O sistema multilateral de comércio evoluiu como resultado de

Política de desenvolvimento internacional | Revue internationale de politique de développement.
Ajuda, Economias Emergentes e Políticas Globais.
Os desafios enfrentados pelo sistema multilateral de comércio ao abordar os objetivos da política pública global.
Apesar de um aumento recorde de 14,5% nas exportações mundiais de mercadorias, os efeitos da crise financeira e da recessão global ainda estão dificultando uma recuperação mais rápida da economia. Preços do petróleo relativamente altos, combinados com desemprego persistente e medidas destinadas a reduzir os déficits orçamentários, prejudicaram as perspectivas de crescimento de curto prazo.
Enquanto o comércio Sul-Sul continua a explodir, os desequilíbrios comerciais - ou seja, a diferença entre as exportações e as importações - aumentaram em 2010 em comparação com 2009 (embora menores do que os níveis anteriores à crise). Enquanto isso, as negociações comerciais no âmbito da Rodada de Doha chegaram a um impasse, gerando incertezas sobre o futuro da Organização Mundial do Comércio (OMC) como um fórum de negociação. Nessas circunstâncias, o sistema deveria repensar seu processo decisório fundado na predominância dos Estados membros, no princípio do consenso e na noção de empreendimento único, como alguns críticos sugeriram? E, em caso afirmativo, como essa agenda de reformas poderia ser iniciada na OMC? Além disso, além da função negociadora da OMC, a paralisia do sistema também levanta questões urgentes sobre a capacidade do sistema de responder aos desafios prementes de nossos tempos, como comércio e mudanças climáticas, ou segurança alimentar e volatilidade de preços.
Termos de indexação.
Palavras-chave temáticas & # 160 ;:
Palavras-chave institucionais & # 160 ;:
Texto completo.
"O que estamos vendo hoje é a paralisia na função negociadora da OMC, seja no acesso ao mercado ou na elaboração de regras. O que estamos enfrentando é a incapacidade da OMC de se adaptar e se ajustar às prioridades emergentes do comércio global, aquelas que você não pode resolver por meio de acordos bilaterais. '
Pascal Lamy, em uma reunião informal de chefes de reunião da delegação.
Comitê de Negociação Comercial, 26 de julho de 2011.
1. Introdução.
1 A crise financeira de 2008-09 e a atual crise da dívida soberana na Europa não só destacaram o alto nível de interdependências econômicas existentes em todo o mundo, mas também os desafios crescentes na busca de ações colaborativas internacionais para enfrentar os desafios urgentes do desenvolvimento sustentável. Num mundo multipolar em rápida mutação, no qual a riqueza económica está progressivamente a mudar para o Leste e o Sul, e em que as restrições de recursos se tornaram cada vez mais prementes, a cooperação internacional continua em crise. A ascensão de países emergentes como a China, a Índia ou o Brasil e o relativo declínio das potências econômicas tradicionais criaram novas oportunidades, como refletido pelo crescimento sem precedentes do comércio Sul-Sul observado na última década. No entanto, também gerou novas tensões, entre os países com grandes superávits comerciais e aqueles com crescentes déficits comerciais. Essas tensões são igualmente palatáveis ​​nas negociações internacionais, como as que tratam das mudanças climáticas.
2 Enquanto isso, estima-se que o número de pessoas com fome tenha atingido um bilhão em 2009, catapultando a segurança alimentar de volta ao topo da agenda política. Como o crescimento da demanda continua a aumentar mais rapidamente do que o aumento da oferta - devido fundamentalmente ao baixo crescimento da produtividade - os preços dos alimentos deverão permanecer altos e voláteis nos próximos anos. Diversos fatores contribuíram para aumentar a volatilidade dos preços: estoques baixos resultantes de uma sucessão de escassez de produção relacionada ao clima, crescente demanda por matéria prima de biocombustíveis, aumento dos preços de energia e depreciação do dólar americano; no entanto, estes foram agravados por respostas políticas, como restrições à exportação.
3 Esse ambiente em rápida mutação e as necessidades urgentes de ação cooperativa internacional para abordar as preocupações em torno da segurança alimentar, mudanças climáticas ou desequilíbrios comerciais insustentáveis ​​contrastam fortemente com a atual paralisia do sistema comercial multilateral. As negociações comerciais da Rodada Doha, no âmbito da Organização Mundial do Comércio (OMC), permaneceram no limbo por vários meses, sem perspectivas reais para o futuro próximo. Enquanto vários fatores explicam o impasse nas negociações comerciais de dez anos, essa paralisia suscita incertezas sobre o futuro do sistema multilateral de comércio.
4 Como contribuição para essa discussão, este capítulo analisa como o sistema multilateral de comércio tem buscado atender aos objetivos de políticas públicas globais e como pode fazê-lo no futuro. Após uma breve revisão das tendências atuais do comércio internacional e dos recentes desdobramentos que levaram à atual crise na Rodada de Doha, a Seção 3 considera possíveis opções para reformar a forma como a OMC conduz as negociações. Finalmente, a Seção 4 enfoca como a OMC procurou responder a objetivos específicos de políticas públicas no passado - usando o caso da segurança alimentar como exemplo - e o que isso nos diz sobre a maneira pela qual o sistema multilateral de comércio se relaciona com o público global. objetivos políticos.
2. O contexto internacional.
2.1 Tendências recentes no comércio internacional.
5 Após uma queda acentuada de 12% em 2009, o volume de exportações mundiais de mercadorias aumentou 14,5% em 2010, o que permitiu que o comércio global se recuperasse para níveis pré-crise. Este número, o maior desde o início da coleta de dados em 1950, acompanhou o aumento de 3,6% no Produto Interno Bruto (PIB) global. De acordo com a OMC (OMC, 2011a), o crescimento do comércio mundial deve se ajustar a 5,8% mais modestos em 2011, com um aumento de 2,5% no PIB global (ver Figura 9.1). Como era de se esperar, a Ásia exibiu o crescimento real mais rápido das exportações - 23,1% -, com as exportações chinesas e japonesas aumentando em 28,4% e 27,5%, respectivamente. Enquanto isso, o comércio de mercadorias cresceu 10,8% na Europa e 15,4% nos EUA. Em geral, os países em desenvolvimento e as economias em transição representaram 45% do total das exportações mundiais, a maior participação de todos os tempos (OMC, 2011a).
6 O aumento dos preços das commodities e a desvalorização da moeda norte-americana fizeram com que o crescimento do comércio em termos de dólares - 22% - superasse o aumento em termos de volume. Em particular, as regiões que dependem das exportações de recursos naturais - como a África, o Oriente Médio ou a América do Sul - tiveram um crescimento menor nos volumes de comércio, mas aumentos significativos no valor em dólar de suas exportações. As exportações africanas aumentaram 6,5% em termos de volume, mas 28% em termos de dólares. Da mesma forma, as exportações latino-americanas cresceram apenas 6,2% em termos de volume, mas 25% em termos de dólar (OMC, 2011b).
Figura 9.1 - Exportações mundiais de mercadorias e PIB, 2008–11 (em variação percentual *)
* Variação percentual em comparação com o mesmo mês do ano anterior.
Fonte: OMC (2011b).
7 Enquanto isso, de acordo com a Conferência das Nações Unidas sobre Comércio e Desenvolvimento (UNCTAD), o total de investimentos diretos estrangeiros (IED) aumentou de US $ 1.185 para 1.244 trilhões em 2010, em grande parte devido ao aumento do fluxo para países em desenvolvimento, juntamente com economias em transição. por mais da metade do total do IDE (UNCTAD, 2011). O IDE externo das economias emergentes também atingiu níveis recordes, com a maior parte do seu investimento direcionado para outros países do sul.
8 Embora esses números pareçam impressionantes, o aumento de 2010 no comércio de mercadorias não foi suficiente para retornar as exportações a níveis consistentes com as tendências de 1990-2008. No front do investimento, apesar de um aumento de 5% em relação a 2009, os fluxos globais de IED permaneceram abaixo da média pré-crise (2005-2007) e 37% abaixo do pico de 2007 (UNCTAD, 2011). E enquanto as economias emergentes na América Latina e no Sudeste da Ásia experimentaram um rápido crescimento, os fluxos de IED continuaram a se contrair nos países desenvolvidos, na África e no sul da Ásia.
9 De maneira mais geral, como a produção mundial em 2009 estava deprimida, a OMC argumenta que um crescimento maior em 2010 era esperado, particularmente porque o crescimento do PIB freqüentemente alcançava 4% ou mais nos últimos anos (OMC, 2011a). Vários fatores podem explicar por que o comércio e a produção cresceram mais lentamente do que poderiam. Em 2010, os preços relativamente altos do petróleo aumentaram os custos de energia para residências e empresas. As altas taxas de desemprego também afetaram o consumo interno e a demanda de importação nos países desenvolvidos. Finalmente, tentativas na Europa, nos EUA e em outros países para reduzir os déficits orçamentários levaram a cortes nos gastos e nas receitas, minando as perspectivas de crescimento de curto prazo. Portanto, é provável que os impactos negativos da crise financeira e da recessão global permaneçam por algum tempo, apesar da recuperação recorde do comércio em 2010.
