Past, present, and future of the WTO
Trade and development is a challenging subject in the multilateral trading system agenda, going back to the very beginning of the GATT. The current crisis of the WTO is one facet of the topic, which has underlying causes such as the struggle for development, asymmetries in the multilateral trade agenda and negotiations, and the shift in the global balance of power. Also, the on-going global Coronavirus (COVID-19) pandemic caused mayhem in all aspects of life. Economic, social, and political fields across the world are suffering its consequences and the scenario is not going to change in the short run.
However, to understand the present crisis of the WTO it is necessary to go back in time to see that the current crisis is the result of several previous crises. Looking back 15 years ago, the WTO was the first multilateral organization to reflect a crisis in global governance, given ongoing changes in the world balance of power. By that time, for many reasons, the WTO was the ‘canary in the coal mine’, announcing the lack of oxygen in multilateral governance. The WTO does not have a weighted voting system, it is the most transparent of all multilateral organizations with binding rules, and it is also the most accountable to its members. This is why the WTO was the first one to reflect changes in the global scenario.
This is a cumulative crisis, and it has at least four causes that remain in time. First, the emerging of China, its development model based on state-led capitalism and its complex accession process to the WTO; the increase of trade protectionism in western countries; the lack of support from the USA to the WTO; and the failure of the Doha Agenda to mainstream the development agenda in the WTO rules.
However, by that time, we can assume we were still in the middle of a crisis, but within a set framework. Currently, we are in the middle of a crisis, marked by a pandemic, and in an emerging global order we still don’t understand very well. And it is in this very moment when the WTO faces the deepest crisis since 1995. A crisis that is challenging the two most important assets that the organization has provided to multilateral governance as a public good: the ability to be a forum for negotiations (based on agreed rules) and the capacity to provide a successful dispute settlement system to its members. As such, the crisis of the WTO is also a crisis of trust in multilateral governance.
The WTO was also a victim of its success. And its huge success is directly linked to a very short period of consensus in the multilateral trading system around the trade agenda and the negotiation mandate. Some examples of this exceptional period are the appellate body and its capacity to create law by its interpretation mandate, the single undertaking principle, and the Trade Policy Review Mechanism. These achievements were important to take trade to another level in terms of setting common and binding rules, but they also reduced flexibility from the WTO to adapt to changes in the global arena.
So perhaps we are missing something very exceptional in the history of the multilateral trade system. Instead, in the path for rebuilding (or reinventing) this public good, it could be more effective to think about the WTO as a common ground, an arena for negotiations, with very little expectations on the agenda in terms of content and binding rules. After rebuilding ties of trust, we can start thinking about progress in trade topics, old ones such as trade and development, and new ones, such as trade and data protection, which is in the frontline of the emerging world bipolarity. The WTO also needs a new narrative, an attractive one. It also must give answers to concrete problems such as the distributional effects of trade, an old challenge in the path to increase the role of trade on social welfare.
In the last few weeks, after several months of waiting for the results, the WTO has a new Director-General. The Nigerian Ngozi Okonjo-Iweala is the first female and first African to occupy this position. She has a daunting task at hand. However, judging by her outstanding background, she can accomplish the mission, as long as state members show the political will to rebuild the WTO as global public good.
Trade will take its time to recover but it will recover, the question is in which position the WTO will be by then. Today measures could help prevent the WTO from irrelevance in a near future.
Juliana Peixoto Batista Researcher, IR Department, Latin American School of Social Sciences (FLACSO), Argentina chapter, and National Council for Technical and Scientific Research (CONICET). firstname.lastname@example.org