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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
HELPING TO AFFIRM THE EFFICACY AND RELEVANCE OF THE WTO
One of the main challenges confronting the new Director General

by Félix Peña
May 2013

English translation: Isabel Romero Carranza

 

 

The paralysis of the Doha Round and the fragmentation of the international trading system resulting from the trend towards the proliferation of mega-interregional preferential trade agreements are symptoms of some of the serious problems being faced by the WTO.

In this context Roberto de Azevêdo will begin his mandate as the new WTO Director General. He succeeds Pascal Lamy who held this office for eight years and who, in spite of his wealth of international experience, personal prestige and intellectual clarity, was unable to fully succeed in the difficult task of bringing together the negotiating objectives of countries with such different interests and power resources.

The new Director General will have little time to influence the outcome of the Ministerial Conference in early December. Despite the notable efforts made by Lamy, there are still doubts whether any significant results will be achieved in Bali (Indonesia). But the fact that there is an awareness of the effects that a meager Bali would have on the future of the WTO could contribute to, at least, make headway in laying out a future roadmap -a credible 'post-Bali agenda'. The recent report on 'The Future of Trade: The Challenges of Convergence' provides significant elements for the layout of such an agenda. It is a valuable legacy of Lamy's fertile period at the WTO.

In order for Azevêdo to be successful in his position he will need the active support of those countries that chose him in the final selection process. A stage begins in which the valuable aspects will be the contribution of practical ideas and political drive to help outline a future roadmap and renew objectives and working methods of the WTO. As noted by Lamy when presenting the report on the future of trade, the key word is 'convergence'. There are four levels at which it should be pursued: that of the trade policies of member countries; of the multilateral system with its various preferential schemes; of the trade policies and other domestic policies of countries, and of the commercial policies with other non-tariff public measures.

These four levels of convergence will require a great capacity for reconciling national interests. It won't be an easy task given also the limited powers that have been granted, until now, to the Director General of the WTO. But what an independent international officer, that does not have an allegiance to any country or group of countries in particular can provide, is an overall view and also practical ideas to reconcile sometimes very diverging national interests.



Beyond their obvious differences, both the World Trade Organization (WTO) at the global level, as the European Union (EU) and the Common Market of the South (Mercosur) at the regional level, seem to share similar challenges. They involve preserving their relevance by adapting to the new global and regional realities which are, as we know, very different from those of their founding moments.

They are adaptation requirements centered mainly on methodological issues related with the mechanisms and tools that allow them to achieve the objectives for which they were created through decisions that are effective and penetrate reality.

But in all three cases these methodological issues tend, at times, to refer back to existential questions. These reflect the doubts of the member countries -and even more so of those who have to make decisions for productive investment and, in particular, the respective citizens- on the validity of the objectives that led to the founding pact or, at least, on the possibility of achieving them within the current institutional frameworks. These objectives are linked especially with global governance at the level of international trade (in the case of the WTO) or with the respective regional governance (for both EU and Mercosur), the latter conceived as the creation of conditions of peace, democracy and political stability and economic and social development in the geographic space shared by its members.

The stagnation of the Doha Round and the trends towards the fragmentation of the international trading system as a result of the proliferation of initiatives for mega- interregional preferential trade agreements (such as the Trans-Pacific Trade Partnership- TPP- and the Transatlantic Trade and Investment Partnership - TATIP-), are some of the more obvious symptoms of the problems of efficacy and, therefore, of relevance, being faced by the WTO. All this at a time when the effects of the current international financial and economic crisis on world trade are still severe, with the ensuing impact of traditional and also novel forms of protectionism of the markets accessed by a large number of the member countries.