10 Nos EUA, a baixa taxa de poupança nacional e o alto consumo privado como proporção do PIB continuaram a sustentar a demanda por bens de consumo importados, alimentando o rápido crescimento impulsionado pelas exportações nas economias emergentes. Nos últimos 10 a 15 anos, esses desenvolvimentos resultaram em grandes desequilíbrios, com grandes déficits em conta corrente se acumulando nos EUA em particular, e grandes superávits em conta corrente em outros, especialmente na China, na Alemanha e no Japão. Estas, por sua vez, geraram tensões políticas, evidenciadas na controvérsia EUA-China sobre as políticas cambiais. Em 2010, os desequilíbrios comerciais permaneceram menores do que os níveis anteriores à crise, mas para a maioria dos países, exceto a China, a diferença entre as exportações e as importações aumentou em relação a 2009 (ver Figuras 9.3 e 9.4). Como mostra a Figura 9.2, o déficit comercial dos EUA aumentou de US $ 550 bilhões para US $ 690 bilhões - mas permaneceu abaixo dos US $ 880 bilhões em 2008. Enquanto isso, o superávit comercial da China caiu de quase US $ 300 bilhões em 2008 para pouco mais de US $ 180. bilhões em 2010. Em 2010, o déficit comercial da União Europeia (UE) aumentou além dos níveis de 2009, apesar do superávit comercial de US $ 200 bilhões da Alemanha, embora o déficit geral da UE tenha sido menor do que em 2008. O Japão foi uma exceção à tendência geral para desequilíbrios mais pequenos, uma vez que o seu excedente comercial quase quadruplicou em 2010, em comparação com os níveis anteriores à crise.
11 Existe um amplo consenso de que os desequilíbrios atuais não são sustentáveis ​​no longo prazo. Níveis persistentemente altos de consumo das famílias financiados por dívida nos EUA terão que retornar a níveis históricos ligeiramente inferiores (Mayer, 2011). Ao mesmo tempo, as baixas taxas de consumo e a alta poupança nacional na China levaram a Pequim a desenvolver seu mercado interno e gradualmente passar do investimento e exportação para o crescimento liderado pelo consumidor. Essas tendências provavelmente afetarão o tamanho e a composição da demanda global nos próximos anos. Isso ocorre em parte porque o aumento do consumo chinês pode não compensar totalmente uma possível redução no crescimento da demanda dos EUA, mas também porque as duas economias tendem a importar diferentes cestas de mercadorias, com a China comprando mais matéria-prima, commodities e alimentos, por exemplo. A menos que outros países com superávit comercial como a Alemanha ou o Japão também aumentem seu consumo interno, mudanças na demanda global terão grandes repercussões negativas nas exportações dos países em desenvolvimento, e também no emprego - particularmente em setores manufatureiros como têxteis e vestuário (Mayer, 2011).
Figura 9.2 - Desequilíbrios comerciais em economias selecionadas, 2008–10 (em US $ milhões)
Fonte: OMC (2011b).
O comércio Sul-Sul também continuou a se expandir e agora representa cerca de 50% das exportações dos países em desenvolvimento. Os volumes de comércio da África com seus parceiros emergentes dobraram em valor nominal ao longo da década e agora somam 37% do comércio total do continente (AFDB et al., 2011). Enquanto a China representa o principal parceiro emergente da África, tendo ultrapassado os EUA em termos de volume, a soma do comércio do continente com outros parceiros emergentes (como Turquia, Brasil, Coréia e Índia) é agora ainda maior do que o comércio com a China. Embora esses desenvolvimentos forneçam novas oportunidades - mercados de exportação, transferência de tecnologia, ajuda e outras formas de cooperação - as exportações africanas para outros países em desenvolvimento permanecem concentradas em produtos primários, com poucas evidências de que o comércio Sul-Sul tenha provocado transformação estrutural real.
Figura 9.3 - Importações - exportações: EUA e China, 2005–11 (em milhões de US $)
Figura 9.4 - Importações - exportações: Alemanha e UE, 2005–11 (em milhões de US $)
2.2 O colapso das negociações da Rodada de Doha.
14 Desde janeiro de 2010, a Rodada de Doha continua a fracassar, com prazos para concluir as negociações de dez anos sendo perdidas no final daquele ano e no próximo, e agora sem fim à vista. Ao longo do ano, os EUA solicitaram repetidamente a participação obrigatória em acordos "setoriais" para produtos manufaturados, devido à redução de tarifas em toda uma indústria. Brasil, China e Índia rejeitaram as exigências dos EUA para que grandes economias emergentes assumissem responsabilidades específicas e contestaram a alegação de Washington de que os textos preliminares de dezembro de 2008 penalizam desproporcionalmente os EUA - chamando os Estados Unidos a esclarecer quais concessões específicas Washington poderia oferecer em troca de aumento Acesso ao mercado.
15 Enquanto isso, o grupo G-33 de países em desenvolvimento fez uma série de propostas em favor de um "mecanismo de salvaguarda especial" forte que eles poderiam usar para defender os produtores agrícolas domésticos de surtos repentinos de importações ou depressões de preços. Os EUA e outros países exportadores continuaram a insistir que as flexibilidades dos países em desenvolvimento não deveriam prejudicar o crescimento no comércio normal.
16 Depois de um 'exercício de inventário' muito elogiado, mas em última instância infrutífero, em março de 2010, os membros se encontraram durante a maior parte do ano restante em vários grupos informais bilaterais e plurilaterais - descritos como 'geometria variável' pelo diretor-geral da OMC, Pascal Lamy. O comércio também foi destaque nas discussões à margem das reuniões da Organização para Cooperação e Desenvolvimento Econômico (OCDE) e da Cooperação Econômica Ásia-Pacífico (Apec), e na agenda das cúpulas de Toronto e Seul do grupo G-20. das principais economias - apenas para os funcionários descobrirem que os interesses das grandes potências comerciais ainda não estavam perto o suficiente para que um acordo de Doha seja fechado no futuro próximo. No início de 2011, o México e o Brasil apresentaram propostas separadas para romper o impasse de Doha, incluindo possíveis trocas entre áreas de negociação separadas, como agricultura e produtos manufaturados: no entanto, estes encontraram pouco apoio no órgão de comércio global. Reconhecendo que as lacunas eram cada vez mais difíceis de superar, os negociadores do comércio começaram a discutir as opções para um "pouso suave". A publicação de textos revisados ​​ou documentos de trabalho em abril de 2011 confirmou receios de que os progressos tivessem sido frustrados, com alguns presidentes de grupo em negociação apenas capazes de divulgar os relatórios "em andamento" em vez de novas versões preliminares.
17 membros começaram então discussões tranquilas sobre o que um "Plano B" poderia parecer. O plano foi anunciado oficialmente em maio: os membros finalizariam um mini-pacote com foco nas preocupações dos países menos desenvolvidos (LDCs) para a reunião ministerial de dezembro e também estabeleceriam um plano de trabalho para resolver outros problemas pendentes. Por insistência dos EUA, o pacote foi ampliado para incluir também os problemas não-LDC. No entanto, o pacote rapidamente começou a se desenrolar quando os membros se tornaram incapazes de concordar sobre quais itens LDC e não-LDC incluir. O consenso mostrou-se elusivo sobre as quatro principais questões que os países menos desenvolvidos procuraram incluir: acesso livre de quotas com isenção de impostos para suas exportações; uma renúncia aos serviços de PMD, um "avanço" no algodão e regras de origem melhoradas. Da mesma forma, as potências comerciais foram incapazes de concordar com o número crescente de questões "não-LDC" propostas, que variavam de subsídios à pesca para facilitação do comércio e competição de exportação.
18 Em agosto, o plano para a Reunião Ministerial de dezembro de 2011 havia se desviado da produção de um pacote LDC-plus: os membros decidiram se concentrar em questões não-Doha e em um plano de trabalho pós-dezembro para concluir Doha, enquanto realizavam discussões paralelas sobre possíveis entregas LDC.
3. Governança de comércio global justa e inclusiva.
19 Vários fatores explicam a incapacidade dos membros para concluir as negociações comerciais. Alguns apontam para o fato de que o processo de negociação se tornou muito politizado e complexo, dada a crescente diversidade e as expectativas variadas dos 153 países membros da OMC. Outros culpam o surgimento de economias emergentes como Brasil, China e Índia, juntamente com coalizões de países em desenvolvimento mais assertivas. Outros ainda o ligam à crise financeira global e às recentes dificuldades domésticas na UE e nos EUA, que impediram esses países de exercer plenamente o papel de liderança nas negociações da OMC. Finalmente, as posições dos países e os interesses de negociação mudaram ao longo do tempo, refletindo hoje a dinâmica geopolítica. Todos esses fatores são relevantes, mas os críticos estão cada vez mais apontando para uma falha mais fundamental do sistema, relacionada à maneira como as negociações são conduzidas. Alguns observadores argumentaram, portanto, que é necessária uma reforma completa do sistema para superar a atual paralisia.
20 Outros observam que não são necessariamente os procedimentos institucionais da OMC que paralisaram a organização, mas sim a maneira pela qual os membros escolheram usar suas regras e práticas (Rodriguez Mendoza e Wilke, 2011; Rolland, 2010). De fato, alguns especialistas argumentam que a OMC serviu como um modelo de sistema de governança em nível internacional, predominantemente por causa de seu sistema automático e exequível de solução de controvérsias. Além disso, através de seu conjunto de regras e disciplinas, argumenta-se, a OMC também foi bem-sucedida na prevenção de tendências protecionistas durante a crise econômica.
