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If the World Trade Organisation did not Exist, it Would Have to be Invented

Roberto Azevêdo is the director general of World Trade Organisation (WTO)

GENEVA, Oct 14 2015 (IPS) - The World Trade Organisation (WTO) is a relative newcomer on the international stage. This year we are marking our 20th anniversary.

Roberto Azevêdo. Credit: World Trade Organization (WTO)

Roberto Azevêdo. Credit: World Trade Organization (WTO)

One hundred twenty-eight governments came together to create this organisation to govern world trade in 1995. In their Ministerial declaration they predicted that it would usher in “a new era of global economic cooperation”.

So has that prediction or that ambition­ proved accurate?

Over these two decades, the organisation has certainly faced major challenges.

Our negotiating arm, especially the Doha Development Round, has made slow progress. A growing number of trade conflicts is putting real pressure on our dispute settlement system.

With the expansion of regional trade agreements, some of them among major trading blocs­, many have questioned whether they could actually replace the WTO. And, of course, the WTO has been the focus of some discontent ­ particularly in the form of anti-globalisation protests which came to a head at our Seattle ministerial meeting in 1999.

These challenges should not be underestimated. But actually, in some cases, rather than being a consequence of the WTO’s shortcomings, I think they are ­ for the most part ­ a result of its achievements.

And despite these challenges, I would argue that the open, transparent and rules-based trading system, as embodied in the WTO, has become an essential and unassailable pillar of global governance.

To appreciate this, I think it is important to look at the origins of the system.

In 1947, a group of 23 nations signed the General Agreement on Tariffs and Trade (GATT).

The GATT was not a fully-fledged organisation; its membership was limited and so was the scope of its mandate. And so the WTO was created in 1995.

And, as I see it, by founding the WTO and agreeing on the legal texts, our members provided the equivalent of a “constitution” for global trade.

That “constitution” enshrines the basic, perennial principles of trade. Non-discrimination, for example, is embodied in an important premise: most-favoured nation treatment, which prohibits a member from discriminating between trade partners by offering more favourable treatment to one member over another.

It is no coincidence that as the rule of law in trade has spread, average tariffs have fallen dramatically. In fact, they have been cut in half. Average applied tariffs were 15 percent in 1995. Today they stand at less than 8 percent. And trade volumes have more than doubled.

Many argue that the difficulties in advancing the Doha Round of world trade negotiations,­ the latest in a long line of trade “rounds,” ­ show that the organisation has lost its ability to negotiate.

And while these difficulties are very real, the reality is that members are negotiating all the time ­ and, actually, they have delivered a great deal.

The clearest proof that the multilateral system can deliver new negotiated outcomes is the Bali Package.

Negotiated in 2013, the Bali Package contains a set of decisions that include steps on agriculture, measures for least developed countries (LDCs), and the first multilateral agreement since the WTO was created:­ the Trade Facilitation Agreement.

The Trade Facilitation Agreement will simplify, standardise and speed up global customs procedures, which can lead to an average cut in trade costs by around 14 percent an impact potentially greater than the elimination of all remaining global tariffs.

And while the economic gains of Bali are indeed significant, it has had a broader systemic impact.

Right now, we are working hard to deliver meaningful outcomes in our next Ministerial Conference in Nairobi this December.

These conferences, which happen at least every two years, are the highest decision-making body of the WTO.

However, gaps in some key negotiating areas are still very big. The big issues of the Doha Round, such as agricultural subsidies and market access, have proved to be extremely contentious. The situation may change, but there are few signs of this at present.

But, despite differences on major issues, I think there is potential for a meaningful agreement in Nairobi.

And crucially, there is a broad understanding that those deliverables must include significant steps on development and LDC issues.

So, where does the WTO stand after 20 years?

The WTO was seen as a key pillar of a new kind of global economic order ­ open, inclusive, cooperative ­ that was taking shape at the end of the Cold War.

And through much hard work, I think this vision has been made into reality:
Global trade barriers are historically low, and international trade has grown significantly. Trade is underpinned by solid rules, and most importantly ­ rules which are respected. Participation in the trading system has become nearly universal, and support is provided for those members most in need. More members are making use of the dispute settlement system and ­ with each new case ­ a more relevant body of trade law develops. And more members are using WTO councils, committees and working groups to coordinate policies, head-off disputes, using the “soft power” of the system to complement the “hard power” provided by the dispute settlement mechanism.

If the WTO did not exist, it would have to be invented.

In the end, the WTO represents the willingness of its members to cooperate. It represents the recognition that their national interests are increasingly intertwined with their collective interests.

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