Our Terms & Conditions | Our Privacy Policy
In the cacophony and chaos that is currently world trade, the international institution known as the World Trade Organization has increasingly been sidelined. For more than three quarters of a century, the rules-based multilateral trading system of the WTO has been at the centre of global commerce. Now, critics say it should be abandoned altogether, to be replaced either by some new attempt at international trade governance or perhaps by no global system at all.
The WTO’s world trading system is an enormously valuable global public good involving 166 countries. The volume of world trade is 44 times, and the value of world trade is 370 times what it was when the system was created 75 years ago. The Bertelsmann Institute says every WTO member has benefited economically from being a part of the system. Abandoning this rules-based system would be a huge mistake that would cause extensive economic harm for every one of those 166 countries.
Such a rules-based global system is far more productive of shared prosperity than the Brics or various regional arrangements
Such a rules-based global system is far more productive of shared prosperity than the Brics or various regional arrangements, which are partial, not always legally binding, hard to enforce when they are, and by definition discriminatory. Furthermore, having countries such as China and Russia complying with trade rules in the WTO’s global system makes them safer targets for foreign direct investment.
Investment implications
Investors of all kinds, including wealthy entrepreneurs and family offices, should care about this because, despite its recent difficulties, the WTO system still covers 98 per cent of all world commerce. What happens to the WTO matters for investors because, when its rules are upheld, it provides security and predictability for the global economy. There is certainty instead of uncertainty — which is much needed now.
Although the achievements of the WTO are not fully appreciated, it is certainly the case that, with only a few exceptions, the system has largely failed in delivering new trade agreements. This, of course, is the fault of the 166 members themselves, with plenty of blame to go around, and not the fault of the basic structure of the system itself.
The basic problem is that, for the most part, WTO members have chosen the wrong negotiating approach, mainly because it is the one they mostly used in the 20th century. This is a consensus approach in which nothing is agreed on anything under negotiation unless and until every single one of the 166 member countries agrees on everything under negotiation.
This consensus was hard enough to achieve in the 20th century when, not surprisingly, multilateral negotiations often lasted for many years. It is even harder to accomplish amid all the global commercial complexities of the 21st century.
New negotiating approach
Yet there is a second negotiating approach that is also permitted under the WTO treaty — a ‘plurilateral’ approach in which an initial subset of WTO members willing to move forward can conclude an agreement on a particular issue. That plurilateral agreement will be automatically open for all other WTO members to join. From time to time, this second approach has been successfully employed through the decades, and some of these agreements have become fully multilateral over time.
Clinging to negotiating only by consensus has led commercially ambitious WTO members to conclude plurilateral agreements outside the legal framework of the WTO, thus creating a proliferation of hundreds of non-WTO bilateral and plurilateral agreements that, de facto, are increasingly raising new barriers to trade and threatening to become competing trading blocs, with unknown adverse geopolitical consequences.
Now is the time for all WTO members to confront reality and embrace the negotiation of new plurilateral agreements inside the WTO. Such WTO agreements — because WTO rules say they must be open to all WTO members willing to be bound by them — avoid the geopolitical confrontations posed by the growing array of non-WTO plurilateral agreements, not to mention the arbitrary and illegal unilateralism currently being practiced by the US.
Now is the time for all WTO members to confront reality and embrace the negotiation of new plurilateral agreements inside the WTO
The shared expectation of many who founded the WTO was that such plurilateral approaches by like-minded WTO members desirous of deeper levels of liberalisation and economic integration would be commonplace.
The new international institution called the World Trade Organization was expected by many who created it to address emerging trade issues through agreements relating to specific trade issues that — at least at the outset — would be less than fully multilateral but would, with time, become multilateral.
It is past time for the WTO to fulfil this original vision.
© Richie Downs. All Rights Reserved.
James Bacchus is professor of global affairs at the University of Florida and adjunct scholar at the Cato Institute. He is a former member of the US Congress and was a founding member and twice chairman of the WTO Appellate Body
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.
Aggregated From –
Comments are closed.