1 O Warwick Report, por exemplo, fornece um dos mais notáveis ​​e abrangentes documentos de inventário e (.)
21 No entanto, o debate sobre a reforma institucional - se ela é necessária, de que forma e por que tipo de processo - continuou desde a criação da OMC (Deere-Birbeck e Monagle, 2009). Em 2003, após o fracasso da Conferência Ministerial de Cancún, Pascal Lamy - então comissário de comércio da UE - classificou a OMC como "medieval" e pediu que seu processo de tomada de decisão fosse reformulado (Lamy, 2003). Nos últimos anos, vários atores propuseram a reforma de praticamente todos os aspectos do funcionamento da OMC - desde a gestão e administração até a condução de negociações comerciais e solução de controvérsias, capacitação e cooperação com outras instituições ou o público em geral (Deere-Birbeck e Monagle, 2009). Os objetivos por trás dessas propostas e o ritmo das reformas propostas foram igualmente diversos, passando de melhorias incrementais a mudanças radicais no funcionamento da instituição. Embora algumas propostas tenham sido introduzidas pelos governos, outras foram apresentadas pela academia, institutos de pesquisa, sociedade civil e outras organizações internacionais.1 O próprio sistema multilateral não tem sido estático diante dessas demandas. Reformas - ou mudanças incrementais - ocorreram em várias frentes, inclusive no nível gerencial, na transparência externa, na participação pública nos processos de solução de controvérsias ou na forma como as negociações são conduzidas (Deere-Birbeck e Monagle, 2009). Há, no entanto, visões divergentes sobre a conveniência e o impacto dessas mudanças e sobre se elas vão longe o suficiente.
2 Quando os governos lançaram as negociações comerciais da Rodada Uruguai no âmbito do GATT em 1986, o decl (.)
22 O debate despertou um interesse renovado à medida que os membros se preparavam para a reunião ministerial de novembro de 2009. Após dez anos de negociações complexas, caracterizadas por prazos perdidos e poucos dividendos substanciais, os críticos argumentaram que as regras, princípios e práticas estabelecidas de tomada de decisão do órgão, herdadas do Acordo Geral sobre Tarifas e Comércio (GATT), 2 são simplesmente inadequada para os desafios que mudam rapidamente de nossos tempos. Alguns chegam a argumentar que o "triângulo dourado" do GATT / OMC - a dominação das partes contratantes, o princípio do consenso e a lógica do "empreendimento único" - é incapaz de enfrentar os desafios da moderna governança do comércio global (Cottier e Elsig, 2009).
23 O fortalecimento do funcionamento das negociações da OMC exigirá o equilíbrio de três demandas conflitantes: maior eficiência na condução das negociações; maior legitimidade, incluindo uma melhor abordagem das preocupações de política pública; e maior inclusão, de modo a superar as assimetrias de poder e promover resultados mutuamente benéficos. As seções a seguir revisam algumas das críticas e as opções de reforma propostas para a condução das negociações da OMC à luz desses objetivos.
3.1 Os princípios do consenso e do compromisso único.
3 O princípio do consenso remonta à Organização Internacional do Comércio (OIC) e, com ele, o e (.) 4 “Com exceção das melhorias e esclarecimentos do DSU, a conduta, a conclusão e (.)
24 As negociações da OMC são guiadas pelo princípio do consenso e pela ideia de que representam um único empreendimento. O consenso não é interpretado como exigindo unanimidade; no entanto, 3 se nenhum objeto presente do estado membro, consenso é assumido. O compromisso único, por outro lado, exige que todas as áreas sejam negociadas e adotadas por todas as partes ao mesmo tempo.4 Ambos os princípios derivam diretamente da natureza da OMC como uma organização dirigida pelos membros. Com o secretariado assumindo um papel quase marginal e o princípio de consenso com base na igualdade soberana permeando todas as áreas e funções da organização, a predominância das partes contratantes é sua principal característica.
25 Cada conceito pode ser visto como uma faca de dois gumes. O princípio do consenso é importante para os países em desenvolvimento, pois, em teoria, garante que cada membro possa vetar quaisquer decisões, independentemente de seu poder político ou econômico. O empreendimento único, por outro lado, tem apoiado países em desenvolvimento em várias ocasiões, por exemplo, quando um grupo de membros latino-americanos interrompeu o estabelecimento da OMC até certas concessões de interesse vital para os países em desenvolvimento terem sido feitas (Croome, 1995).
26 Ambos os pilares, no entanto, precisam ser vistos no contexto das assimetrias de poder globais na OMC. Na prática, as nações mais ricas podem manter as negociações comerciais como reféns mais facilmente do que as mais pobres, devido ao fato de serem mais capazes de resistir à pressão política para se juntar a um consenso mesmo contra grandes oposições (Steinberg, 2002; Cottier e Elsig, 2009; 2009). O princípio do consenso é, portanto, menos sobre a adoção consensual real de uma decisão final do que sobre o processo de construção de consenso (Ismail e Vickers, 2011). As maiores nações comerciais, portanto, têm a responsabilidade especial de ajudar os países a chegar a um acordo, orientando o processo de construção de consenso e facilitando uma atmosfera de compromisso. Ismail e Vickers observam que, na Rodada de Doha, “os países desenvolvidos também compartilham uma culpa considerável - e até mesmo responsabilidade - por frustrar o processo de construção de consenso. É […] perturbador que os críticos do princípio do consenso aumentem as preocupações de eficiência apenas quando países menores em desenvolvimento e grandes economias emergentes (por exemplo, Brasil, China, Índia e África do Sul) não se juntarem ao consenso dos países desenvolvidos (Ismail e Vickers, 2011).
27 Isto é igualmente verdade para o compromisso único e o uso de “ligações” para condicionar concessões em uma área a progredir em outras. Embora, em princípio, estes possam fomentar compromissos, concentrando a atenção dos negociadores nos maiores ganhos, na prática, os membros tendem a superenfatizar as perdas (Van Grasstek e Sauvé, 2006). Isso é particularmente verdadeiro para a rodada atual, na qual os negociadores não procuram estabelecer sistematicamente vínculos com vistas a obter benefícios de longo prazo, mas se concentram em obter ganhos de curto prazo por razões táticas (Rodriguez Mendoza e Wilke, 2011). A introdução de ligações impede que certas áreas avancem, independentemente do progresso de outras. Como resultado, até mesmo pequenos acordos não podem ser alcançados, pois novas propostas promovem mais vínculos.
28 As propostas para reformar esses dois princípios fundamentais de negociação (Deere-Birbeck e Monagle, 2009) podem ser resumidas em duas categorias: aquelas que introduzem diferentes sistemas de votação, e aquelas relacionadas a “acordos de geometria variável”, incluindo os chamados “plurilaterais” e “críticos”. acordos de massa.
5 Note que a votação ponderada no Banco Mundial e no Fundo Monetário Internacional (FMI) é baseada em (.)
29 As propostas sobre votação ponderada (uma sugestão para reformar o princípio do consenso) e acordos de massa crítica compartilham uma idéia comum. O poder - seja para votação, definição de agenda ou participação em negociações - refletiria a importância econômica de um país. A distribuição de votos poderia refletir a participação de um país no comércio global, no PIB ou no nível de abertura do mercado. Alguns especialistas também sugerem levar em conta o tamanho do país ou população, argumentando que isso garantiria que o poder seja compartilhado de forma justa entre países desenvolvidos, emergentes e outros países em desenvolvimento (Cottier e Takenoshita, 2008; Elsig, 2009). No entanto, a experiência com abordagens de votação ponderadas no Fundo Monetário Internacional (FMI) e no Banco Mundial mostra que a abordagem pode facilmente manifestar assimetrias reais de poder em vez de superar desequilíbrios (Warwick Commission, 2007).
30 O atual sistema de votação não sofre com um grande grupo de pequenos países bloqueando as negociações, mas sim com um punhado de países poderosos que não conseguem chegar a um acordo entre si. A alternativa, a maioria simples, poderia ser difícil de ser introduzida, pois minaria a posição atualmente poderosa dos países desenvolvidos, permitindo que grupos de países menores os anulem. A experiência na Assembleia Geral das Nações Unidas (ONU) indica que muitos países se oporiam sistematicamente à introdução de uma maioria simples (Anghie, 2005).
31 O conceito de acordos de "geometria variável" é uma alternativa ao compromisso único. Acordos multilaterais, por exemplo, já foram utilizados no passado. Aqui, a participação de todos os membros da OMC não é necessária para se chegar a um acordo e os membros interessados ​​são livres para participar da negociação ou não. Vários especialistas sugeriram reavivar e melhorar essa abordagem (Conselho Consultivo, 2004; Elsig, 2008). A 'abordagem de massa' crítica é ligeiramente diferente no sentido de que requer que os membros participantes representem pelo menos uma massa crítica ou um certo limiar de um setor em negociação baseado em seu nível coletivo de atividade econômica, produção, consumo ou exportação (Jackson, 2001). Defensores argumentam que a inclusão da participação de importação no limiar garantiria que os acordos de massa crítica não pudessem ser utilizados pelos exportadores para harmonizar seus sistemas de exportação em detrimento dos importadores - uma questão que eles consideram de importância crescente como, por exemplo, os países produtores de tecnologia enfrentam escassez de matérias-primas necessárias que são extraídas em apenas alguns países (ICTSD, 2011d). Os limites propostos variam de 75 a 90 por cento. Os proponentes argumentam que o limiar poderia ainda ser associado ao requisito de incluir pelo menos um número mínimo de países. Se construído de uma maneira sensível, os defensores sugerem, este segundo requisito poderia garantir a legitimidade de uma massa crítica específica, em vez de apenas sua eficiência. A Warwick Commission, por exemplo, observa que "um benefício global positivo para o bem-estar social, para proteger o princípio da não-discriminação e para acomodar explicitamente os efeitos de distribuição de renda da elaboração de regras" precisaria fazer parte de uma consideração crítica em massa. particular "quando se refere à formação de uma agenda" (Warwick Commission, 2007, 3).
