Tuesday, January 15, 2013

Advice for the Next WTO Director-General

Nine candidates are vying to succeed World Trade Organization Director-General Pascal Lamy when he retires this year.  As the next Director-General knows, the WTO does three things:

  • establishes and enforces global rules for trade among nations,
  • serves as an impartial forum for resolving disputes, and
  • facilitates negotiation of global trade agreements to boost economic growth.

The WTO is doing fine on the first two duties, but has failed on the third.

The WTO’s Doha Development Agenda is all but dead.  Why?

  • Perhaps it was doomed from the start by the WTO’s all-or-nothing approach where nothing is agreed until everything is agreed – enabling small groups of countries to prevent progress if they didn’t get what they wanted. 
  • Perhaps the world has changed in the dozen years since the Doha Round was launched and countries then seen as developing – such as China and India – now are global economic powers who no longer deserve “developing” status.
  • Perhaps the final nail in the coffin, so to speak, was the rise of bilateral and multilateral agreements among nations willing to more forward when the WTO couldn’t – such as the Trans-Pacific Partnership and the potential new agreement between the United States and the European Union.

Willing countries are attempting to build on the progress made during the failed Doha Round and soon will launch negotiations toward a global services agreement and a global trade facilitation and customs agreement.  These agreements will call into question a fundamental WTO mission.

What should the WTO do?

We expect the new Director-General to continue to strengthen the WTO’s rulemaking and dispute resolution systems.  But what about trade?

One suggestion: Abandon the all-or-nothing requirement for progress on global trade deals. 

Allowing the majority of countries to agree on terms and move forward would be a good start.  Doing so with the next WTO agreement would help boost economic activity and would strengthen the WTO’s role as a global venue for enhancing trade.

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