WTO Adrift

Jan 13, 2012 Editorial

The eighth ministerial of the WTO held in Geneva Dec 15-17 passed almost without comment, much less the conflict that had characterized its meetings over the last decade. The sad reality is that the WTO faces a crisis of relevance due to many factors since the launching of the Doha Round in 2001.
Arrogating the right to manage global political and economic processes, the industrialised countries launched the round without a credible material basis. With their recent worsening domestic economic and political conditions, they shifted the goalposts repeatedly and sought extreme results. The paralysis in the trade body has been further compounded over the last five years by an ineffective management.
Something has gone wrong, perhaps inevitably, with an organisation whose sole agenda is to advance trade liberalisation. Some see this “irrelevance” of the WTO as a negotiating forum which is unable to deliver credible and equitable multilateral trade agreements that are palatable for all members. The Uruguay Round (UR) of trade negotiations, which was concluded in December 1993 at the official level, was the last major agreement of the trade body. It coincided with the high tide of globalisation when the US and the EU exerted a hegemonic influence on global economic processes. The UR brought new areas – intellectual property rights and services – under the global rules on trade. They had not been part of the General Agreement on Tariffs and Trade (GATT), the predecessor to the WTO.
This vastly changed the landscape of the global trading regime by taking on board the concerns of the US, the EU, and other industrialised countries. Developing countries were compelled to undertake new commitments which they had little influence in framing. In short, the outcome from the UR emboldened the trade majors to go for the kill based on their favourite ‘bicycle-theory’. This ‘theory’ ordains that like riding a bicycle, countries must keep peddling the levers of trade liberalisation by tearing down their tariff and market access barriers without a pause. Otherwise, they would risk reversing the supposed gains, the keepers of the neo-liberal paradigm warned time and time again.
A fortnight before the ministers descended on Geneva, WTO members had already decided the outcome. That was primarily to avoid any mutual recriminations which are bound to crop up, given the manner in which the Doha Development Agenda negotiations have been hijacked and all its agreed mandates modified since the round was launched in 2001. Intransigent positions adopted by some members, the US in particular, have put paid to the possibility of any middle ground solutions to end the decade-old negotiations. Coupled with this, the WTO’s leadership also played its part in worsening the systemic paralysis that seems certain to cause the ultimate demise of the Round.
The US wants China, India, Brazil and South Africa, who are often referred to as the emerging countries, to undertake commitments in market access and rules that are far in excess of what the Doha mandates stipulate. Indeed the US stance also finds resonance with the positions adopted by the WTO’s embattled Director General Pascal Lamy. In his inaugural statement at the ministerial meeting, Lamy said, “You [the ministers] will need to address the essential question behind the current impasse: different views as to what constitutes a fair balance of rights and obligations within the trading system, among members with different levels of development.”
The only highlight, if any, was the admission of Russia into the WTO after 15 years of negotiations. Ironically, on the margins of a multilateral ministerial meeting, 42 countries, primarily industrialised nations, agreed on a “closed” plurilateral agreement on revised rules and expanded market access coverage in government procurement. This is a telling commentary on the WTO and its future direction.
In the end, three issues–keeping markets open and resisting protectionism, current global challenges, and the way forward in the Doha Round–revealed an unbridgeable divide among industrialised countries along with several developing countries on the one side, and an overwhelming majority of developing and LDC’s on the other.

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WTO Adrift

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