32 É preciso alertar, no entanto, que a maioria das propostas para uma abordagem de massa crítica se concentra nas negociações de modalidades e concessões "descendentes" (basicamente acesso a mercados), limitando assim os limites a considerações puramente econômicas. À medida que a OMC avança no sentido de abordar uma gama maior de políticas relacionadas ao comércio, esse conceito de massa crítica pode ser inadequado. Os pequenos países, por exemplo, podem não ter uma participação específica de exportação ou importação num determinado setor e, portanto, não são indispensáveis ​​para uma massa crítica, mas seriam seriamente afetados por quaisquer novas regras - seja sobre commodities agrícolas ou sobre novas regulamentações. comércio de serviços. Isto é particularmente verdade quando as "tendências na elaboração de regras" servem cada vez mais como referência para a interpretação legal e as novas abordagens regulatórias são usadas como referência e argumento em negociações não relacionadas, mas semelhantes. Cada negociação é, portanto, também sobre moldar a política global e as tendências do direito.
6 «Acordos e instrumentos jurídicos conexos incluídos no anexo 4 (a seguir designados« (.)
33 Outro aspecto que continua a ser disputado entre os defensores de uma abordagem de massa crítica é o caráter de "nação mais favorecida" (MFN) dos acordos finais. Os atuais acordos plurilaterais da OMC (nos quais não é necessária massa crítica) se aplicam apenas entre os membros que os assinaram.6 Se for reforçada, essa abordagem tem o potencial de transformar a OMC em uma organização que facilite os arranjos grupais, perdendo sua participação multilateral e, portanto, participativa. e caráter inclusivo. Para atender a essa preocupação, propostas alternativas sugerem estender os direitos e benefícios derivados de acordos de massa crítica em uma base de MFN para todos os membros da OMC (Warwick Commission, 2007). Isso poderia preservar o caráter multilateral da OMC e, portanto, sua integridade, ao mesmo tempo em que apoia as negociações "rápidas".
34 Entretanto, mesmo o último construto levanta certas questões. Primeiro, assumindo que um determinado setor era irrelevante para um determinado país no momento em que uma negociação de massa crítica foi concluída, ainda não está claro como o país poderia ser induzido a aderir ao acordo se os benefícios já se aplicarem em uma base de MFN. Além disso, não está claro se um país seria obrigado a aderir ao acordo existente ou se haveria uma opção para renegociar os termos (Harbinson, 2009). Se nenhuma mudança fosse permitida, grupos poderosos poderiam agora concluir acordos que só se tornariam relevantes para os países em desenvolvimento, impondo indiretamente seus termos e condições. Críticas a respeito de uma tendência em direção a compromissos da OMC nos ALCs e o medo do Acordo Comercial Anticontrafação (ACTA), introduzindo uma nova referência global para a proteção da propriedade intelectual, vêm à mente neste aspecto (ICTSD, 2008b).
3.2 Redirecionar o domínio dos estados membros.
35 While some of the proposals discussed above might be promising, neither a review of the voting procedures nor a critical mass approach in isolation of other reforms seem to have the potential to fully achieve the three objectives of WTO reform, namely, efficiency, legitimacy and inclusiveness. Instead, if implemented in their simplest form, both concepts risk excluding smaller countries and exacerbating power asymmetries. Also, none of the proposed reforms would be likely to resolve the current deadlock in the Doha round which results, to a large extent, from political differences rather than weak procedural rules. In this respect, some critics have challenged the ‘member-driven’ nature of the institution. They argue that a stronger WTO secretariat could be useful, particularly in times where members fail to initiate needed deliberations or where discussions are paralysed by individual member states’ political actions. ‘If members are not prepared to defend and promote the principles they subscribed to, then the Secretariat must be free to do so’, the Sutherland report noted already in 2004 (Consultative Board, 2004).
7 See for instance the 2003 ‘Memorandum on the Need to Improve Internal Transparency and Participati (. )
36 Such proposals, however, need to be seen in the light of already existing criticism over a too powerful and partial WTO secretariat. The same stakeholders fear that strengthening the secretariat could create a strong institution following its own internal agenda.7 Consequentially, the challenge would be a strong, yet neutral secretariat. Proponents agree that this could only be guaranteed if member states were to ensure a constant participation and oversight. Efforts on strengthening the secretariat would thus focus primarily on increased political support by member states rather than a budgetary increase or a mandate extension as advocated by others. The idea behind this is to redirect but not replace the preponderant role of member states, i. e. to strengthen the WTO through increased policy deliberation among its members.
8 For instance, during the 7th Ministerial Conference in 2009, the delegation of Uruguay called upon (. )
37 One important starting point could be the election process of the Director General (Consultative Board, 2004; Steger, 2009). This process provides a critical opportunity to reflect on the most pressing challenges facing the organisation. If candidates were to take a strong position while countries provided them with clear indications on what is expected over the coming term, directors would receive a strong mandate to lead and guide even in critical times (Deere-Birbeck and Monagle, 2009, 74). The current practice of ‘nodding through’ rather than ‘electing’ a new Director General, without any internal and external reflection process, on the other hand, weakens the position of the Director General, the member states and the WTO as an institution (Keohane and Nye, 2000). A second point of entry could be the regular Ministerial Conferences. If members used the meetings to reflect on the standing of the WTO, the way forward and the actions expected in the coming years, the secretariat could guide the organisation accordingly over the coming months. In fact Ministerial Conferences were originally meant to provide for such a forum. Only with the launch of the Doha Round they have turned into pure negotiation gatherings. Numerous developing countries have consistently criticised this development.8.
3.3. Forum and process.
38 As described above, there has been no shortage of thoughtful ideas and recommendations from a variety of different sources and study groups. But some critics argue that these ideas have gone nowhere because they have had no process to feed into. Currently only one set of proposals is being discussed in a formalised manner at the WTO, namely those related to dispute settlement (WTO, 1999b). As foreseen by the original WTO agreements a special session of the Dispute Settlement Body (DSB) has been reviewing related reform proposals since 1997. Formally it proceeds outside of the Doha Round and is not part of the single undertaking. In practice, however, the review is used as a trade-off opportunity in the Doha Round which has prevented any conclusion over the last 14 years. To allow for a proper debate, other reform proposals will also need to be addressed in a formalised process at the WTO. Such a process would probably need to involve and engage trade ministers themselves to generate sufficient credibility and political traction. Ideally, the process should be co-chaired and co-owned by a developing and a developed country trade minister.
39 At the same time, the experience of the Dispute Settlement Understanding (DSU) review shows that any reform discussion must be de-linked from trade negotiations. Enforcing such an objective and non-concession-based discussion could be easier if various reform proposals were debated in a joint forum with a common objective and a single plan of action. Moreover, a joint process would facilitate the coordination of different reforms ensuring that the executive, legislative and judicial branches of the WTO do not develop in opposite directions but are mutually supportive.
40 A first opportunity to initiate such a process was missed at the 7th Ministerial Conference, in December 2009, essentially due to a lack of political will to push this agenda through. During the preparatory process and under the leadership of India, 18 developed and developing countries had proposed to address the need for an institutional reform in a formalised and long-term manner. The coalition, backed by almost the entire WTO membership, called upon the WTO to ‘[…] periodically engage in a process of review of its functioning, efficiency and transparency’ and upon the member states ‘[to] consider systemic improvements, as appropriate. […] to establish an appropriate deliberative process to review the organization’s functioning, efficiency and transparency and consider possible improvements, while bearing in mind the high priority […] attach[ed] to the successful conclusion of the DDA [Doha Development Agenda] negotiation’ (WTO, 2009).
41 However, the proposal was dropped from consideration following opposition from Bolivia, Cuba, Ecuador, Nicaragua and Venezuela ( ICTSD , 2009) . An earlier communication submitted by India in summer 2009, entitled ‘Strengthening the WTO’, likewise remained without further consideration ( Deere-Birbeck, 2009) . These missed opportunities further aggravate the dilemma of the WTO as political guidance becomes hampered at the very first stage ( Deere-Birbeck, 2009) . If the secretariat assumed a more active role in preparing ministerial conferences and guiding towards processes as those called upon by the country coalition, initial opposition might be overcome. As a formal forum for discussing reform proposals continues to be missing, this could be the first step towards reform.
4. The WTO and global public policy goals: the example of food security.
42 Beyond institutional reform, the current paralysis in the Doha Round is affecting the ability of the system to address pressing global challenges. Over the last 17 years, public perceptions of the organisation’s relevance and legitimacy have greatly depended on the degree to which it can credibly claim to be responding effectively to broader public policy demands in areas such as food security, environmental protection, labour standards and, more recently, the transition towards a low-carbon economy. However, the difficulty the WTO has experienced in bringing its troubled Doha Round talks to a successful conclusion is arguably hampering its ability to respond and adapt meaningfully to new public policy challenges.
