| A CHALLENGE FOR THE FUTURE OF THE WTO:
How to articulate the global, regional and interregional trade agreements?
by Félix Peña
English translation: Isabel Romero Carranza
There are at least three possible scenarios regarding
the future of the WTO. The first one would involve the prevalence of a
certain "institutional inertia". The second possibility is that
of a "re-foundation" scenario. Finally the third one would involve
a "metamorphosis" of the WTO.
This metamorphosis would imply continuing and furthering
those accumulated assets considered as valuable and effective. It would
not necessarily involve casting aside the Doha Round. However, it would
require concentrating the efforts, ingenuity and political will on the
renewal of the agendas and working methods. It would require a great deal
of flexibility to help preserve predictability, needed to encourage productive
investments and the development of a denser network of transnational productive
The main challenge will be to link together, within
the multilateral institutional framework, the multiple efforts that are
being made at a global, regional and interregional level. This would mean
to turn into compatible what is usually perceived as contradictory. It
would imply accepting the complexities of the world trade agenda and of
the means needed to deal with relevant issues as something positive and
That being so, the key issue will be to define operational
mechanisms that enable to preserve a reasonable degree of collective disciplines,
transparency and connectedness between the different forms of trade agreements
in which the WTO members participate. Among other reforms, it would require
assigning priority to an in-depth revision of Article XXIV of the GATT
In principle, there is a relative consensus regarding the following three
issues involving the current and future situation of the World Trade Organization
The first issue is related to its role as a relevant multilateral institution
for the world trading system. On this regard it should be noted that there
are no qualms regarding the WTO as a necessary institution in the architecture
of global economic governance. What is more, the assets acquired in its
course since the creation of the GATT are fully acknowledged. These are
considered as valuable international public resources that need to be
preserved. Among others, the following contributions that can be attributed
to the multilateral world trading system are highly valued: a safeguard
against protectionist tendencies -overt or, more frequently, covert- that
tend to heighten in times of international economic crisis such as these,
with their subsequent impact on world trade; the guarantee of reasonable
transparency in trade policies applied by member countries; and an institutional
framework to reestablish the reciprocity of national interests affected
by behaviors that are considered contrary to the agreed rules.
The abovementioned are contributions that help maintain a reasonable
degree of collective disciplines in the world trading system. This is
probable the most valued role of the WTO in a world which is starting
to show tendencies that in previous historic contexts have led to chaotic
situations. (On this regard refer to the article by Sergei Karaganov listed
in the recommended reading section of this newsletter).
The second issue over which there is a certain agreement is the acknowledgement
that the WTO has to continue to act as a multilateral forum where to negotiate
the opening of the markets to world trade, devising ground rules to facilitate
the internationalization of the production of goods and services within
multiple forms of transnational networks, and generating mechanisms that
are functional to the establishment of close links between trade, economic
development and environmental sustainability. All this within a context
of strong asymmetries in relative economic power, capabilities to compete
at a global scale and degree of development of the member countries, which
makes it hard to reach the articulation of national interests needed to
adopt those decisions that are considered essential.
The third issue refers to the need to adapt the WTO to the new realities
of the international system and global economic competition. There is
a strong contrast between the current economic reality and world power
distribution, and the conditions that prevailed when the GATT was created
-the period where the core principles and regulations that still rule
the world trading system were originated- and even with those present
in 1994, when the WTO was created. On this regard, the concept of a world
trading system driven by a restricted group of developed nations with
similar visions has become outdated. The main problem lies in the difficulty
to find agreement on the most sensitive issues of the global negotiating
agenda between the ever-growing number of member countries -currently
157- with visions, realities and interests that seem so different at times,
in order to adopt decisions that are effective, efficient and legitimate.
(See the October
2011 and the August
2009 editions of this newsletter on http://www.felixpena.com.ar,
The Doha Round experience illustrates this point. It has not been possible
to reach agreements to conclude it, nor to change the methodology of the
multilateral negotiation, for example, by reviewing the principle of "single
undertaking" and adopting other criteria such as that of "critical
mass" that would open the door to the use of instruments such as
plurilateral agreements, particularly for the most sensitive issues and
sectors of the negotiating agenda.. The recent Eighth WTO Conference exemplified
the "no way out" scenario in which the member countries find
themselves now. (See the December
2011 edition of this newsletter on http://www.felixpena.com.ar/,
and the Bridges Weekly Trade News Digest, Volume 16, Number 1, 11th January
2012, on http://ictsd.org/i/news/bridgesweekly/123034).
