as Doha and global governance and commitments languish and fail to live up to the minimum of promises made (remember Gleneagles?).

 

After the climate change meeting in Copenhagen collapsed, I argued that Cancún should be cancelled, since these meetings are not only extremely expensive in money terms, but also with all the travelling, etc., leave a deep environmental imprint. The expense could not be justified on the basis of the expected return. I was, alas, right!

 

For similar reasons, unless there are very concrete and convincing reasons to expect some positive output, I think we should urge Pascal Lamy to cancel MC8. Instead the WTO should appoint an Eminent Persons Group (EPG) that would address the five key questions Ujal poses at the end of his article.

 

This will not per se “solve the world’s problems”; but at the very least it will put a stop to the charade that these meetings have become and will save a lot of money at a time of crisis! Ujal should himself definitely be a member of this EPG.

 

Depending on the outcome, a ministerial meeting could be convened sometime in 2012 to debate and ideally implement the recommendations of the EPG.

 

I am also increasingly of the view that the WTO needs new leadership. Pascal Lamy is exceptional in being a scrupulously honest man and full of boundless energy, but he is too closely associated with Doha (having been European Trade Commissioner at its launch in 2001) and its many setbacks over the last decade. I like him personally and respect him, but I think the time has come for fresh blood.

 

 

Jean-Pierre Lehmann

 

 

 

 

From: Jagdish Bhagwati, Professor, Columbia University

 

I am not clear what Ujal means. He seems to accept uncritically many recent assertions such as that the value chains mean that FTAs are better than multilateral WTO. I find the paper disappointing.

 

 

Jagdish Bhagwati

 

 

 

 

Questions on WTO' role in the 21st Century

 

Respected Readers,

 

Given below is an article by former Indian Ambassador to the WTO; Ujal Singh Bhatia who has in his own inimitable and erudite style analysed the situation of the WTO and the Doha Round. He has also raised five pertinent questions, which can determine the future of the WTO in the 21st Century.

 

These questions include what the 8th WTO Ministerial Conference must do to justify the costs of holding the event, rather than just meet, drink, eat and slap each other on their backs for a 'job not done well'. All are accountable to the taxpayers of the world, and we at CUTS are wedded to this principle.

 

Regards,

 

 

Pradeep S Mehta,

Secretary General,

CUTS International

 

 

WTO’s Role in the 21st Century

 

Ujal Singh Bhatia

India’s Ambassador to the WTO (2004-2010)

 

Recent developments in Geneva have highlighted the depth of the Doha Round quagmire. The failure of the Members of the World Trade Organisation to agree on an “early harvest” package raises a number of questions not only about the fate of the Doha Round, but also about the future of the WTO itself. Questions will inevitably be raised about the WTO’s continued centrality in the global trading system in the context of the paralysis in its negotiating function which prevents it from raising its game to address the rapid changes in the global trading system.

 

The lively debate we have witnessed in the CUTS Internet Forum on the Doha Round and the WTO has remained inconclusive. Some contributors have argued that the only way to rescue the WTO is to allow it to discard the Doha baggage or to delink it from the other functions of the WTO. Others remain unconvinced that it is possible to extract the Doha tooth from the WTO mouth painlessly, because in their view, the source of the infection is not in the tooth, but deep in the gums of the WTO. Doubts have also been raised about the practicalities of separation or abandonment as there does not appear to be a large constituency among WTO members for such a step.

 

The Doha impasse has prevented the WTO from focusing its attention on much needed institutional reform and new issues in the global trade agenda. In view of the deep structural changes taking place in the global economy and the multifarious rules being written into regional trading arrangements, further delay in addressing such issues will increasingly call to question the WTO’s centrality.

 

The Ministerial Conference of the WTO to be held in December this year (MC8) provides an opportunity for Ministers to address all these issues. A clearer understanding, through a public debate, on the substantive issues Ministers should be addressing in MC8, would be useful in focusing Ministerial minds. The purpose of this note is to flag off such a debate.

 

Perhaps the most fundamental issue the WTO needs to confront is about its role in the 21st Century – is its central function about trade liberalisation per se, or is to provide a canopy of rules, disciplines and other mechanisms to capture trade liberalisation around the world and to manage global economic interdependence?

 

There are at least three contexts for such a discussion:

 

First, the structural changes we are witnessing in global manufacturing and commerce – the unbundling of manufacturing and its dispersal along regional/global value chains, a similar process in a growing range of services leading in many cases, to their off shoring, the spurt in innovation throughout the value chain, etc. RTAs are better geared to providing a framework for liberalisation in such a dynamic trading environment.

 

Second, the uneven spread of benefits of globalisation among geographies, which threatens to marginalise a large number of poor countries and is spurring calls for “demondialisation” and fuelling protectionist policies in several developed economies.

 

Third, a number of global challenges which have a bearing on the global trading system are either outside the purview of the WTO or are being inadequately dealt with. These include issues like climate change, food security, energy security, etc.

 

The real task, therefore, is to equip the WTO with the tools it needs to address current and future challenges in a way that responds to the needs of all players, big and small, and furthers the goal of sustainable globalisation. For this it needs forward looking mandates, institutional capacity and agile processes. Mega Rounds under the debilitating cover of the Single Undertaking are clearly not the answer.

 

As far as the prospects of the Doha Round in the short term are concerned, it is important to understand the politics behind the wrangling about the “early harvest” package for December. A minimalist LDC package requires the US to approach its Congress without any sweeteners. It is difficult to envisage a positive consideration of such a minimalist package in the US Congress given its ambivalence on issues of international trade and the deep polarisation within it on a range of issues. Apart from this, a LDC package alone will do little to assure other constituencies that the remaining part of the Doha mandate can be successfully negotiated. The challenge before Members is to agree on something beyond the LDC package without conceding too much negotiating leverage required for the final push. At the end of the day though, even an agreement on a package may be a case of “too little, too late”.

 

In this broad framework, the questions which need to be debated are:

·        Is the Doha Round dead for all practical purposes or is it possible to breathe fresh life into it? Will the successful completion of the Round have any significance for the global trading system?

·        If it is possible and necessary to revive the Doha Round, what concrete steps do Ministers need to take in MC8?

·        What are the key challenges before the WTO? Does it need to reboot itself to address these challenges?

·        Is it possible to develop synergy and complementarity between regional liberalisation and the multilateral process? If so, what should the WTO be doing?

·        What initiatives should the Ministers launch in MC8 towards institutional reform?

 

It is essential that the preparation for MC8 moves along the triple tracks of decisive steps (either way) on the Doha Round, a mandate to take up new issues and institutional reform. MC8 has to move out of the sterile script of its predecessor. Another listless, expensive Conference which produces little of significance, will only serve to highlight the organisation’s plight.

 

 

This article is prepared at the request of CUTS.

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