43 From its inception in 1994 as an organisation outside the UN system, the WTO has consistently been obliged to demonstrate that its decision-making processes, rules and negotiating outcomes are consistent with broader public policy goals – in the areas of health, the environment or development, to name but a few. While calls for greater policy coherence have often come from the governments that constitute the membership of the global trade body, they have also come from civil society groups, the media and even from other intergovernmental agencies concerned with the relationship between trade and public policy objectives.
9 Policies directed at ensuring food security certainly reach beyond the trade arena. Investment in (. )
44 The evolution in the way in which food security concerns are addressed at the WTO can serve to illustrate the organisation’s attempt to take wider public policy goals into account.9 It also demonstrates the challenges that remain in establishing policy coherence with other global governance mechanisms, and in responding to the scale and ambition of the aspirations and commitments that governments have agreed to in the post-war period (United Nations General Assembly, 1948, art. 25; 1 966, art. 11; 2000, goal 1) (FAO, 1996, para. 2).
45 At the global level, evolving consumption patterns, combined with demographic changes, urbanisation and low agricultural productivity growth, are widely expected to mean that regional and international trade will play an increased role in many developing countries’ food security strategies. Combined with increased investment in agriculture, international trade mighthelp offset future climate-induced production decreases in certain regions, ensuring that local populations can purchase food that may be unavailable in sufficient quantities through domestic production.
10 ‘Food security exists when all people, at all times, have physical and economic access to sufficie (. )
46 Two years before the 1996 World Food Summit agreed on a landmark definition10 of food security that is still widely used and accepted today, the concept was mentioned in the preamble to the Agreement on Agriculture at the end of the Uruguay Round, and in some paragraphs within the text of the accord. These included provisions dealing with export prohibitions and restrictions (article 12), subsidies for public stockholding for food security purposes (Annex 2, para. 3) and a clause permitting exemptions to be made from market access binding and reduction commitments (Annex 5, para. 1d). However, while food security is also related to numerous other aspects of the agreement, such as subsidy reform or market access considerations, it is not explicitly mentioned anywhere else in the text.
11 See, for example, proposals from the developing country ‘Like Minded Group’ (23 June 2000), G/AG/N (. )
47 As governments concluded the Agreement on Agriculture, they also finalised the Marrakech Decision (WTO, 1999c) on least developed and net-food importing developing countries, supposedly intended to ensure that these countries would remain able to purchase food from external sources ‘on reasonable terms and conditions’. The decision has since been widely criticised by developing countries, who have argued that loopholes in the text prevent them from requiring developed countries and the international financial institutions to implement its provisions.11 Essentially, the decision characterises the challenge that net food-importing countries could face as a trade and balance-of-payments problem rather than a food security problem, and provides a fairly limited set of solutions centring mainly on the provision of food aid.
48 Arguably, the way in which food security concerns have been approached in the multilateral trading system has evolved considerably since the end of the Uruguay Round, along with the way in which other public policy goals have been treated. In the years running up to the 2001 Doha ministerial conference, developing country governments expressed growing concern that they were ill-equipped to implement the Uruguay Round agreements, that the provisions of these agreements undermined domestic food security, or – as in the case of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) – that they had signed on to texts which affected their food security without fully understanding the practical and legal implications that might result. In some cases, these concerns were also echoed by development agencies and campaign groups, farmers’ organisations, research centres, academic experts and the staff of various intergovernmental organisations.
12 Cuba, Dominican Republic, Honduras, Pakistan, Haiti, Nicaragua, Kenya, Uganda, Zimbabwe, Sri Lanka (. ) 13 India (15 January 2001), G/AG/NG/W/102, wto/english/tratop_e/agric_e/negs_bkgrnd02_p(. ) 14 Domestic support measures that are exempt from reduction commitments on the basis that they cause (. )
49 In the summer following the WTO’s Seattle ministerial conference in 1999, a cross-regional group of 11 developing countries known as the Like-Minded Group submitted a proposal12 for a ‘development box’, under the built-in agenda of negotiations foreseen in article 20 of the Agreement on Agriculture. The sponsors called for a development box that would aim to ‘increase food security and food accessibility’ by allowing developing countries to select which products would be disciplined under the rules of the Agreement on Agriculture; allowing developing countries to re-evaluate and adjust their tariff levels; provide greater flexibility for developing countries to use limited amounts of trade-distorting support under the de minimis provision (WTO, 1999a, art. 6.4); and allowing developing countries to use the special safeguard clause. Measures to reform developed country subsidies and tariffs were also included as part of the same proposal. The Indian government echoed many of these proposals in an early 2001 submission13 calling for the establishment of a ‘food security box’, which also contemplated measures to reform rules on ‘green box’ subsidies.14 Several of the elements outlined in the development box proposal were later to appear, in modified form, in subsequent negotiating submissions and texts.
50 The Doha declaration launching a new round of trade talks – dubbed the ‘Doha Development Agenda’ by the WTO – also made explicit reference to food security goals. It stated that developing countries would be accorded special and differential treatment so as to enable them to take account effectively of their development needs, ‘including food security and rural development’ (WTO, 2001, para. 13). Such treatment was to be an ‘integral part’ of all elements of the negotiations, the declaration said, in language that was to be echoed in a large number of negotiating proposals submitted in the years that were to follow.
15 ‘Substantial improvements in market access; reductions of, with a view to phasing out, all forms o (. )
51 The dozens of proposals that invoked food security during the Doha Round, and in the years immediately before its launch, can be roughly divided into a handful of broad, non-exhaustive categories, largely reflecting the emphasis of the agriculture negotiations on four main areas15:
52 On market access, many developing countries sought to be granted greater flexibility on tariff commitments, and access to an agricultural safeguard that would allow themselves to shield producers from the effects of import surges or price depressions.
16 A provision allowing developing countries to exempt some input and investment subsidies from reduc (. )
53 Food security concerns were discussed in relation to trade-distorting support in general, but were also given particular attention in proposals for reform of the WTO’s green box, and for maintaining or expanding article 6.2 of the Uruguay Round Agreement on Agriculture.16.
54 The issue of food security also arose in negotiations on proposed new disciplines governing the provision of food aid, and in debates on export credits and other export competition issues.
55 Finally, importing countries in particular raised questions and concerns over food security in proposals on export restrictions (including export taxes and export prohibitions).
56 In each of these areas, different political constituencies and country grouping were active in seeking concessions.
17 See, for example, G-33 proposals: 1 June 2004 (JOB(04)/65); 3 June 2005 (JOB(05)/91); 12 Oct 2005 (. )
57 On special products and the special safeguard mechanism, a group of import-sensitive developing countries that came to be known as the G-33 argued in favour of greater flexibility on market access disciplines, on the basis that this was needed to safeguard the livelihoods, food security and longer-term development of their rural populations, including large numbers of small-scale producers that would be ill-equipped to compete with industrialised (and often also subsidised) agriculture elsewhere in the world.17 Analysis by the Food and Agriculture Organization (FAO), the International Centre for Trade and Sustainable Development (ICTSD) and the South Centre – including country level studies – helped contribute to the evolution of countries’ negotiating positions on these issues (Mably, 2007; Wolfe, 2009; ICTSD/FAO, 2007; Matthews, 2011).
18 See, for example, various exporting country proposals: 2 May 2006 (JOB(06)/135); 3 May 2006 (JOB(0 (. )
58 The G-33 proposed allowing developing countries to designate a limited set of products as ‘special’ based on objective indicators of food security, livelihood security and rural development. Such indicators included, for example, the share of local income spent on a particular product, employment by product, productivity levels, rates of self-sufficiency, or the contribution of a product to local nutrition. Based on this country-specific analysis the tariffs of the selected products would then qualify for gentler reduction under the Doha Round, or would even be exempt from any cuts. The G-33, however, encountered opposition to their proposals from developed countries seeking greater access to developing country markets, such as the US, but also from exporting developing countries, such as Argentina, Paraguay and Uruguay.18 Controversy over the special safeguard mechanism played a significant role in the breakdown of talks in July 2008 (ICTSD, 2008a).
59 Despite the disagreements in this area, the debate over special products in particular probably represents the most sophisticated attempt at defining food and livelihood security concerns in the WTO and how they relate to international trade. It is also symptomatic of how the discussion evolved over time in the trade body from a fairly narrow understanding of food security to a highly complex and differentiated approach based on indicators.
19 See African Group proposal, 20 Nov 2007 (JOB(02)/187).
60 Food security concerns were also given particular attention in the review of the criteria for green box subsidies, as well as in the negotiations on domestic support more generally. The African Group (a group of developing countries that seeks reform of developed country agriculture), along with the G-20, has sought to expand the flexibility that the green box allows developing countries in being able to use domestic support to pursue national development goals.19 Among other things, these proposals would involve modifying the language on support for public stockholding for food security purposes so as to remove the existing requirement that developing countries count purchases from low-income or resource-poor producers towards their ‘aggregate measure of support’ (AMS) – an upper ceiling which would be reduced as part of the Doha Round negotiations.