The temptation for many member countries interested in moving forward
the trade commitments already agreed within the WTO -in the access to
markets as well as with other conditions-, is to dodge the rigidity that
characterizes the multilateral ambit and try to reach their desired objectives
through novel modalities of preferential trade agreement that take advantage
of the ambiguities of Article XXIV of the GATT 1994. This is the reason
why the number of negotiation processes and agreements has increased significantly.
The problem is that everybody is aware that this path could end up eroding
the efficacy and even the legitimacy of the multilateral world trading
system, something that the member countries consider not to be compatible
with the requirements for global economic and even political governance.
The risk of the fragmentation of the system within an international context
that tends to be "toxic" is thus not to be underestimated.
As to the future of the WTO, there are at least three possible scenarios.
A first scenario is one in which some sort of "institutional inertia"
prevails. This would mean to continue working with the same methods and
the same agenda of the last years. It would also imply placing the current
Doha Round as the central axis of the strategy. This is not impossible.
However, it is not advisable. The results could continue to be the same
as those achieved so far. It could end up dragging the whole system towards
irrelevance and illegitimacy.
A second scenario is that of a "new founding". It would involve
a deep institutional reform but still capitalizing on the valuable assets
acquired up to this point. It would be the equivalent of what is usually
proposed for the global economic and financial architecture. This may
be reflected by the expression "a new Bretton Woods". The drawback
is that it would ignore the reality in the distribution of power that
enabled to achieve the agreements that originated the current institutional
scheme of international economic and financial cooperation. This was the
outcome of a war, from which the United States emerged as the undisputed
rule-maker of the time. This is not the picture of the current distribution
of world power evinced, among other examples, by the growing difficulty
of the G20 to translate into concrete facts its aspiration to lead the
definition of a new international economic order.
A third scenario would be the "metamorphosis" of the WTO. This
is what would be more advisable. It would also be the most convenient
option for institutional frameworks that are facing difficulties and that
play a key role in the governance of regional geographic spaces, such
as the European Union and even Mercosur, conceived as the hard core in
the governance of the South American space. (See the June
2011 edition of this newsletter, and the November
2011 issue on http://www.felixpena.com.ar/).
The idea of a metamorphosis would involve gradual advances in order to
build something new based on the existing assets and through incremental
steps. It would involve merging what apparently seems incompatible. It
would require making the transition from one stage of the system to the
next in a persistent but almost imperceptible manner. In time, the result
would be something new but based on what preceded it. It would not imply
a rupture with the past nor the temptation to start from scratch. However,
it would involve a deep transformation. The new would be a continuation
of the old but would not be the same. (On the metamorphosis as a method
for social change, where it is difficult to establish the limits between
the old and the new, refer to the article by Edgar Morin, "Elogio
de la metamorfosis", in "El País", Madrid, 17 January
2010, on http://www.elpais.com/.
For a recent example of metamorphosis of a complex national system, see
the book by Ezra Vogel on Deng Xiaoping and China's transformation listed
as recommended reading at the end of this newsletter).
In the case of the WTO, the transformation would entail continuing and
furthering the accumulated assets that are considered effective and valuable
-some of which were mentioned above -. It would not necessarily mean casting
the Doha Round aside. However, it would imply concentrating all efforts,
technical inventiveness and political will on the renovation of the agendas
and negotiating methods. Additionally, it would require greater flexibility
to face special situations in the case of developing countries; this without
harming the necessary predictability to facilitate productive investments
and a growing web of transnational productive networks.
Perhaps the main challenge would be to harmonize, within the multilateral
framework, the multiple efforts that are being made today at a global,
regional and interregional level. This would mean to try to make compatible
what is usually perceived as being contradictory. Due to its evident geopolitical
implications, an example in the right direction might be to place the
recent Trans-Pacific Partnership (TPP) initiative within the perspective
of the multilateral global system.
The transformation of the WTO would thus imply accepting the complexities
of the world trade agenda and of the means needed to deal with relevant
issues as something positive and natural. There wouldn't be a dominant
topic (for example trade liberalization), nor a single way to deal with
it. The global, regional and interregional would be components of a single
multilateral system. As was pointed out by Jean-Pierre Lehmann in the
article listed bellow as recommended reading, it would imply reconciling
fragmentation with integration in a common vision and framework.
Being that the case, the key issue would be to define operational mechanisms
that enable to preserve a reasonable degree of collective disciplines,
transparency and connectedness between the different modalities of trade
agreements signed by WTO member countries. Among other reforms, it would
require assigning top priority to an in-depth revision of Article XXIV
of GATT 1994.
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Félix Peña Director
of the Institute of International Trade at the ICBC Foundation. Director
of the Masters Degree in International Trade Relations at Tres de Febrero
National University (UNTREF). Member of the Executive Committee of the
Argentine Council for International Relations (CARI). Member of the Evian
Group Brains Trust. More