The World Trade Organization (WTO) is a fallen hero, more like Samson. WTO's decline is the result of its inability to retain mandate. When it was born in 1994 at Marrakesh, it looked like a colossus which could free global trade, liberate economies, and bring prosperity to all.
The developing countries had no choice. They were confronted with a take-it-or-leave it proposition. The fear was that they would be excluded from the global trading system. Alongside, propaganda mills blared out the message of goodies falling from globalisation of which free trade was a major part. The World Bank was in the forefront and its Development Research reports gave out estimates of increased annual trade that would accrue to them. There was an unholy alliance seamlessly built around Fund/Bank/WTO. None thought that the juggernaut would ever run aground.
Sadly, it was stuck at Seattle and later in Cancun. Doha was a new effort in the wake of September 11. It sought to redress the imbalance by bringing in “development” dimension to trade negotiations. After ten years of sputtering, the Doha Round is moribund. Nobody wants to bury! Among other factors that stymied that Round, the major one was the shift in the global economic balance from North to South.
The WTO faces, as Richard Baldwin described, the “impossible trinity” of consensus, universal rules, and strict enforcement. The developing countries feel let down about the Grand Bargain promised earlier when the trade negotiations commenced. As Pascal Lamy explained after the collapse of the Eight Ministerial in Geneva in December last, the Council has to address the “essential question” as to what constitutes a fair distribution of rights and obligations within the global trading system, among members with different levels of development. This is a political question to which a political response is required.
There have been debates among academics whether the malaise could be treated by a reform of the institutional arrangements or through changes in the scope and mandate of the WTO. Sadly, changes in the mandate can come only through negotiations.
The authors of this book under review share the optimism that the WTO could be reinvigorated through institutional changes and refinements. It is a collaborative project organised by Emerging Dynamic Global Economies (EDGE) Network together with research institutes and experts around the world. Much of the work was done in 2008 and an early publication was done in 2009. There has been thorough and detailed work on various aspects of WTO's functioning. These have been done at a high level of academic sophistication and objectivity. The bibliography runs to 18 pages. No wonder the book is a standard text for WTO studies in most universities abroad.
Tunnel vision
Most if not all the authors are legal experts or specialists in trade law. There is not much evidence of politico-economic factors captured in their analysis. A couple of papers refer to them in passing. Referring to Doha Development Round, one author (Gerhard Erasmus) says, “Development' cannot provide the ratio for a WTO trade negotiation round … ” His reasoning is that the “development problem does not fit into the logic and procedures of a trade round.” Sadly, this is a lawyer's tunnel vision and not that of a developmental theorist.
On institutional reform, one paper (Thomas Cottiers) describes the inadequacies of the WTO structure, especially its Dispute Settlement Mechanism, standing in the way. The GATT/WTO structures “were shaped at different times and for different agenda.” They were framed for periodic tariff reductions and have reached their limits. Newer issues will require different structures. Truly so. But how does one bring them about outside of the negotiating process?
There is a paper on empowering the WTO Secretariat to strengthen the ‘ system .' The approach again is legal and rather simplistic. The WTO is a platform for negotiations where sovereign states negotiate with due regard to their national priorities. The Secretariat can, at best, provide backroom support to facilitate the process and cannot have an independent or overweening role. It has to remain neutral and faceless.
IMF model
One paper argues for reforms and pleads for the adoption of the IMF/World Bank management models. Its understanding of the ‘management' in the Fund/Bank is an idealised version which does not conform to reality. There scores of studies including reports of IMF's External Evaluation Organisation which expose the weakness and deficits of their management.
The paper overlooks the attacks on IMF/Bank management made in G-20 and other forums. More importantly, both the Fund and the Bank work to established Articles and to settled agenda. No wonder their structures are different. But the WTO is a negotiating forum and may not copy them.
There is an interesting paper on involving NGOs in the decision-making process. Though it is very detailed and covers many international organisations and how they interact with NGOs, it reveals that WTO does not formally do so. Yes, it does not do it formally. Sadly, it overlooks the fact that hundreds of NGOs such as OXFAM, Action Aid, Bretton Woods Project et al agitate outside the conference and help developing countries. NGOs are here to stay whether they are formally associated or not.
A chapter on Regional Agreements and the WTO makes a realistic plea for recognising the rise of RTAs and how to live with them. It frowns on overly strict monitoring of them and how they could impede regional endeavours.
There are some papers which deal with harmonisation of laws, standards, etc. and these are high legalese. Overall there is an underlying assumption that there would be global convergence. This is a neo-liberal delusion. It does not reckon that systems and laws will vary and attempts to bring them under one format may create more problems than they seek to solve. After all, global trade has been in existence for hundreds of years and it is not a recent (read American) discovery.
This collection is a sincere, conscientious and scholarly attempt to study some of the weaknesses of the WTO and to improve them. However, they are narrowly legalistic and are based on neo-liberal assumptions. Taking into account later developments in the WTO, one can't help feeling that it is love's labour lost!
REDESIGNING THE WORLD TRADE ORGANIZATION FOR THE TWENTY-FIRST CENTURY: Edited by Debra P. Stegar; Bookwell Publications, 24/4800, Ansari Road, Darya Ganj, New Delhi-110002. Rs. 1595.
