inicio | contacto | buscador | imprimir   
 
· Presentación
· Trayectoria
· Artículos y notas
· Newsletter (español)
· Newsletter (english)
· Radar Internacional
· Tesis de posgrado
· Programas de clase
· Sitios recomendados

Publicaciones
· Las crisis en el multilateralismo y en los acuerdos regionales
· Argentina y Brasil en
el sistema de relaciones internacionales
· Momentos y Perspectivas


  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
TWENTY YEARS OF THE WORLD TRADE ORGANIZATION:
What do they teach us about how to harness the multilateral trading system?

by Félix Peña
February 2015

English translation: Isabel Romero Carranza


 

After the twenty years that have elapsed since the creation of the WTO we can point out, among others, three relevant changes in the international scenario in relation to the multilateral trading system.

In the first place, the redistribution of global power and the growing importance of the so-called emerging nations -several of them actually "re-emerging" ones- . Secondly, the greater connectivity between markets. And thirdly, the fragmentation of production in multiple modalities of transnational value chains -it was the WTO that installed the concept of "made in the world" without which it is now increasingly difficult to understand trade and investment between countries-.

What are some of the main positive contributions that the WTO has made for the development of international trade in its twenty years of existence? One of them is the body of collective international trade disciplines. The other relates to transparency in the policies and instruments applied by countries in international trade. The third contribution is to ensure a system to help address and resolve disputes arising between member countries as a result of possible and apparent breaches in the agreed obligations.

On another level, however, the contributions of the WTO have not yet materialized, sometimes affecting its image with the public opinion. We are referring to the multilateral trade negotiations, namely those that over the past years have developed in the so-called "Doha Round".

What do these past twenty years teach on the utility that the WTO system can have for a member country, as is the case of Argentina? Three lessons can be considered as the most relevant.

The first lesson is that the WTO as a system of rules and mechanisms that affect world trade can only be harnessed to the extent that a country, not just its government, has a clear idea of what it wants and what it can achieve in its trade relations with other countries and regions of the world. The second is that, in order to do this, the country needs to have specialists who are knowledgeable of the rules and mechanisms of the WTO. And the third lesson is that dealing in the WTO implies that a member country has a strong vocation and ability to forge alliances with other countries, at the level of government, business and civil society.


Much has changed in the world since 1st January 1995 when the World Trade Organization came into existence. It was built upon the General Agreement on Tariffs and Trade (GATT) and absorbed its contractual text into its legal system (on the process of creation of the WTO and its link to the GATT system originated in 1948, see the book by Craig VanGrasstek "The History and Future of the World Trade Organization", WTO, Geneva 2013, http://wto.org/. On a critical view of the current state of the WTO and how the author considers the future of the international multilateral trading system should be addressed, see the recent book by Rorden Wilskinson listed in the Recommended Reading section of this Newsletter).

Therefore it would be advisable to view the contributions that the WTO has made and can continue to make, in the perspective of an increasingly dynamic and complex international reality (this work includes the input of the author to the article published by Florencia Carbone in the Foreign Trade Supplement of La Nación on Tuesday January 27, 2015. See the text on http://www.lanacion.com.ar/1763286-multilateralismo-versus-ley-de-la-selva).

Among other relevant changes that can be observed in the international scenario in relation to the multilateral trading system embodied in the WTO, we can highlight the following: first, the redistribution of world power and the growing role of the so-called emerging economies -several of them actually "re-emerging" ones-. Second, the increased connectivity of markets at all levels and not just physical. And thirdly, the fragmentation of production in multiple modalities of transnational value chains and production linkages - it was the WTO that installed the concept of "made in the world", which is now essential to understanding the trade of goods and services as well as investment and technology flows between the different countries-.

What are some of the main positive contributions that the WTO has made to the development of international trade in its twenty years of existence?

One of its contributions is the body of collective international trade disciplines. Far from complete or perfect -it would be difficult to pretend this in a world that is and will continue to be characterized by the unequal distribution of power between nations that, at least formally, are sovereign-, the rules and mechanisms of the WTO, coming largely from the GATT period, provide certain order in the implementation of national policies and instruments that can affect the global trade of goods and services. And this is something that is convenient both for large countries with highly diversified business interests and investments at global scale and for countries with less capacity to impose their principles and rules on world trade.