20 16 May 2006 (JOB(06)/145). 21 Arguably, civil society organisations also played an important role in highlighting some of these (. ) 22 See, for example, proposals dated 27 Sept 2002: Cairns Group (JOB(02)/132) and Canada (JOB(02)/131) 23 21 Dec 2000 (G/AG/NG/W/91), wto/english/tratop_e/agric_e/negs_bkgrnd11_nontrade_e. h(. ) 24 14 Dec 2000 (G/AG/NG/W/90), wto/english/tratop_e/agric_e/negs_bkgrnd11_nontrade_e. ht(. )
61 In addition to proposals favouring greater flexibility for developing countries to subsidise their own agriculture sectors, two other main trends can be identified in the discussions on green box reform and in the debate over domestic support more generally (Hepburn and Bellmann, 2009). The first of these is the concern expressed by the G-2020 and by efficient agricultural exporters in the Cairns Group, which have argued that trade-distorting support undermines competitiveness and food security in countries that do not subsidise their agricultural sectors.21 These countries have also argued that green box programmes may be causing more than minimal trade distortion, and called for the criteria for these payments to be tightened.22 The other major trend is characterised by the proposals of countries with highly protected and heavily subsidised agricultural sectors, which have resisted such demands. These countries – which include Japan23 and others in the G-10 coalition, as well as, to a lesser extent, the EU24 – have instead historically called for greater flexibility to allow WTO members to address ‘non-trade concerns’, including food security.
25 See WTO (2005), para. 6. The text further specifies:‘On food aid, we reconfirm our commitment to m (. ) 26 6 March 2006 (TN/AG/GEN/13). 27 25 Apr 2006 (JOB(06)/122). 28 7 Apr 2006 (JOB(06)/78).
62 Food security was also debated extensively in the negotiations over new rules on food aid. In exchange for agreeing, at the WTO’s Hong Kong Ministerial in 2005, to the elimination of export subsidies, the EU had pressed trading partners to adopt ‘disciplines on all export measures with equivalent effect’ – including food aid.25 At the heart of the debate was the notion that in-kind food aid or practices such as monetisation have sometimes disrupted local food markets and affected local producers. While members agreed that a ‘safe box’ would cover bona fide emergency situations, they also agreed to introduce rules that would prevent aid from undermining local producers in non-emergency situations. A proposal from the African and LDC groups26 formed the basis for negotiations, with further contributions from the European Community27 and the US28 – the world’s major provider of in-kind food aid (ICTSD, 2006).
29 Cairns Group, 21 Dec 2000 (G/AG/NG/W/93); Japan, 15 Nov 2002 (JOB(02)/164); Mauritius, 19 Nov 2002 (. )
63 While the impact of export restrictions on food security has been a concern of various WTO members since the start of the Doha Round,29 debate and controversy over this issue has recently intensified, as two episodes of unusually high food prices and predictions of a long-term upward price trend for agricultural products increase the pressure on food importing countries, especially in the developing world (ICTSD, 2010, 2011b, c). While net-food-importing countries have drawn on analysis (FAO et al., 2011) by FAO staff and other experts to argue that export restrictions endanger food security by exacerbating shortages and volatility on world markets, exporting countries have thus far resisted any attempts to introduce more systemic disciplines in this area that go beyond the relatively limited disciplines set out in the Agreement on Agriculture or contemplated in the latest draft Doha agriculture accord. In part, this may be because of the role such measures play in supporting a strategy of enhancing value-addition in the exporting countries’ agriculture sector, and partly because of concerns that they could serve a useful role in responding to potential domestic food shortages. However, possibly more important is a more generalised reluctance on the part of exporting countries to make concessions in the absence of more far-reaching disciplines on trade distortions on the import side.
64 Despite the post-2008 stalemate in the WTO’s Doha process, the same price trends and projections have helped to push food security back towards the top of the agenda in a number of political and policy-making processes, with the role of trade receiving some attention in this context. A series of high-level meetings – the G-8’s meeting in L’Aquila in 2008, the FAO’s World Summit on Food Security in 2009 and the G-20 gathering of agriculture ministers in 2011 – reflected the increased political importance being accorded to the question. However, while heads of state and ministers reaffirmed the importance of access to markets and pledged their commitment to raise agricultural productivity by boosting aid and investment, the WTO continues to be seen as the sole forum where concrete market access and subsidy commitments can be made. Even where agreement on trade-related measures has been reached, such as the G-20’s June 2011 accord on exempting humanitarian food purchases from export restrictions, governments have recommended that further action be taken at the WTO (ICTSD, 2011a). Other trade-related issues such as biofuel subsidies have proven to be too controversial to be addressed meaningfully by the G-8 or G-20 (Tangermann, 2011), leaving their food security implications unresolved for the time being.
65 The establishment of the UN’s High Level Task Force on the Global Food Security Crisis , the elaboration of its Comprehensive Framework of Action and the reform of the Committee on World Food Security (CWFS) were significant steps in the effort to improve global governance and enhance policy coherence in this area. The WTO, FAO and eight other relevant bodies also collaborated around the inter-agency report to the G-20 in the first half of 2011 (FAO et al., 2011). However, much more could still be done in this regard. Recent suggestions have included ensuring that the WTO Committee on Agriculture takes a more active role in reviewing food security issues related to trade, and strengthening the collaboration between the CWFS, the WTO, the World Bank and the Rome-based institutions (Ahmad, 2011). Reforming and improving the international governance framework is a necessary step towards overcoming current shortcomings on trade and food security, even though by itself it will not be sufficient to do so.
66 Measures to enhance policy coherence and to reform governance structures at the international level will, however, need to be accompanied by similar moves at the domestic level, especially in key countries. The disconnect between governance mechanisms responsible for development and aid, for the environment and for agricultural policy can mean that, for example, EU or US policies on farm subsidies may be at odds with policies pursued on related issues such as climate or poverty. Furthermore, to a great extent, the geopolitical tensions between countries and blocs that have thwarted progress on international trade issues are mirrored by similar tensions on climate change, food security and development issues more generally. Behind these lie configurations of domestic interests and political constituencies at the national and sub-national level. The shifting global economic landscape of the last decade has thrown up new opportunities and threats for different actors, in developed countries as well as in the so-called ‘emerging’ countries of the developing world, and created new challenges for the world’s poorest people – whether they live in the group of countries that the UN officially recognises as LDCs, or elsewhere.
67 Even among trade negotiators, there is a growing awareness that the multilateral trading system is proving increasingly incapable of demonstrating that it is flexible and adaptable enough to prove its relevance in a changing world. At the same time, negotiators are reluctant to abandon the investment that has been made in elaborating a package of farm trade disciplines that are perceived to go some way towards restructuring an agricultural trading system that has been heavily criticised for failing to deliver on a range of global public policy goals, including food security. Any decision to abandon the Doha talks, or place them in deep freeze, would arguably leave a large ‘Doha-shaped hole’: current patterns of trade-distorting support and tariff protection would remain unchanged, in addition to the new trade and food security challenges that are emerging. Until countries are able to resolve the growing contradictions between domestic policies on trade, food security, climate and international development, there is little prospect of achieving greater policy coherence in these areas at the global level.
5. Conclusion and the way forward.
68 The WTO is not what it used to be a decade or so ago. Many new developing countries have since joined, and shifts in the balance of global economic and political power have transformed the playing field. Accordingly, new needs and different expectations have emerged, including demands on the decision-making processes, and their fairness and transparency. As described above, modern global trade governance requires a careful balance between greater efficiency, legitimacy and inclusiveness. These objectives are not incompatible, but would require WTO members to move from essentially promoting their individual short-term mercantilist interests to developing a shared vision to effectively advance global public policy goals. Numerous proposals have been put forward to strengthen the multilateral trading system. But as for any intergovernmental institution, change must come, and be agreed to, from the inside. This calls for the establishment of an inclusive and bottom-up process, one that seeks input from all WTO members, as well as seeking submissions from the different actors in the international trade community. Only with such a process will ideas have a realistic chance to be considered, and be transformed into agents for strengthening the system.
30 See WT/GC/W/605, July 2009, wto/english/thewto_e/gcounc_e/meet_jul09_e. htm (accesse (. )
69 Years of near-exclusive focus on the Doha Round have inhibited institutional evolution and even diminished some of the WTO’s permanent, non-negotiating functions such as the work of the regular committees. Beyond the WTO negotiating function, there might be therefore merit in strengthening the work of the regular WTO committees. In the run-up to the 2009 Ministerial Conference, several such proposals were put on the table, notably by India.30 These covered a variety of issues such as the need to enhance the WTO trade information system by including data on non-tariff barriers; monitor developments in regional trade agreements (RTAs) and develop non-binding best practice guidelines for negotiating new RTAs; establish an ‘omnibus legal system’ that would address all forms of preferential market access for LDCs in a coherent way; address the increasing role of standards and standard-setting bodies in international trade. Many of these proposals are still relevant today.
70 Finally, in parallel with efforts to revive the Doha Round, members could undertake work on a number of pressing global challenges. These could include concerns around the trade dimension of food security, food prices and export restrictions; the potential trade impacts of emerging domestic policies designed to combat climate change; or highly controversial matters around exchange rate policies and current trade imbalances. This is not to say that the WTO should become the sole or even primary body to deal with these matters. Several other institutions such as the United Nations Framework Convention on Climate Change (UNFCCC), FAO or IMF have indeed a major role to play in this area. The WTO, as the main organisation dealing with trade rules, should nevertheless contribute to addressing them insofar as they are linked to trade. Willingness to do so has already been expressed by a wide and cross-cutting segment of the WTO membership, but as a first step it might be more realistic to address these issues in a non-negotiating setting. In doing so, members could assess whether the WTO rule book is properly equipped to deal with emerging challenges or whether existing disciplines need to be clarified or amended. Existing institutional structures such as the Committee on Agriculture could be used for such an exercise. Precedents for doing so already exist. Singapore, for example, has recently made a submission to the regular session of the Committee on Trade and Environment to embark on work examining possible trade applications of border tax adjustment as a way to address competitiveness and carbon leakage concerns in climate change. Such an approach would enable the system to address challenges of the twenty-first century and prepare the ground for future negotiations when the political situation is ripe.
