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European Affairs
Trade Relations
We Need a Serious Trade Initiative in the WTO
Hugo Paemen
Senior Advisor, Hogan and Hartson L.L.P.
As discussions intensify in Geneva over the possibility of launching a new round of multilateral trade negotiations later this year, there is some good news and some not-so-good news. The good news is that the World Trade Organization, despite assaults from its critics, has undeniably gained authority with governments and trade experts.
More countries want to become members of the WTO and, soon after their accession, the organization will be able to claim its truly global vocation. The WTO rules, as they were established during the last major trade round, the Uruguay Round, are undisputed, and the dispute settlement system is generally considered to be working well. None of the final decisions have been put into question until now.
The bad news: it is hard to deny that the WTO missed its debut in terms of public performance. The Ministerial meeting in Seattle in late 1999 failed in its aim of starting a new round, or at least a kind of action program for the following two years.
It was a failure, not because of the demonstrations by anti-globalization protestors outside the meeting, but because of bad preparation and an absence of the political will to compromise inside the conference rooms.
The lack of any decision, which might at least have made some demonstrators think twice, certainly reinforced the image of the WTO as contributing to the problems of globalization rather than to their solution.
It is also difficult to part with the impression that, since Seattle, some precious time has been lost. Too much "Monday-morning quarterbacking" has been taking place. Too much time and energy have been spent on methodology and tactics, and not enough on the substantial problems.
The result has been too much concentration on dispute settlement procedures and a rush to litigation each time a problem comes up - all at the expense of consultation and negotiation, which are meant to be the main vocation of the WTO.
We seem to have forgotten that the General Agreement on Tariffs and Trade (GATT) served us well for about 50 years thanks to effective consultation and negotiation procedures, notwithstanding a rather defective dispute settlement system. The problem is not with the new dispute settlement system, which is working well and has gained considerable authority.
The problem is with the rest of the WTO, which makes the dispute settlement system the only show in town. Moreover, as the Chairman of the General Council, Mr. Kåre Bryn of Norway has said, "The dispute settlement process is increasingly being forced to take decisions that ought to be taken by the trade body's members."
Does this mean that the WTO is a desperate case? Certainly not. But in the light of these problems, and of the growing interest in the WTO, the only alternative is a major effort to recover lost time and opportunities. It seems to me that, in order to recover from its missed debut, the WTO needs to tackle five important issues in the very near future:
The WTO should wrap up accession negotiations with the candidate countries, particularly China and Russia, as soon as possible. This will make it a truly global organization, and the only regulatory framework for international trade with full authority and worldwide responsibility. It would also give it a considerable stabilizing role in the world, alongside the International Monetary Fund, the World Bank and the United Nations.
There needs to be a solution to the so-called implementation issue - the complaints by some developing countries that agreements reached in the Uruguay are too difficult, or too painful for them to implement. The problem is seen by many developing countries as their main difficulty in the WTO, and, together with the dispute settlement process, it has tended to monopolize discussions in Geneva.It is not a generic problem and there is readiness to reach a reasonable solution. The outcome, however, should neither call past achievements into question nor block further progress.
The WTO should also find the right formulas for increasing transparency in its internal workings and toward the outside world, and should be open to input from interested non-governmental organizations. This should not be too difficult. It is largely a question of imagination, common sense, and mutual respect. Such openness could encourage the belief that the WTO is not part of the problem, but of the solution.
The WTO should maintain the dispute settlement system, using it judiciously and improving it where needed.
The WTO should concentrate on substantial preparation of future negotiations. Seattle will always remind us that the sheer presence of more than a hundred ministers is not a guarantee for success if the homework has not been done in national capitals and in Geneva. A large part of the technical preparatory work for the Uruguay Round was also done by organizations such as the Organization for Economic Cooperation and Development, as well as by research institutes and experts in different countries.
It is important for the WTO to find the right balance between the day-to-day organization and working methods of a permanent institution on the one hand, and the political-level meetings on the other. The vigor and strength of multilateral organizations generally do not come from ambulant ministerial meetings.
They mostly result from well-organized and strenuous efforts by permanent delegations and experts in the Headquarters, who tirelessly try to find common ground between their respective governments in order to prepare the ultimate trade-offs, and the decisions by their ministers.
That's how things happen in the European Union, the North Atlantic Treaty Organization, the IMF, the World Bank, and the UN. These organizations do not move forward without good work at the preparatory level between Ministerial meetings.
These considerations should not detract from the necessary increase in openness and transparency, which is the common responsibility of governments and of the headquarters in Geneva.
Finally, all this indicates that, for the WTO, a serious and substantial initiative is long overdue. Whether it will be called a "Round" or not is of less importance. At any rate, it will have to be different from traditional GATT rounds, including the Uruguay Round.
It should be different, if only because there is now a WTO, and this added potential should be fully exploited. Moreover, it is never good to prepare for the previous war. This time, there will be more active participants in the negotiations.
There is a much wider scope of issues in different stages of maturity. These days, the competitive position of an economy has to do with factors that go beyond traditional trade policy regimes.
Such an initiative will require acts of strong and cogent leadership. It will not succeed without a balanced and rather inclusive agenda that reflects the concerns of citizens and of international economic operators, both of which have considerably shifted since the opening of the Uruguay Round.
One condition, however, remains: as the United States and the EU collectively represent nearly
60 percent of world economic output, and nearly 40 percent of world trade, a new initiative will not flourish without their genuine cooperation.