WTO must re-invent policies to ensure robust trade globally

There is a need to look at the World Trade Organisation's vision again as countries look to shift from a multilateral platform to a plurilateral one, says TS Vishwanath.

The current turmoil in the World Trade Organisation (WTO) over the future of the Doha Round brings to focus a possible change that countries may expect from WTO negotiations.

The Geneva-based multilateral trade body has over the years focussed mainly on the issue of market access by putting together agreements that will provide transparency and predictability to countries while engaging in global trade.

However, ever since the Doha Round started and developing countries found greater voice in the outcome of the negotiations, there seems to be a shifting focus on the policy space available to countries under the multilateral agreements rather than on the rules that help provide greater market access.

This possible shift is happening because in the recent past the free trade agreements (FTAs) - mega, regional and bilateral - bridged the gap in market access issues that the WTO was supposed to provide.

This possible shift in expectations from WTO may also have been accentuated by the fact that the global economic unrest over the past few years is forcing many countries to look inwards to protect labour markets and push domestic manufacturing and agriculture.

The WTO rules have been a deterrent to many countries wanting to boost local industry to sustain the domestic economy.

Protectionism has certainly increased in the recent past with many ostensibly open economies adopting a stand that is clearly perceived as protectionist.

The various forms of protectionism that have risen in the last four to five years, according to a report prepared by the European Commission last year, range from stimulus measures to boost exports, pushing domestic goods over imported goods, competition distorting policy packages and increase in import tariffs.

The total number of measures introduced since 2008, according to the report has been 700.

So if protectionism is growing and countries are looking at policy space to boost domestic economies, the question is whether WTO needs to re-invent itself to remain relevant and at the same time help in finding viable solutions that can lead to a win-win situation whereby it continues to be a strong trade liberalisation platform.

To begin with, member countries may want to look at positioning WTO equally as a platform to address larger policy issues, which may be creating a divide among the member nations.

For example, on the issue of subsidies in agriculture, there is a feeling among some developing countries that the developed world has some carve-outs in the agreement on agriculture, which are not available to developing countries.

In short, it could require addressing some larger policy issues that may have become relevant in the current context.

To get to this point of protecting the larger interests of WTO, member countries may need to take a closer look at how FTAs are growing despite a hiatus at Geneva.

With the growing trend of mega FTAs across the globe, the shift from a multilateral platform to a plurilateral one for trade negotiations is real.

This may not be in the interest of many developing countries, including India, which gains a lot from a multilateral system, thereby making the need for a re-look at the vision and objectives of WTO more pertinent.

The WTO's role as an arbitrator of trade disputes has been established and that needs to remain firmly entrenched as a key objective of the multilateral body to ensure that global trade remains fair.

Another role that WTO may also focus more on is to identify issues such as regulations under the sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT) agreements that may impact trade in the form of non-tariff barriers.

This will be an area where bilateral or regional trade pacts may not be able to perform well.

From September, countries will make a renewed push to put the Doha agenda back on track following the setback in July due to India's reluctance on moving forward on the trade facilitation piece, citing the need for a larger agenda.

It may be time for some informal discussions in the corridors of the Centre William Rappard, the building in Geneva where the WTO is housed, to check if the approach of countries towards the negotiations needs to change to get some tangible results.

Next one year is the most crucial for WTO trade talks Next one year is the most crucial for WTO trade talks February 28, 2014 09:33 IST

This would mean that by the time the whole Doha Agenda is negotiated and if completed within the next two to three years, then it could take another three to four years for the Round to take actual effect.

Therefore, when countries look at what is on the table for negotiations, they will need to look in a time frame of about six to seven years and decide on a negotiating strategy accordingly.

In this context, it will be important to look at what could be the core issues for negotiations at Geneva in the coming months.

One area, which has already been signalled for immediate attention, is the elimination or substantial reduction in tariffs on green goods.

Fourteen countries - Australia, Canada, China, Costa Rica, Chinese Taipei, the European Union, Hong Kong (China), Japan, Korea, New Zealand, Norway, Switzerland, Singapore and the US - have at Davos, on the sidelines of the World Economic Forum Annual Meeting agreed to push for concluding this agreement. 

 

Image: A delegate waits for the opening of a session of the Trade Negotiation Committee at the World Trade Organization (WTO) in Geneva.

Photograph: Denis Balibouse/Reuters