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1 The Warwick Report , for example, provides one of the most notable and comprehensive stock-taking exercises produced by non-governmental experts (Warwick Commission, 2007). Another critical milestone in this debate was the report commissioned in 2003 by Dr Supachai Panitchpakdi, then Director General of the World Trade Organization (WTO), to a panel of experts chaired by the former Director General of the General Agreement on Tariffs and Trade (GATT), Peter Sutherland, on ‘ The Future of the WTO: Addressing Institutional Challenges in the New Millennium’ . Despite its comprehensive analysis and concrete recommendations, the Sutherland Report was, however, criticised as a defence of the status quo , produced by insiders, thus lacking novel approaches (Hufbauer, 2005; Pauwelyn, 2005). As such it did not provide the necessary impetus to initiate a structured discussion among members.
2 When governments launched the Uruguay Round of trade negotiations under the GATT in 1986, the declared aim was not to establish a standing global organisation on trade governance. What later became the WTO, only emerged over the last few months of the almost eight years’ lasting negotiations. When members realised that the trade package to be presented at the end of the negotiation round would include new areas such as intellectual property rights and services, the need arose to discuss processes and structures that would ensure the coherence of these different agreements. The decision to establish the WTO finally stemmed from that discussion and other related considerations in the negotiation Group on the Functioning of the GATT (FOGS). Since no systemic, long-term negotiations had taken place on a potential international organisation, most agreements (with the exception of the Dispute Settlement Understanding (DSU) which had been revised completely during the Uruguay Round) thus replicate the principles that have served that GATT for the last five decades. Moreover, when members launched the ongoing Doha Round they referred back to the negotiation principles used during the Uruguay Round, namely the principles of consensus and single undertaking. See Rodriguez Mendoza and Wilke (2011).
3 The consensus principle dates back to the International Trade Organization (ITO) and with it the early beginnings of the GATT. See Ismail and Vickers (2011).
4 ‘With the exception of the improvements and clarifications of the DSU, the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking. However, agreements reached at an early stage may be implemented on a provisional or a definitive basis. Early agreements shall be taken into account in assessing the overall balance of the negotiations’ (WTO, 2001, para. 47).
5 Note that weighted voting at the World Bank and the International Monetary Fund (IMF) is based on the level of a country’s financial contribution to the organisation’s budget. Currently the United States holds roughly 17 per cent of the votes, with the G-7 holding a total of 45 per cent. WTO-related proposals certainly differ from this, yet there are important lessons to be learnt from the World Banks’ and IMF’s experience with ‘power-based’ voting.
6 ‘ The agreements and associated legal instruments included in Annex 4 (hereinafter referred to as ‘Plurilateral Trade Agreements’) are also part of this Agreement for those Members that have accepted them, and are binding on those Members. The Plurilateral Trade Agreements do not create either obligations or rights for Members that have not accepted them’ (WTO, 1999d, Article II:3).
7 See for instance the 2003 ‘Memorandum on the Need to Improve Internal Transparency and Participation in the WTO’ by the Third World Network, Oxfam International, Public Services International, World Wildlife Fund International, The Center for International Environmental Law, Focus on the Global South, The Institute for Agriculture and Trade Policy, The Africa Trade Network, The International General and Trade Network, and the Tebtebba International Centre for Indigenous Peoples’ Rights, 13 July 2003.
8 For instance, during the 7th Ministerial Conference in 2009, the delegation of Uruguay called upon the WTO members to ‘not confuse the […] Ministerial with [various kinds of negotiation sessions]. There would be no justification for continuing to postpone the regular revocation of the topmost body of the WTO, particularly in the current world economic and trade environment, which requires international cooperation, direct political involvement at the multilateral level, and strong credible institutions’ (WTO, 2009).
9 Policies directed at ensuring food security certainly reach beyond the trade arena. Investment in the agriculture sector, land rights and access to water and other natural resources are of equal importance in this context. However, the following discussion will be limited to the interface of the multilateral trading system and food security.
10 ‘Food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life’(FAO, 1996).
11 See, for example, proposals from the developing country ‘Like Minded Group’ (23 June 2000), G/AG/NG/W/13; Kenya (12 March 2001), G/AG/NG/W/136; and Small Island Developing States (29 December 2000), G/AG/NG/W/97, wto/english/tratop_e/agric_e/negs_bkgrnd02_props1_e. htm (accessed on 27 September 2011).
12 Cuba, Dominican Republic, Honduras, Pakistan, Haiti, Nicaragua, Kenya, Uganda, Zimbabwe, Sri Lanka and El Salvador (23 June 2000), G/AG/NG/W/13, wto/english/tratop_e/agric_e/negs_bkgrnd02_props1_e. htm (accessed on 27 September 2011).
14 Domestic support measures that are exempt from reduction commitments on the basis that they cause not more than minimal distortion of trade or production, set out in Annex 2 of the Agreement on Agriculture.
15 ‘Substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support’ (WTO, 2001, para. 13).
16 A provision allowing developing countries to exempt some input and investment subsidies from reduction commitments.
17 See, for example, G-33 proposals: 1 June 2004 (JOB(04)/65); 3 June 2005 (JOB(05)/91); 12 Oct 2005 (JOB(05)/230); 22 Nov 2005 (JOB(05)/304); 22 Nov 2005 (JOB(05)/303); 11 May 2006 (JOB(06)/143); 7 June 2006 (JOB(06)/173); 16 June 2006 (JOB(06)/189/Rev.1); 28 Mar 2007 (JOB(07)/35); 3 June 2008 (JOB(08)/47); 28 Jan 2010 (TN/AG/GEN/30).
18 See, for example, various exporting country proposals: 2 May 2006 (JOB(06)/135); 3 May 2006 (JOB(06)/137); 20 February 2008 (JOB(08)/6); 8 April 2008 (JOB(08)/24).
19 See African Group proposal, 20 Nov 2007 (JOB(02)/187).
20 16 May 2006 (JOB(06)/145).
21 Arguably, civil society organisations also played an important role in highlighting some of these connections. See, for example, Oxfam (2002).
22 See, for example, proposals dated 27 Sept 2002: Cairns Group (JOB(02)/132) and Canada (JOB(02)/131).
25 See WTO (2005), para. 6. The text further specifies:‘On food aid, we reconfirm our commitment to maintain an adequate level and to take into account the interests of food aid recipient countries. To this end, a “safe box” for bona fide food aid will be provided to ensure that there is no unintended impediment to dealing with emergency situations. Beyond that, we will ensure elimination of commercial displacement. To this end, we will agree effective disciplines on in-kind food aid, monetization and re-exports so that there can be no loop-hole for continuing export subsidization.’
26 6 March 2006 (TN/AG/GEN/13).
27 25 Apr 2006 (JOB(06)/122).
28 7 Apr 2006 (JOB(06)/78).
29 Cairns Group, 21 Dec 2000 (G/AG/NG/W/93); Japan, 15 Nov 2002 (JOB(02)/164); Mauritius, 19 Nov 2002 (JOB(02)/182); Cuba, 20 Jan 2003 (JOB(02)/190/Corr.1; Korea, 18 Dec 2002 (JOB(02)/220); Japan, 28 Feb 2003 (JOB(03)/41; G-20), 18 May 2006 (JOB(06)/147); Japan and Switzerland, 30 Apr 2008 (JOB(08)/34); Net Food-Importing Developing Countries, 6 Apr 2011 (JOB/AG/18).
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Christophe Bellmann , Jonathan Hepburn and Marie Wilke , « The Challenges Facing the Multilateral Trading System in Addressing Global Public Policy Objectives », International Development Policy | Revue internationale de politique de développement [Online], 3 | 2012, Online since 27 February 2013, connection on 16 February 2018. URL : journals. openedition/poldev/1012 ; DOI : 10.4000/poldev.1012.
Sobre os autores.
Christophe Bellmann.
Programmes Director at the International Centre for Trade and Sustainable Development (ICTSD). He has previously worked for the Swiss Coalition of Development Organisations. He also was a Research Associate at the Economic Commission for Latin America and the Caribbean in Santiago.
By this author.
Jonathan Hepburn.
Agriculture Programme Manager, International Centre for Trade and Sustainable Development (ICTSD). Before joining ICTSD, he represented Oxfam International at the World Bank and the International Monetary Fund (IMF) in Washington, and led Oxfam’s global campaign on aid, debt and the Millennium Development Goals. He previously worked on trade, development and human rights issues at the Quaker United Nations Office in Geneva.
By this author.
Marie Wilke.
International Trade Law Programme Officer at the International Centre for Trade and Sustainable Development (ICTSD). Previously she worked for the United Nations Conference on Trade and Development (UNCTAD) and for the German Federal Ministry of Economics and Technology. She holds a law degree from Hanse Law School and an LLM in Public International Law from Helsinki University (summa cum laude).
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The Emergence of collective preferences in international trade: implications for regulating globalisation.
Conference on “Collective preferences and global gouvernance: what future for the multilateral trading system”
Brussels, 15 September 2004.