The second contribution relates to transparency in the policies and instruments applied by countries in their international trade, which largely has been achieved through their periodic review with the participation of the group of WTO member countries and an active role of the Secretariat.

The third contribution is to ensure a system that helps address and resolve disputes arising between member countries as a result of possible and apparent breaches of obligations. Precisely, one of the latest cases involved Argentina as the defendant country in relation to measures affecting the import of goods. (See the information on the ruling of the Appellate Body and its approval by the Dispute Settlement Body on http://www.wto.org; DS438; DS444; DS445).

These three contributions are mutually reinforcing and this helps achieve a reasonable degree of efficiency, effectiveness and legitimacy of the multilateral trading system. It would be easy to imagine the situation that would prevail if this system were nonexistent. It would be a situation that could be readily characterized by the prevalence of the "law of the jungle" or, what is the same, by the predominance of the country or countries with greater relative power.

On another level, however, the contributions of the WTO have not yet materialized, sometimes affecting its image with the public opinion. We are referring to the multilateral trade negotiations, namely those that over the past years have developed in the so-called "Doha Round".

A plausible hypothesis could be that the difficulties in moving forward with these negotiations are due largely to the fact that some of the main WTO member countries have lately favored the possibility of reaching inter-regional mega agreements, particularly in the Trans-Atlantic and Trans-Pacific spaces (see our newsletter from March 2014)

These negotiations are especially driven by the more developed countries, which throughout the period of the GATT and the founding moments of the WTO were in fact the ones who set the rules. We could even consider their interest in "mega preferential agreements" as a new way to continue generating rules that later the rest of the member countries would have no choice but to accept.

What do these past twenty years teach on the utility that the WTO system can have for a member country such as Argentina?

Three lessons can be considered as the most relevant.

The first is that the WTO as a system of rules and mechanisms that have an impact on world trade can only be properly harnessed in the measure that a country, not just its government, has a clear vision of what it wants and what it can achieve in its trade relations with other countries and regions of the world. This is what is commonly called "country strategy" in trade and international investment.

This implies defining the offensive and defensive interests as well as the necessary balance between them. And it also implies making a correct assessment -even taking into account different aspects that can transcend the commercial- of the value that the country has for other countries, especially for those with greater economic impact and particularly in the country's own region, such as Latin America in our case. This helps appraise the margin for maneuver available to fulfill the agreed obligations and it allows, above all, to gauge what margin a country has for not fulfilling its obligations thoroughly. If the latter were the case, of course it should be done without proclaiming it and in an inconspicuous manner.

The second lesson is that it is necessary for a country to have very good trade specialists knowledgeable of the rules and mechanisms of the WTO. A good specialist is someone who, due to their training and experience, masters the subtleties inherent to a legal system of clear Anglo-Saxon roots, given the influence that the U.S. and the U.K. had since the founding moments of the GATT. This is even more important when the circumstances of a country may indicate at some point that it is impossible to comply with the rules by interpreting them to the letter, i.e. without taking advantage of the implied flexibilities that always exist and that a good expert is supposed to know.

Brazil is a partner country that realizes the importance of having a good knowledge of the rules of the WTO and its nuances to better apply them according to its national interests. That Brazil values the WTO was made evident in the election process of the current Director General. In addition, at least three of the Ministers of Foreign Affairs of recent years (Luiz Felipe Lampreia, Celso Lafer and Celso Amorim) previously served as representatives of their country in Geneva. Of its last Secretaries of Foreign Trade, at least three are known specialists in international trade law and even in the WTO (Welber Barral, Mario Marconini and Tatiana Prazeres). Moreover, several of its highest level diplomats, as well as those who were responsible for foreign trade policy and of the most relevant experts in international trade, are today working in business institutions or are advisors on issues related to foreign trade and the WTO (among others are Sergio Amaral, who was Minister of Development, the aforementioned Mario Marconini, Welber Barral and Rubens Barboza, who was Ambassador of Brazil in London, Washington, and before the LAIA, as well as being responsible for the negotiations in the Mercosur). This country also has some of the most prestigious centers of the region for monitoring the global trading system with an interdisciplinary approach and a perspective in accordance with its national interests (among others we should mention the case of Professor Vera Thorstensen who, aside from working today in the Getulio Vargas Foundation, worked for several years in the Brazilian Mission to the WTO).

