Thursday, August 27, 2026
News and Views from the Global South
TRADE: WTO Panel Frowns on Side Deals by Member Nations
Emad Mekay
- A review commissioned by the World Trade Organisation (WTO) after its first 10 years of operation came out heavily in favour of expanding global trade and urged governments to take a more aggressive role in promoting multilateral deals, rather than bilateral or regional agreements.
Meanwhile, critics of the current global trade system contend that the Geneva-based organisation has in fact undermined the fight against poverty. They believe the WTO system has primarily benefited corporations based in industrialised nations, local elites and a few wealthy individuals around the world.
Monday’s report, authored by a panel of economists led by former WTO Director General Peter Sutherland, says that opening markets and reducing trade barriers still offer the world the best hope to expand economic growth, both for developed and developing countries. The 90-page report urges nations to agree on a timeframe to collectively eliminate trade tariffs and barriers.
Sutherland, who is also a former European Union trade commissioner, recommends in the report that the body hold a summit every five years to energise support for the WTO, which has come under increasing criticism from developing nations and some economists.
The report also places strong emphasis on ambitious multilateral trade liberalisation and the so-called Doha Development Agenda of 2001.
Commissioned by the current WTO director Supachai Panitchpakdi, the document calls for greater transparency, particularly in its recommendations for greater outreach to the public and civil society groups. It advocates open meetings for the settlement of disputes to provide officials and citizens with a better understanding of the global trade system.
Apart from Sutherland, who now serves on the boards of Investors AB and the Royal Bank of Scotland, the eight-member panel includes Niall Fitzgerald, the chairman of Reuters, who also served as joint chairman and CEO of household goods giant Unilever, and Jagdish Bhagwat, a professor at Columbia University who is a senior fellow at the U.S.-based Council on Foreign Relations, which is known for its economic orthodoxy.
"It will be increasingly apparent that to undo or resile (withdraw) from this system will carry a significant price," Sutherland says in the report’s introduction.
The assessment comes as the WTO celebrates its 10-year anniversary, and days before the informal meeting of trade ministers in Davos, Switzerland to help give the struggling Doha round a new impetus in 2005.
The WTO, which was set up on Jan. 1, 1995, is a major player in the conduct of trade relations. It has a membership of 148 countries and is based on a free trade and investment agreement that has provided international investors with a unique set of guarantees designed to stimulate foreign direct investment and the movement of factories around the world, especially from the United States and Europe to low-wage locations such as China and Mexico.
Director-General Supachai Panitchpakdi said the report by the consultative board showed the need for "serious reflection on how to improve our functioning while safeguarding the strengths of this institution".
The United States generally welcomed the report and said it proves its point that trade within multilateral settings was one of the best options for economic growth around the world.
"Like others, we may take issue with some of the points and recommendations, but we think that it raises the right questions for reflection while making a compelling case for an open trading system based on agreed multilateral rules," said Richard Mills, spokesman for the United States Trade Representative in a statement on Monday.
The United States says that the report recognises its long-time grievance that many WTO members are pursuing multilateral liberalisation at the same time as they are proceeding with bilateral and regional agreements.
The report said that this "bowl of spaghetti" of one-to-one deals was undermining the multilateral setting and recommended that members operate under the WTO and its principles instead.
But watchdog groups say that at the 10-year mark, the WTO has failed to deliver on promised economic gains either for the majority of people in both industrialised nations and developing countries. They say the policies of the organisation are to blame for setbacks to the environment and public health as well.
The WTO has hit many snags in its yet unattained goal of global liberalisation of trade, especially when countries failed to launch a new round of negotiations at the contentious ministerial meeting in Seattle in 1999.
Another major setback occurred at the midway point of the Doha Development Agenda talks in Cancun in 2003. Many developing countries, economists and independent development groups have raised serious questions about the future of the WTO, saying the rising global opposition to its agenda showed major cracks in the system.
"Ten years ago, when opposition in numerous countries almost prevented establishment of this powerful global commerce agency with expansive one-size-fits-all rules, proponents said the WTO would lead to tremendous economic gains worldwide without posing any threat to public interest policies, democracy or sovereignty," said Lori Wallach, director of Global Trade Watch. "But a decade later, it’s clear that the WTO has been very effective – at doing exactly the opposite."
Global Trade Watch notes the number of people in the least-developed countries living in extreme poverty as defined by the World Bank (earning less than one dollar per day) has risen steadily since the WTO’s inception, according to World Bank figures.
Most of the gains in poverty reduction for developing countries over the period have come from China and India, two countries that diverge strongly from WTO-recommended policies. In China’s case, the country began restructuring its rapidly growing economy to meet WTO requirements in 2002, the group said.
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