It is no secret that this is crunch time for the World Trade Organization (WTO). Those of us who were closely associated with the Uruguay round negotiations and were fortunate enough to be present in Marrakesh in 1994, knew we were involved in a remarkable diplomatic endeavour. A truly multilateral organisation based on the universally acclaimed principle of non-discrimination (MFN) was borne with a balance of rights and obligations for all its members, regardless of whether it was the omnipotent United States of America or indeed the tiny state of Antigua and Barbuda. Most importantly, a robust dispute settlement mechanism was built into WTO whereby the powerful and the weak, in substantially equal measure, could get redress.
How then did the WTO come to such a pass today? Well, for one thing, it became a victim of its own success. With a whopping near-universal membership of 164 countries, big, small and all sizes in-between, the organisation simply turned unwieldy. It became increasingly impossible to negotiate one common trade rule on the basis of the consensus that applied equally to all WTO members. Second, crucial mistakes were made by all concerned, especially the more powerful players. Some wanted an ever-expanding negotiating agenda; others wanted to bury the Doha round of negotiations so painstakingly agreed by the WTO membership in the post-9/11 scenario. Even developing and least developed countries cannot be absolved of all blame; they resisted, sometimes illogically, all forward movement in negotiations and were obsessively consumed by the injustice (both perceived and real) meted out to them in the Uruguay round. All in all, it was a recipe for collective disaster. And when the US, the most powerful player of them all, felt aggrieved and decided to act out, it was pretty much game over for WTO.
There is little doubt that WTO is needed more than ever now when the Covid-19 has wrought havoc with global trade. So, how does WTO reinvent itself? The following is a broad road map and maybe worth a try.
(1) The WTO membership must decide expeditiously on the new director general. There are times in the past when this issue has dragged on indefinitely, debilitating the organisation. The main function of the director general is “consensus-building” on the basis of equity towards all members. The main quality required is “political gravitas” since she can be sure to get as much technical expertise as necessary once in the job. Fortunately, the chairperson of the General Council is New Zealand ambassador David Walker, a highly respected trade diplomat with integrity who can be expected to do the job of selecting a DG with efficiency.
(2) The US simply has to be brought on board WTO, for it makes no sense to keep the most powerful player out. This does not mean giving in to all American demands, but some of them do make sense. If this means waiting till the American elections are over, so be it, but this judgement call must be made by the main players of WTO.
(3) WTO has three primary functions: one, to act as a forum for negotiations; two, to administer and monitor existing trade agreements; and three, to provide an effective mechanism for resolving trade disputes. There is simply no way the first two functions be performed if the third one is ineffective. Today, the dispute settlement mechanism, previously considered the jewel in the crown of WTO, is dysfunctional. This needs to be set right. Again, the US has to be co-opted, since it nursed the main grievance with respect to the erstwhile Appellate Body.
(4) The next ministerial conference is scheduled to take place in June 2021 and it would be okay if the main aim was to conclude the negotiations on fisheries subsidies by then. That would give enough time for the new DG and the membership to deliver on time.
(5) It is clear that WTO, one way or the other, has to reckon with China and its trade practices. This is not just because China is one of the most important players in WTO today, but also because a number of countries do want the body to clarify issues such as the role of state-owned enterprises, forced tech transfer and non-market economies. Sooner rather than later, WTO has to address these issues.
(6) The real challenge for WTO is the future negotiating agenda in the medium term. What will the agenda comprise of e commerce, investment and services, of course? But what about some other subjects of interest from the Doha agenda to developing and least developed countries, including agriculture, S&D and rules.
(7) A final issue: should WTO house plurilateral trade agreements at all? If yes, should they not be open for all countries to join at a later stage and should not the negotiating outcome be made applicable to all on an MFN basis?
The above strategy is not infallible, but it would be a good beginning. The post-Covid-19 world needs WTO more than ever if only to provide security and predictability to international trade. But for that to happen, the WTO members must get their act together.
(Dr Mohan Kumar is a former Indian Foreign Service (IFS) officer and retired as the Indian ambassador to France. Views are personal.)