In such context, Ambassador Roberto de Azevêdo will initiate on September 1 his mandate as new Director General of the WTO. He will succeed Pascal Lamy, who held that position for eight years. Lamy's vast international experience and personal and technical prestige were not sufficient to achieve the success he sought in the difficult task of coordinating the negotiating positions of countries with such different interests and power resources. Azevêdo is knowledgeable of the negotiating arena of Geneva and the art of economic diplomacy. The fact that he was appointed after an interesting selection process, which originally included nine candidates with outstanding backgrounds, speaks volumes of his reputation as a diplomat and this will help him in his role. But, in particular, it also shows the new realities of world power. The fact that he was not the candidate favored by the countries that since the inception of GATT had been the main protagonists when making key decisions and that, on the contrary, the developing countries were the ones who most influenced his selection, clearly shows that the WTO is no longer what it was when it was created in Marrakech.

The new Director General will have little time to influence the outcome of the Ministerial Conference to be held in early December in Bali (Indonesia). Despite the notable efforts made by Pascal Lamy, there are still strong doubts whether any meaningful results will be achieved in this opportunity. But the fact that there is now an awareness that the effects -even political ones in terms of global governance- that a meager Bali could have on the future of the WTO and on its effectiveness as the ambit for international trade negotiations that are relevant, could contribute to finally make headway in laying out a roadmap for the future -a credible 'post-Bali agenda'.

The recent report on ´The Future of Trade: The Challenges of Convergence´, provides significant elements for the layout of such an agenda. In this sense, it is part of the valuable legacy of the Lamy period. Other legacies relate to the obvious gains that have been evinced for example in the area of (i) transparency -reflected by a quality website- and in particular on the trade policies applied by member countries; (ii) the mechanism for dispute settlement, and (iii) the understanding of the transformations that are taking place in the modalities of international trade of goods and services, as well as their link with productive investments and economic development -reflected by the concept 'made in the world' and in the continuous teaching that the Director General has made through his lectures on multiple occasions and in very different locations.

Thinking of Bali, it should be noted that a major problem may be the fact that the US in particular does not seem very interested in restoring the relevance of the multilateral system of international trade. If in fact there is an interest, it has failed to show it convincingly. On the contrary, President Obama's administration seems to be more focused on promoting the new generation of mega-interregional preferential trade agreements. The recent presidential trip to Mexico seems to enroll in such a strategy. Such mega-deals would be regarded as a more interesting alternative due to their possible WTO-plus content and perhaps, ultimately, as a way to pressure some of the major emerging nations to finally accept a 'Doha-plus' negotiation.

Even the prestigious and influential specialist Professor Richard Baldwin (see the reference to his recent article in the Recommended Reading section of the April 2013 edition of this Newsletter) has advanced the idea of a WTO 2.0, more adapted to what he considers to be the new realities of world trade. This includes a membership limited to the few countries that, in his opinion, are relevant in a world in which the exchange of goods and services is channeled largely through transnational value chains. The investments which these value chains give rise to would require the negotiation of regulatory frameworks and effective measures to protect them and, above all, to protect the knowledge and intelligence built into the respective goods and services. However, he does not analyze -at least in the referred article- the geopolitical implications of his proposal, especially in terms of global governance. Neither does he explain how transnational value chains have been able to develop in recent years, although there were no mega-interregional preferential trade agreements such as the ones being promoted, nor, of course, the WTO 2.0 existed.

In order to be successful Azevêdo will need the full active support of all those countries that opted for him in the last stretch of the selection process. It is a stage in which what will be valuable will be the contribution of practical ideas and of sufficient political power to help conclude Bali with a projected roadmap for the future aimed at renewing the objectives and working methods of the WTO. In this regard, and as noted by Pascal Lamy when presenting the above-mentioned report on the future of trade, the key word is convergence. According to this report, there are four levels at which such convergence should be sought: the level of trade policies of member countries; of the multilateral system with the different preferential schemes; of the trade policies and other internal policies of countries; and of the trade policies with other non-tariff public measures.

