News and Analysis • Volume 14 • Number 1 • February 2010

2. Multilateralism and Diversity: Rethinking the Structure of WTO Agreements

by Robert Howse

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Despite the efforts of Director-General Lamy and his lieutenants to keep a brave face, a sense of frustration and failure clearly pervades the Doha Round negotiations. Meanwhile, the world has moved on and issues not on the Doha agenda, such as the climate change- trade nexus have taken on a greater urgency.

The round was born in Qatar in the wake of the collapsed WTO ministerial meeting in Seattle. It has absorbed the energies of many capable and public-spirited officials and diplomats, and considerable resources of the WTO secretariat, but has produced little in the way of results. The idea that it will all come together in some last minute high-pressure negotiating session, with enough pressure being put on the leaders of the major powers, is nothing but a fantasy.

Political capital is invested elsewhere, dealing with the immediate demands of the financial and economic crisis - the restabilisation of national economies and the normalisation of domestic and international financial systems. The Doha talks have stalled, but preferential trade arrangements have proliferated. Even countries that had traditionally opted for multilateralism have now begun aggressively to pursue regional trade liberalisation. While the Doha agenda remains dominated by issues left over from the Uruguay Round, the world has moved on and issues not on the Doha agenda (except indirectly and peripherally), such as the relation of climate change to trade, have taken on a greater urgency and significance than many of those that are being discussed pursuant to the Doha Declaration.1

But it is not only subject matter of WTO negotiations that needs to be reconsidered; the structure of negotiations and of WTO agreements also needs to be rethought. In particular, we must reflect on the extent to which the current impasse is a product of what might be called the ‘single undertaking’ mentality: the notion that the WTO must move forward through comprehensive rounds of negotiations, resulting in a package of agreements to all of which most WTO must adhere more or less on the same terms. Even in the Uruguay Round itself, this rigidity was not fully followed - the Government Procurement Agreement is plurilateral and the GATS permits individual WTO Members to tailor many of their obligations, based on what they are prepared to commit. Today more than ever the WTO membership exhibits enormous diversity in levels and trajectories of economic development, political systems and capacities. In these circumstances we need to re-imagine the round in more flexible terms.

Re-examining Some Key Assumption

First of all, why not simply admit that some elements of the Doha package are much harder to obtain agreement to than others? It is quite feasible to re-conceive the ‘conclusion’ of the round as an on-going process, rather than a grand finale where everything is agreed at once. An assessment needs to be done of which areas are close to agreement and which areas represent a greater challenge to achieve common ground. Moving forward to agreement on the former, while simply admitting that the latter are not ripe, will give the Doha exercise a sense of greater momentum on the one hand, and greater realism, on the other. In defining these different areas, and taking stock of where things really stand, the Director-General with his senior counsellors and officials, has the opportunity to exercise real leadership.

Second, a similarly hard-headed assessment needs to be done of whether in certain areas it is simply not realistic to expect all WTO Members to agree. It might be the case that a wide range of agreement already exists among a considerable number of Members, but certain others are simply not ready to proceed (one possible example is liberalisation of trade in environmental goods and services). In such cases, it may make sense to imagine a plurilateral outcome: an agreement among the Members who are ready to agree, while leaving it open for others to join. This is what happened with basic telecommunications and financial services in the Uruguay Round, although official WTO theology does not admit that these arrangements are genuinely plurilateral.

Third, a careful examination needs to be undertaken of the way in which various kinds of flexibilities can be built into new accords to address the needs and concerns of particular Members, whether for policy space or capacity-building, for example. The existing flexibilities in WTO agreements needs to be inventoried and examined for their effectiveness in managing diversity within a multilateral framework. These include safeguards, exceptions and limitations provisions, phase-in periods and obligations to provide technical assistance, and so forth. In the heat of the negotiations themselves, there is little opportunity to consider carefully these structural possibilities, or to think about basic design choices: for instance, which flexibilities need to be offered on a general basis, and which can be tailored to particular Members or groups of Members?

Fourth, one dimension of the current negotiations that limits the range of options for achieving agreement is resistance among a number of key players and supported by what appears to be the overall outlook of the WTO as an institution to adjusting or amending the Uruguay Round Agreements - as if they were some kind of divine, or super-constitutional law set in stone. On the one hand, the Doha Round has been billed as a development round. On the other hand, it is not supposed to be possible to use this round to open up aspects of the Uruguay Round settlement that have been sources of considerable grievance and grief for a range of developing countries.

