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WTO Resilient but Changed after Ministerial

This essay is excerpted from a Centre for International Governance Innovation (CIGI) Commentary, published online February 7, 2012.

The recent ministerial meeting, held in Geneva in December, demonstrated that the World Trade Organization (WTO) is resilient but changed as an organization. In fact, the meeting surprised many hardened observers by producing some tangible deliverables—four new accessions and a major new deal on government procurement—as well as a number of ministerial decisions. Do these results suggest that WTO members really do care about the WTO and that the mood has changed within the organization? Or was this simply a carefully orchestrated opera directed by a masterful director, WTO Director-General Pascal Lamy, to ensure that this meeting would not result in a failure, like so many past WTO meetings? After all, this was the first ministerial meeting to eschew multilateral negotiations—the Doha Round was not on the table; instead, this meeting was devoted to discussions about the role of development and the future of the multilateral trading system. The precisely drafted consensus document, “Elements for Political Guidance,” prepared in advance by ambassadors in Geneva, reveals an overwhelming preoccupation with development as a “core element of the WTO’s work.” It is this mission that underscores most of the ministerial decisions taken at this meeting, which provide preferential treatment to less-developed countries. This statement, however, if widely accepted by the WTO membership, is a major change from the WTO’s main mission, which, in the past, has focused primarily on trade liberalization.

With respect to the future of the multilateral trading system, it is clear that the WTO will not continue to play the central role it has played in previous trade negotiations. Instead, the priority in developed country capitals is on negotiation of preferential “new generation” economic and trade agreements with other major partners, as well as plurilateral negotiations, such as the Trans-Pacific Partnership. They pragmatically view the WTO as a place to achieve what they can with whom they can—witness the Agreement on Government Procurement (a plurilateral agreement involving the European Union, the United States, Canada and a handful of other partners). But, increasingly, the major developed countries feel hamstrung by the very principles they insisted upon in the Uruguay Round, which have now become the mantras of the developing countries—the single undertaking and the consensus principle. The very success of the Uruguay Round in making the WTO more universal, with fuller participation of developing countries, has made the WTO less viable as a forum for negotiating further trade liberalization.

There appears to be a more realistic understanding, after over 10 years of failing to negotiate all issues within the context of the Doha Round, that it might be better to separate the subjects out and try to negotiate some of them on a case-by-case basis. One example is dispute settlement—ministers agreed to conclude the Dispute Settlement Understanding Review negotiations on a separate track from the Doha Round. It shows a new willingness by members to negotiate outside of the confines of omnibus rounds in the future.

The successful negotiation of the Agreement on Government Procurement highlights another mantra in the WTO: whether negotiations should always be approved by all members on the basis of consensus, rather than allowing “variable geometry” or plurilateral agreements in the system with approval of less than the full membership of the WTO. The developing countries are particularly committed to retaining the single undertaking and consensus principles, whereas the major developed countries tend to favour a more pragmatic approach, including variable geometry if consensus is not possible. It is this inability to bring new agreements into the WTO that has driven those countries in favour of greater liberalization to negotiate “new generation” trade and economic agreements outside the WTO.

The ministerial meeting has provided interesting insights into the WTO as an organization. From a governance perspective, the WTO is clearly a different organization today than it was in its first decade. There is currently a deep divide between developing and developed countries with respect to its mission, governance structures and future direction. The overwhelming majority of members are developing countries for whom development is a core element; the developed countries see trade liberalization as the primary objective and will pursue it in preferential trade agreements when progress is not attainable in the multilateral system. Many members remain wedded to concepts of the single undertaking and consensus decision making for reasons of representativeness and transparency. In order to move ahead, however, and conclude new agreements in the WTO, some form of variable geometry will likely have to be accepted in future. By delinking the dispute settlement negotiations from the Doha Round and concluding the government procurement agreement, members have already demonstrated a willingness to be pragmatic in order to achieve results rather than dogmatic in insisting upon certain principles such as the single undertaking. While there appears to be a renewed sense of optimism among members of the WTO, it is clear that the scope of what is achievable is limited and broad multilateral trade negotiations will remain very difficult for the foreseeable future.

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