These four levels of convergence will require a great capacity for agreeing concerted national interests. It will not be easy considering also the limited powers that have been attributed to the Director General of the WTO until now. But what and independent international official, who has no allegiance to any country or group of countries in particular, can bring in is an overall view and ideas that can help reconcile sometimes very divergent national interests.

Of course, the art of reaching agreement requires a pre-requisite: that the different countries know what they want and what they can achieve in an international context in deep and constant change, where there is no longer room for the practice of what Professor Bertrand Badie, from Science Po Paris, has aptly termed the 'diplomacy of connivence' (see the Spanish translation of his book in the Recommended Reading section, with the provocative title 'Diplomacia del Contubernio').

In this regard, Roberto Azevêdo has a great opportunity -and a great challenge- to highlight the contribution that the capacity for concerted action can bring to the necessary global governance. It will be crucial that in the performance of his duties he is perceived as someone who is committed to all and not just to one country or group of countries in particular. He needs to have something like the quality that Jean-Christophe Rufin attributes to Jacques Coeur, the protagonist of his historic novel Le Grand Coeur (Gallimard, Paris 2012) and which is his ability to see everything from above, like a bird's eye view ('comme le ferait un oiseau'). Perhaps it was Jean Monnet who best reflected in contemporary terms that quality. With his actions and ideas he made a decisive contribution to help post-war Europe find a roadmap that now it would seem, at times, tempted to abandon.


Recommended Reading:


  • Appleton, Arthur E., "Forum Selection in Trade Litigation", International Centre For Trade and Sustainable Development (ICTSD), International Trade Law Programme, Issue Paper N° 12, Geneva 2013, at http://ictsd.org/.
  • Badie, Bertrand, "La diplomacia del contubernio. Los desvíos oligárquicos del sistema internacional", EDUNTREF, Buenos Aires 2013.
  • Barral, Welber, "O Mercosul e sua maioridade", Ponte, ICSTD, Volume 9, Number 3, April 2013, at http://ictsd.org/.
  • Ben-Atar, Doron S., "Trade Secrets. Intellectual Piracy and the Origins of American Industrial Power", Yale University Press, New Haven & London 2004.
  • Castro, Jorge, "Malvinas Hoy. Su importancia económica y geopolítica", Distal, Buenos Aires 2013.
  • Choate, Pat, "Hot Property. The Stealing of Ideas in an Age of Globalization", Alfred A.Knopf, New York 2005.
  • Horlick, Gary N.; Boeckmann, Hanna, "What to do before you call the WTO. The Prelitigation Assesment of Trade Barriers", International Centre For Trade and Sustainable Development (ICTSD), International Trade Law Programme, Issue Paper N° 13, Geneva 2013, at http://ictsd.org/.
  • Machado Oliveira, Ivan Tiago, "A Política Comercial Externa Brasileira. Uma análise de seus determinantes", Fundacão Getulio Vargas, Direito GV, Editora Saraiva, São Paulo 2013.
  • Morin, Jean-Frédéric, "Mapping Prevailing Ideas on Intellectual Property. Preliminary Finding from a Survey", International Centre for Trade and Sustainable Development (ICTSD), Issue Paper N° 38, Geneva 2013.
  • Narlikar, Amrita; Daunton, Martin; Stern, Robert M. (eds), "The Oxford Handbook on the World Trade Organization", Oxford University Press, Oxford - New York, 2012.
  • Plasai, Virachai, "Coordinating Trade Litigation", International Centre For Trade and Sustainable Development (ICTSD), International Trade Law Programme, Issue Paper N° 14, Geneva 2013, at http://ictsd.org/.
  • Pursell, Carrol, "The Machine in America. A Social History of Technology", The John Hopkins University Press, Baltimore 2007.
  • WTO, "The Future of Trade: The Challenges of Convergence". Report of the Panel on Defining the Future of Trade convened by WTO Director-General Pascal Lamy, Geneva, 24 April 2013, at http://wto.org/.

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 information.

http://www.felixpena.com.ar | info@felixpena.com.ar


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