The instruments on access to medicines are an illustration that there is nothing actually impossible about adjusting the Uruguay Round bargain, where there is sufficient political will. Moreover, there are options in between a formal amendment of Uruguay Round provisions and complete inaction, for example through interpretative understandings, where the clauses in question are open-ended or ambiguous, or capable of more flexible readings than would seem to be currently the case.

This could be used to fix some of the difficulties of the Dispute Settlement Understanding, particularly in the relationship between compliance panel actions and the imposition of countermeasures. It would even be possible to have interpretative understandings that would apply as between a sub-set of WTO Members, provided these do not diminish the rights of Members who do not subscribe to the understanding in question. Such inter se agreements between some of the states parties to a multilateral accord are explicitly contemplated in the Vienna Convention on the Law of Treaties. Even if not in the form of treaties, understandings along such lines would constitute relevant practice to guide the Appellate Body in disputes to which adherents of the understandings in question are parties.

If the legitimacy of the dispute settlement organs is not to be stretched to the limit, there must be some way of addressing gaps and ambiguities in the existing law other than through judicial activism or comprehensive renegotiation. Here, one immediate step would be to attempt to identify those issues and areas where more rapid and satisfying progress can be made through interpretative understandings or similar devices that fall short of formal legal amendments. Fixing some of the concerns about the existing law in this way could build confidence and momentum for new accords, and might be considered in some instances as an intermediate step.

None of these proposals will guarantee a successful Doha result, obviously; good timing and an appropriate investment of political capital both by developed and developing countries remain crucial. But in world of enormous and increasing diversity, where new issues and challenges demand more rapid cooperation among states and other global actors, it is important to keep multilateralism alive and relevant. The tangled web of regional and other preferential accords already poses formidable challenges to global governance, in areas such as investment for instance. A more flexible WTO architecture can still draw on the organisation’s strengths as an open forum for deliberation and exchange of ideas and views, as well as a rule-of-law based system for settling disputes, with an elaborate jurisprudence and a final court of appeal.

Robert Howse is a professor at New York University (NYU) and a specialist in International Economic Law.

endnote

1 See Susan Esserman and Robert Howse, Rethinking the WTO, Forbes.com, September 4, 2008. A number of the ideas that follow have been developed in my collaboration with Esserman; but I alone am responsible for the views expressed in this article.

One response to “2. Multilateralism and Diversity: Rethinking the Structure of WTO Agreements”

Guy de Jonquieres 1st February 2010 at 16:16
There is much common sense and some good ideas in this article. However, I think it does not, in the end, take us that much further.

Some parts of the Doha agenda are undoubtedly harder than others. But which are the \easier\ ones? Everyone can probably agree on trade facilitation. But beyond that? If Brazil and other G20 members are unwilling to agree to industrial tariff cuts while agriculture is on the table, what chance of them doing so if it were taken off? Equally, would the US Congress and EU member states consider for one moment reducing their farm subsidies if negotiations on industrial tariffs were kicked into the indefinite future, with no certainty of an outcome? And if both issues were kicked into the future, what chance would there be of reviving the largely moribund negotiations on services?

It is equally unclear whether plurilaterals would break the deadlock, either. In order to assemble coalitions of the willing, there have to be adequate numbers of willing. But on exactly which issues is a \critical mass\ of WTO members so desperate to negotiate that members are seriously interested in pursuing this option?

The three plurilateral agreements in the WTO, on telecoms, IT and telecoms services happened for very specific reasons. The first, because technological change was making the traditional industry business model unsustainable; the second because it made no sense for developing economies linked to the global production chain to tax their own imported inputs; and the third because a failure would have risked severely destablising global financial markets already deeply troubled by the 1997 Asian crisis: the talks were, literally, doomed to succeed.

But in which, if any, other areas of trade are events running so strongly in favour of WTO agreements that negotiations, even among a limited number of participants, would stand a reasonable chance of success?

The basic problem lies not, I think, in the mechanics or format of WTO negotiations. It lies, rather, in the lack of political will and incentives among members to do what is necessary to conclude them. Slimming down or differentiating the agenda would not remove that obstacle: in some ways, it could even make it more untractable.

Regards,
Anonymous at