The state of the WTO in three metaphors

Tracey Samuelson Dec 15, 2015

The state of the WTO in three metaphors

Tracey Samuelson Dec 15, 2015

Since 2001, the World Trade Organization has been working on the so-called Doha Development Agenda, named for the Qatar city where talks were first held. Fourteen years later, those talks will continue at the WTO’s ministerial meetings in Nairobi this week.

The Doha agenda was supposed to improve the trade for developing countries by lowering trade barriers and revising trade rules, especially related to agricultural subsidies, but talks have been largely deadlocked for 14 years.

U.S. Trade Representative Michael Froman recently published an op-ed in the Financial Times that said, “It’s time for the world to free itself from the stricture of Doha.”

However, not everyone agrees.

“Another group of countries are saying, ‘No, no, no, we have to finish up the Doha round before we can move on to anything else,’” said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. “That’s a big division.”

Whatever the outcome, it will never be as comprehensive and ambitious as some may have hoped when we began our journey,” WTO Director-General Roberto Azevêdo said in an address to trade ministers in Nairobi Tuesday. “It would not add up to the successful conclusion of the Doha issues, but we can take important steps nonetheless.”

The Doha round was born out a spirit of global unity and solidarity after the September 11 terrorists attacks, said Miriam Sapiro, a principal at Summit Strategies International and former U.S. deputy trade representative.

But from the start she said negotiations suffered from a central problem: Developed countries wanted all parties to cut their tariffs and subsidies, while developing nations thought they should be allowed to maintain their protections.

“So far, there’s been an inability to find enough common ground or potential areas of eventual compromise,” she said, advocating that Doha be retired for a newer agenda that better reflects current economic conditions and trading patterns. “If you think of Doha as Humpty Dumpty, it’s very hard to put it back together.”

The Doha deadlock has lead to “a problem of perception” for the WTO, said Andy Shoyer, a partner at the law firm Sidley Austin and a former legal advisor in the U.S. Mission to the WTO in Geneva. “It’s hard for the WTO because it has always moved forward through those trade rounds — these large packages of carrots and sticks — that have created a broad enough benefits set of benefits that you could get to closure.”

Because that’s the model the trade community is used to, “when a round that lasts this long, it risks irrelevance,” he said.

 So while WTO has been successful in creating and enforcing a common set of trade rules for its 162 member countries, Shoyer said “the risk is that the WTO is like a shark, in that if it fails to move forward it dies.”

Countries could instead negotiate agreements among a smaller number of WTO countries or work outside the organization entirely, as the U.S. and its 11 partner countries did with the Transpacific Partnership.

While director-general Azevêdo argued the bilateral and regional agreements aren’t a cause for concern and can co-exist with the WTO, the Peterson Institute’s Hufbauer calls the Nairobi ministerial is a “dramatic moment” for the WTO.

“I think it’s like a business firm that meets a very strong competitor,” he said. “It might go bankrupt and it might revive and come back.”

Hufbauer doesn’t think WTO won’t disappear, as it still has important roles to play in research and resolving trade disputes and “international organizations live far longer than we humans.”

“But they can be a walking ghost,” he said.

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