Time to rethink the WTO?
On Friday September 26, GMF hosted a discussion on the institutional challenges facing the World Trade Organization (WTO) entitled "Time to rethink the WTO?" with Debra Steger, professor of law at the University of Ottawa, and Vinod Busjeet, minister counselor at the Embassy of Mauritius. Jennifer Hillman, a senior Transatlantic Fellow at GMF, introduced the speakers and moderated the discussion.
Debra Steger began her presentation by asking if the WTO will become irrelevant? She noted that unless the WTO undergoes major reforms, the larger economic powers will build their own regional trade agreements and the WTO will become obsolete. Steger, who previously served as the founding Director of the Appellate Body Secretariat of the World Trade Organization in Geneva, introduced the framework for the rest of her analysis by differentiating the two central views of the WTO's mandate. The first conception of the WTO views the organization's mandate to be trade liberalization while the second assumes that the primary goal is to create a rules-based international economic system. One's idea of the WTO, Steger noted, fundamentally changes one's views on the needed reforms. Steger admitted that because she adheres to the latter view, her presentation would focus more on reforms that would advance the role of the WTO in governing global trade and related economic activities.
Steger listed the key reasons that the WTO is in need of reform, including shifting global power balance, rising influence of developing countries, Doha round difficulties, growing regionalism, and legitimacy, among others. She also highlighted that the WTO is not in a unique situation. Other international organizations, such as the World Bank and the International Monetary Fund, were in need of institutional reform and they have started to bring about these changes.
Steger concluded that the international trading system is at a historical turning point and that if the WTO does not change during this transformational period, it may be left behind. Finally, she emphasized that the WTO needs to develop a formal process for change and create some sort of coherence with other international organizations.
Vinod Busjeet opened with the Doha round and the difference between "all dead" and "mostly dead," wondering which entity was mostly dead; the Doha Round or the WTO. He was cautious about advocating too much reform too quickly and noted that he would prefer to keep an open mind and see what the future brings. One of the values of the WTO is the protection that the multilateral system provides to weaker states, emphasizing that bilateral and regional trade agreements give much less power to these states. Busjeet was weary of the concept of special and differential treatment, emphasizing that there needs to be a better, clearer categorization of which countries and situations merit this status.
Busjeet agreed with Steger that shifting global powers are posing significant challenges to the future of the international trading system. He thinks largest countries have traditionally been the winners in the international trade system and posed the question whether it is the responsibility of the WTO to ensure that small countries can take advantage of world trade and whether the WTO should coordinate with other international organizations to help accomplish this. He then elaborated and asked whether this could be accomplished by simply developing more linkages between the institutions or whether more drastic reform efforts are needed for this kind of collaboration to take place.
Busjeet then quoted Pascal Lamy, head of the WTO, by saying that the WTO structure is based on three characteristics. First, it's bottom up (member driven). Secondly, nothing is agreed until everything is agreed. Finally, the organization is consensus based.
Busjeet agreed that these elements posed significant challenges for the organization's responsiveness and that they have slowed down the system considerably. However, he also stressed that it is not time to give up on them yet. Finally, Busjeet concluded by stating that the WTO is now, more than ever, in the forefront of public consciousness and debate-pointing to the newly released film, Battle in Seattle. This increased public attention makes it more important than ever to increase the WTO's legitimacy.
The first question coming from the audience addressed the connections between domestic politics and the future of the WTO reform. Participants were particularly interested in the question of why the next U.S. president would spend precious political capital on this topic. Steger responded that if the next president wants a well-functioning international system, this issue is essential to address. To this point, another guest suggested that a "functioning international system" was not concrete enough to convince domestic constituencies that this is a priority. The same guest went on to connect the creation of the General Agreement on Tariffs and Trade (GATT) in 1947 to specific domestic interests. Busjeet suggested that the next administration link the WTO and wider trade issues to the financial crisis in order to tie the topic more closely to domestic concerns. Another guest suggested that linking the WTO to environmental concerns might be the best way for the next administration to link WTO reform with constituency interests.
When asked about the legitimacy of the "Green Room" process, Steger suggested that people focus more on the front end of the decision making process than the back end. She noted that all proposals-from the budget to selecting the Secretary General- go through the same process which is incredibly cumbersome and makes it impossible to do anything quickly. A final question, again alluding to the film Battle in Seattle, addressed the public perception of the WTO as an independent organization driving international trade policy. In response, Steger quoted one view of the WTO as a group of "nameless, faceless, foreign bureaucrats in Geneva" and stressed that the WTO is lagging far behind other international organizations in transparency and legitimacy. Steger concluded by emphasizing the need for the WTO to not only follow the lead of other international organizations in restructuring and reform, but also to build a coherent system of linkages with these organizations.