Articles >Failure of Latest WTO
Failure of Latest WTO Summit Reveals an Alarming Global Indifference
The Wire, December 25, 2017
By Pradeep S Mehta and Bipul
Past WTO conferences have also ended unsuccessfully. This, however,
was the first time member countries didn’t even try to make it a
There is little doubt today that trade multilateralism is in a state
of crisis. This was proved again at the recently-concluded
unsuccessful ministerial conference of the WTO (World Trade
Organisation) members in Buenos Aires, Argentina. This is neither a
one-off event nor just confined to trade.
Since the financial crisis of 2008, a series of events have taken
place in all three areas of global public goods – security,
environment, trade – where multilateral negotiations and solutions
have had hiccups. However, the setback of trade multilateralism
should not be confused with backlash against globalisation.
Manifested backlash against globalisation, as reflected in Brexit
for example, is more about growing inequalities created by
increasingly-prevalent economic tensions among capital, labour and
technologies than trade per se.
It is true that, as against reversal, current trends in the three
pillars of globalisation – trade, investment, migration – are all
positive. After a few years of sluggish growth global trade is
poised for a better growth in 2018 according to the WTO. This is a
reflection of economic recoveries in Western countries. Investment,
particularly foreign direct investment in services and new
technologies, is expanding. Despite many political challenges,
evident from the growth and diversification of sources of
remittances, cross-border migration is not stopping.
Then the question is how to get trade multilateralism out of its
crisis so that there is a greater political push for globalisation
with equity. Time is not on our side. Collective leadership is
Unsuccessful WTO ministerial
This is not the first time that a WTO ministerial conference was
unsuccessful. We have seen it happening before: in Seattle (1999)
and Cancun (2003). However, the difference between the earlier ones
and the one in Buenos Aires is that there was no palpable appetite
on the part of any WTO member to make it a success. The big trader,
the US, itself was unclear in what it wants.
Much before this ministerial, and repeatedly during the event in
Buenos Aires, the conference chair – Argentine minister Susana
Malcorra – said that there is life beyond Buenos Aires. Of course
there is, but nobody is sure what it would be like in the near
future. The result was that the Buenos Aires ministerial could not
produce a ministerial declaration or decision. On the other hand,
the US was hell bent that there should not be any reference to the
Doha Development Round of negotiations in those documents.
Many developing countries including India refused to accept the
discussions and negotiations during the conference as mere “policy
dialogue”. Neither of them made efforts to arrive at a middle
ground. Nor there was much push on the part of other major players
such as the European Union, China and Brazil to get them to a
conducive negotiating table.
This was not surprising because at the time of the drafting the
ministerial declaration in Geneva (before the actual conference),
the US stated its discomfort about the word ‘development’ and also
questioned the principles of the multilateral trading system under
the WTO. Even though India’s trade minister Suresh Prabhu protested,
defining development as the heart of the WTO, other members did not
rally against such extreme positions.
Therefore, it did not come as a surprise when Robert Lighthizer, the
US trade representative, left Buenos Aires on the second day of the
conference without waiting for its conclusion.
Need for institutional reforms
The governance of the multilateral trading system rests on three
major functions of the WTO – negotiations, regular work programme
and dispute settlement. Out of them, negotiations are stalled, the
regular work programme has become more like business as usual and
the dispute settlement system is under severe stress.
Perhaps because of the success of its dispute settlement system, the
WTO has become a victim. This year the US refused to endorse the
appointment of a member to the appellate body of the WTO disputes.
With a few other members of this appellate body due to retire before
the end of next year, the system will become dysfunctional.
The US is
saying that there is too much of emphasis on WTO disputes and as a
result its negotiating function under the regular work programme is
not getting much-needed attention. This was the original idea behind
the formation of the WTO. With the conclusion of the Uruguay Round
of multilateral trade negotiations under the General Agreement on
Tariffs and Trade, it was decided that there will not be any more
round of negotiations but revisions of Uruguay Round agreements and
introduction of new issues to the system will be carried forward
through the negotiations of a built-in agenda under the regular work
Alas, within a few years of the conclusion of the Uruguay Round and
the establishment of the WTO in 1996, it was the US (supported by
the EU) which insisted on first launching a millennium round of
negotiations in Seattle (1999) and then, despite opposition from
many developing countries including India, launched the Development
Round in Doha (2001). Developing countries agreed to launch the Doha
Round more as a solidarity shown to the US and the international
community following the unfortunate 9/11 incident.
Time for collective leadership
Institutional reforms at the WTO will take time to come to fruition.
This is because it is a member-driven organisation and they will
have to first agree in what areas and what type of reforms are
needed. Both the dispute settlement system (without reverting back
to the GATT system of dispute resolution – from the current system
of negative consensus to the old system of positive consensus) and
the functioning of its regular work programme need significant
reforms so that there is balanced participation of all members in
the system and a more equitable distribution of its outcomes.
That can happen if there is a collective leadership within and
outside the WTO. Since the Second World War, the US has successfully
underwritten a system of governance of global public goods which
brought unprecedented stability and growth to the world. At the same
time, it is to be realised that it has also created inequality
within and among countries. Furthermore, the US will have to come to
a new reality that it is no longer in a pole position to direct the
governance of global public goods.
However, while some current policies and postures of the US
administration are creating vacuum in the governance of global
public goods, China and other emerging economies should also realise
that either alone or in a disjointed manner they are not in a
position to provide the kind of leadership that the US provided post
the Second World War.
The comity of nations will have to work collectively for better
governance of global public goods; trade being one of them. All
countries should be in a position to exercise their right to trade.
This should be done at the WTO and also at other relevant fora such
as the G-20. This will require much more proactiveness and
flexibility on the part of the US, EU, China, India and other
emerging economies. They should realise the importance of finding
negotiated solutions to problems through dialogues and that even
with ‘give and take’, there can be ‘win-win for all’.
If the WTO becomes dysfunctional, which may happen before the end of
next year, then the world is heading for disastrous consequences in
the other two areas of global public goods as well. It is better to
pull up our socks now than to wait for another unfortunate, 9/11
type of incident to understand the virtues of multilateralism and
Pradeep S. Mehta and Bipul Chatterjee are secretary general and
executive director, CUTS International, a global think-tank on
economic policy issues.
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