Development & Aid, Economy & Trade, Global, Global Geopolitics, Global Governance, Globalisation, Headlines | Analysis

TRADE: Reforming WTO Still a Distant Goal

Analysis - By Emad Mekay

WASHINGTON, Jan 27 2004 (IPS) - Consensus on how to reform the embattled World Trade Organisation (WTO) will not be easy to achieve, if a survey of experts is any indicator.

Questioned by the Bretton Woods Committee, a public education group that studies global financial institutions like the World Bank and the International Monetary Fund (IMF), nine world-renowned economists appeared split on the priorities for reforming global trade, with some even arguing reform is not necessary.

Over the past four years, two WTO ministerial conferences have collapsed while the volume and rancour of trade disputes has exploded. Frustrated member states have increasingly shunned the multilateral forum in favour of bilateral and regional trade pacts..

But the most recent resounding breakdown of the trade system came in Cancun, Mexico in September, when a group of developing nations revolted against the established order.

That led many stakeholders to reflect on possible ideas of reform.

European officials, for example, complained that the WTO needed an institutional overhaul, but scaled back their critique in late October, saying the world body required a tune-up rather than a rebuild.

Civil society groups have maintained the system needs to be more inclusive of workers’ rights and environmental protection, while poor nations argue for more say in setting the WTO agenda.

The United States stepped up its pursuit of bilateral trade deals.

And now the experts interviewed by Bretton Woods have come up with a grab bag of proposals.

The WTO’s dispute resolution process should be open to public scrutiny, said Charles Kolb, president of the Committee for Economic Development, an independent business group.

“Such openness will engender greater public trust in, and acceptance of, the WTO, in a manner that will assuage concerns and simultaneously build greater public support,” he added.

Kolb said his organisation, a business and civic group that is 56 years old, would favour Washington taking the lead in the WTO to ensure that developing countries have access to the markets of developed countries.

He also argued that the body should focus on trade-related matters and not complicate that with other issues that, in his view, could be more appropriately addressed elsewhere.

For example, labour issues are best discussed in the International Labour Organisation (ILO) while non-trade environmental issues should be addressed at the United Nations Environment Programme (UNEP), according to Kolb.

“The WTO should understand that developing countries should be allowed to pursue their own labour and environmental standards,” he added.

Brazilian ambassador to the United States, Rubens Antonio Barbosa – whose country played a major role in rallying 20 other developing nations against the North’s agenda in Cancun – acknowledged that the Geneva-based WTO was created as a universal forum whose decisions would be made by consensus and without qualified votes.

Yet, he complained, members’ real weight was becoming more and more perceptible, as real decisions continued to be made behind closed doors and in exclusive informal groups of western nations.

“This conflict between an apparently egalitarian decision-making process, based on consensus, and the old methods by which decisions continued to be made by a restricted number of countries has generated an increasing atmosphere of tension among the WTO members,” he said.

If the problem is addressed, Barbosa said, there would be a chance that WTO members could restart negotiations in Geneva this year, but he warned that another ministerial meeting, “without concrete results could mean a very serious, if not fatal, blow to the Doha round”, the current stage of global trade discussions.

The next WTO ministerial meeting is likely to be held early next year due to presidential elections in the United States in November.

Civil society groups, which played a major role in resisting the rich nations’ trade agenda in Cancun, say they want to work toward a more fundamental reorientation of the multilateral trading system, to promote sustainable world economic growth and development.

That system should creates decent jobs and a more equitable distribution of the benefits of globalisation, and benefit people in both developing and industrialised countries, they add.

“It is a priority to protect the fundamental rights of workers around the world against unscrupulous governments or employers who seek to gain an unfair advantage in international trade through the violation of core labour standards,” said John Sweeney, president of the AFL-CIO federation of U.S. labour unions.

Sweeney suggested the WTO establish a formal structure to address trade and core labour standards, with the participation of the ILO.

His group, like many other civil society organisations, demanded that the WTO become more transparent and democratic.

“Increased transparency and financial assistance is needed to ensure that all members (particularly the least developed) are able to take part fully in all WTO activities and procedures, including its dispute settlement mechanisms,” Sweeney said.

The role of civil society groups themselves in the WTO system is a contentious issue, especially given recent calls to give their representatives observer status at the body.

Yale University Professor N Srinivasan told the Bretton Woods Committee that the concerns of civil society groups have to be addressed at the national political level, not at the WTO.

“Through influencing the national debates about trade policies they will be influencing the position of national governments in the negotiations and decision making in the WTO,” he said.

“Any change in the character of the WTO as an inter-governmental organisation should be avoided.”

One expert said “WTO reform” is actually an escape route for many governments that do not want to deal with “real” trade issues and blame the failure of recent negotiations on institutional obstacles, particularly the WTO requirement for consensus.

“Focusing on institutional reform as an alternative to trying to restart the negotiations is an attractive road to go down politically,” said William A. Reinsch, president of the National Foreign Trade Council, a powerful business lobby group.

“It allows governments to postpone, if not ignore, the real trade issues that divide them, and it allows them to place blame on the organisation itself or, at worst, their predecessors who created it, rather than on themselves.”

“Tempting though that is, however, I believe it is ultimately self-defeating,” Reinsch added.

That is because it is unlikely any reform proposals would get the consensus necessary from all members.

For example, small nations would no doubt cite the model of the United Nations General Assembly – one vote per country. Larger ones would no doubt prefer a weighted system, which would open up an enormous debate over its parameters, said Reinsch.

It is unlikely the issue of WTO reform will get much attention from officials in 2004. This year will mark not only a U.S. presidential election but also the rotation of the presidency of the European Commission.

These will be followed by the expiry of U.S. trade promotion authority, a presidential power without which the administration will need congressional approval for the details of its trade deals, a lengthy process.