The third lesson is that dealing in the WTO implies that a member country has a strong vocation and ability to forge alliances with other countries at the level of government, business and civil society. This also entails an intensive use of human resources with practical experience in global trade competition and in the multilateral trading system.

Looking forward at least three current thematic fronts acquire increasing relevance for WTO member countries. One is the environmental issue and its effects on international trade. Another is how to achieve a reasonable degree of articulation among multiple preferential trade agreements and the multilateral trading system. The third relates to the incidence of different types of regulatory frameworks on the trade of goods and services, and on investments and transnational value chains.

All three fronts may require new approaches and also new rules and mechanisms. Negotiating them will take time and will require that each country or group of countries has a clear idea of what they need and how to achieve it

But it will be still more important to establish an open and comprehensive debate on how to adapt the multilateral trading system to the requirements of equal opportunities for the economic development of all member countries and on how it can make a useful contribution to the growing challenges of global governance. Are the proposals that have been raised enough to move towards a WTO 2.0? Or, on the contrary, what is required is a profound change in an institutional structure that transcends trade and penetrates deep into the complex and multidimensional agenda of development and governance at global scale? (In reference to this, see the book by Rormer Wilkinson, listed in the recommended reading section of this Newsletter).



Recommended Reading:


  • Boletín Informativo Techint, "Los mega acuerdos de comercio y el futuro del Mercosur", Boletín Techint, n° 35, Buenos Aires, Noviembre 2014, http://www.boletintechint.com/.
  • Bridges, "WTO Appellate Body Rules Against Argentina in Import Restrictions Dispute", ICTSD, Bridges, volume 19, number 2, Geneva 22 January 2015, http://www.ictsd.org/.
  • Bruszt, László; McDermott, Gerald (eds), "Leveling the playing field. Transnational Regulatory Integration and Development", Oxford University Press, Oxford 2014.
  • Friedmann, George, "Flash Points. The Emerging Crisis in Europe". Doubleday, New York 2015.
  • Gat, Hazar, "War in Human Civilization", Oxford University Press, New York 2006.
  • Gat, Hazar; Jacobson, Alexander, "Nations. The Long History and Deep Roots of Political Ethnicity and Nationalism", Cambridge University Press, New York 2013.
  • Groppo, Valeria; Piermartini, Roberta, "Trade Policy Uncertainty and the WTO", WTO, Economic Research and Statistics Division, Working Paper, ERSD - 2014 - 23, Geneva, 19 December 2014, http://wto.org/.
  • Hernández, René A.; Martínez-Piva, Mario; Mulder, Nanno, "Global value chains and world trade. Prospects and challenges for Latin America", ECLAC -German Cooperation, Santiago de Chile, August 2014, http://repositorio.cepal.org/.
  • Horn, Henryk; Mavroidis, Petros C., "Legal and Economic Principles of World Trade Law", The American Law Institute, Cambridge University Press, New York 2013.
  • Puentes, "Órgano de Apelación confirma fallo contra Argentina", ICTSD, Puentes, Geneva 21 January 2015, http://www.ictsd.org/.
  • Turner, Henry Ashby, "A treinta días del poder", Prólogo de Antonio Muñoz Molina, Edhasa, Barcelona 2002.
  • UNCTAD, "13th Investment Policy Monitor", A periodic report by the UNCTAD Secretariat, N° 13, Geneva, January 2015, http://investmentpolicyhub.unctad.org/.
  • United Nations, "World Economic Situation and Prospects 2015", United Nations, New York 2015, http://www.un.org/.
  • Van Creveld, Martín, "The Transformation of War", The Free Press, New York 1991.
  • Wilkinson, Rorden, "What's Wrong with the WTO - and how to fix it", Polity, Cambridge - Malden MA., 2014.

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


Subscribe to our newsletter to receive a monthly e-mail with the
latest articles published on this site.


 

Regresar a la página anterior | Top de la página | Imprimir artículo

 
Diseño y producción: Rodrigo Silvosa