International market-opening is a tremendous force for growth and employment that benefits us all. But whatever its benefits, it also has a destabilising impact on the economic and social fabric, and potentially on societal choices. Politicians and trade negotiators should keep this in mind:
Politicians must face up to their responsibilities. You cannot preach the virtues of market-opening unless you are prepared to deal with the negative effects on productive structures, people and social choices. This is why it is crucial to plan ahead for the adjustments that have to be made and assist people and structures in coping with change. That has been the aim of programmes to mitigate the effects of market opening, such as Trade Adjustment Assistance in the US, cohesion policy and other measures in Europe and the trade integration mechanism recently set up by the World Bank and the IMF in developing countries. But it is just as important to make sure that market-opening does not jeopardise legitimate collective choices; in all political systems it is a sovereign duty to safeguard such "collective preferences" as markers of identity. Trade negotiators need a proper understanding of the destabilising effects of market-opening to do their job properly. The adverse effects on industries and societies generate opposition from people who believe they will lose out personally whatever the overall benefits for society as a whole. This opposition is reinforced by a biased perception of the costs and benefits of market-opening: the costs (factory closures, job losses and so on) are highly visible, localised and palpable. This masks the real magnitude of the benefits, which tend to be less tangible and more widely spread. This lack of a clear correspondence means that negotiators have a particularly hard job in explaining the benefits of market-opening. Programmes to offset the effects of market-opening do help, however, and the OECD was right to include accompanying measures in its free-trade programme. Fears that social choices might be called into question by an all-powerful WTO are behind the rejection of globalisation and now weigh on international trade negotiations. Whether or not these fears are justified, they must be met with a credible response. But while efforts have been made to educate opinion and develop accompanying measures to deal with the effects of market-opening on industry and employment (though the issue of business relocation has recently rekindled controversy), the threat to societal choices has not received proper attention. Perhaps because the risk seems more theoretical than real, despite mounting tensions, and because the adverse effects on industries and local communities have actually happened (and can't usually be separated out from the benefits of market-opening anyway). Another possible reason is that this issue is not simply a domestic one like, for the most part, support measures to offset social costs, but a wider problem that has to be tackled as a whole in agreement with our international partners.
However, if this threat becomes reality, the consequences will be much more serious than the destabilisation of industries and jobs: it will strike at the heart of the social fabric and democracy, namely the taking of collective decisions, and not merely economic interests, sensitive though they are. Any "cost" of this type is by definition not comparable (not commensurate) with the (economic) benefits engendered by market-opening; the one cannot offset the other.
We have to find a way of tackling this problem because these doubts are already making themselves felt in terms of growing disenchantment with democracy and opposition to market-opening.
The roots of the problem.
We all have personal preferences about lots of things, and we are free to choose them without having them thrust upon us by other people. But as soon as we interact with someone else, whether it be in trade or cooperation, the expression of personal preferences, attitudes and choices may pose problems; for instance, conflicts may arise if we de not share the same conception of property and its transfer, of how to punish crimes, or the risks involved in this or that situation.
Happily, democratic societies are organised in such a way as to allow the emergence of "collective" preferences, which synthesise the preferences of individuals through political debate and institutions. These preferences then become standards which apply to everyone and provide a framework for relations between individuals.
The same thing happens at international level whenever countries, each with their own collective preferences, interact, cooperate or engage in trade. There is a big difference, however: if there is a clash of choices at international level, there is no legitimate higher authority, no world government, to act as referee and ensure that a "collective" collective preference emerges.
What are collective preferences?
Collective preferences are the end result of choices made by human communities that apply to the community as a whole. "Community" refers to any group of persons that have set up institutions capable of forging collective preferences. It might be a country; it might be a larger community like Europe. Of course, communities do not necessarily make the same collective choice in response to any given issue. Even the scope of collective preferences can vary: on the issue of "soft drugs", for example, some communities prefer to leave the choice to the individual while others impose a collective rule. Such choices are rooted in the cultural and religious values and traditions of the country in question, and are also determined by political considerations, historical factors and the level of development. [1]
Collective preferences are thus especially difficult to define.
They are not set in stone: they evolve over time and there are even cases of inversions of collective preferences as happened in the case of America's and Europe's evolving appreciation of risk in the 1980s (awareness of environmental issues developed much earlier in the US). They are not always rational: they are forged by political experience. Europeans' attitudes to food safety and to scientific opinion have been greatly influenced by major scandals in the last two decades (contaminated blood and mad cow disease) while Americans' attitudes to the balance between security and freedom have changed since 9/11. From the regulatory point of view it is difficult to forge collective preferences from a heterogeneous collection of individual preferences, as the economic theory of social choice demonstrates. They are thus open to dispute.
In short, they should be seen as values.
So it is difficult to draw up an exhaustive list of collective preferences in the abstract. We can, however, be definite about certain of Europe's collective preferences: multilateralism, environmental protection, food safety, cultural diversity, public provision of education and healthcare, precautions in the field of biotechnology, and welfare rights. These preferences are not a European monopoly; other countries share them to a greater or lesser extent, though they may be expressed in different ways.
We should not confuse collective preferences as such with the form of regulatory measure used to embody them. There are two different steps here and recognising this is crucial if collective preferences are to be expressed coherently. The specific problems that arise from combining different collective preferences often stem, not from the collective preferences themselves, but from the way in which they have been converted into regulatory measures. And one way of converting them may create more problems for other countries than another way. So the trick in expressing collective preferences is largely one of drawing up or adapting regulatory measures in such a way as to faithfully translate a country's collective preferences while causing as few problems as possible for others.
This is a recurring problem in international relations. The most striking example is in criminal matters, as the need for often complex extradition arrangements testifies. The opposing views of Europeans and Americans on the death penalty [2] have complicated not only extradition arrangements but also, though less perceptibly, judicial assistance and exchanges of information in the course of investigations. It is even more difficult to give up exclusive competence over extradition procedures, as Europeans have recently, and reach agreement on a European arrest warrant. Doing this involved the emergence of a common definition of criminal acts and, finally, of a "collective preference". Another issue causing similar difficulties is the exchange of personal information, airline passenger lists being one recent example. This issue throws the spotlight on different conceptions of the right to privacy and the balance between security and freedom.
Such difficulties arise in trade as well as other areas of international cooperation. Traded goods and services are both an embodiment of and vehicle for the collective preferences of the countries producing them; they then become an interface with the collective preferences of the consumer country. Trade is the natural point of intersection for different systems of collective preferences.
This interface function is not new. The issue of slavery raised the question of how to articulate collective preferences very early in the course of international trade organisation. But for a long time it remained implicit, only emerging in the most flagrant of cases. Only recently has the interface function become a key feature of international trade, for three reasons:
lower customs duties and the removal of quantitative barriers to trade at borders, which, when high, acted as a brake on trade anyway. To use Richard Baldwin's image, a low tide uncovers the reefs that are hidden at high water; the trend towards a greater "ideological content" in goods and services. The development of trade in farm products raises issues about our relationship to nature, the environment and food, all things that ethnologists class as cultural markers; trade in services raises the question of regulation of public services; and cultural diversity is a modern version of the cultural exception; changes in society itself as citizens and consumers have become better informed and more demanding. This greater awareness of issues has crystallised in the form of NGOs and global communications media whose development has given an ideological spin to previously humdrum issues (for instance, we used to change batteries without thinking twice, now it is an act fraught with environmental consequences).
And is it really a problem?
Bringing collective preferences into contact, as happens in international trade, may provoke clashes. These potential difficulties fuel fears that globalisation may threaten these preferences. Are such fears justified? Basically, no. Different collective preferences tend to be complementary rather than conflicting, though experience show that problems of compatibility may arise.
Collective preferences are essentially complementary.
Diverse collective preferences and international market-opening are mutually beneficial. Trade bolsters, indeed promotes, variety in preferences because it allows everyone to make their own choices while enjoying their partners’ choices. A good example is the ban on usury in medieval Europe: no interest could be paid on money lent between "brothers". In conditions of autarky this situation would have been unsustainable because it would have held back economic development. The ban on profiting from money-lending restricted the opportunities for borrowing by artisans, traders and peasants who need loans to develop their businesses. This problem was solved by international market-opening: outsiders of a different nationality (Lombards and Cahorsins) or religion (Jews) were allowed to lend money and so played a vital role in the economic development of such societies without overturning their social choice, indeed they reduced the economic cost of this choice.
A diversity of preferences should be seen as complementary and mutually enriching. If all countries had the same preferences, the lack of complementarity would diminish the benefits of trade. The ban on money-lending is an extreme example but there are other, more contemporary cases of countries having different social arrangements for the organisation of the labour market. This is true of Europe and the US: as the OECD has shown, they have differently organised labour markets (emphasis on providing people with security in Europe, greater flexibility in the US), giving rise to different forms of innovation (incremental and cumulative in Europe, more abrupt in the US) which in the end prove to be complementary, even in sectoral terms (technology sector geared to aircraft engineering and vehicle manufacture in Europe, precision instruments and software in the US). The even more flagrant differences between developing and industrialised countries are another one of the fundamental divisions of international labour.
The WTO acknowledges the legitimacy of preferences as long as they comply with the basic principles of the trading system (transparency, non-discrimination, etc.) and commitments entered into. WTO rules do not impose uniform standards for products any more than they dictate the conditions of production.
As long as there is transparency and no discrimination a country cannot be accused of protectionism just because it applies specific health, plant health or technical rules on access to its market, just as another cannot be accused of dumping simply because it sells its products at lower prices than other countries as a result of, say, lower labour costs.
In practice, and contrary to what is widely believed, there has been no inexorable standardisation or dilution of collective preferences as a result of globalisation. Any convergence of such preferences has been uneven at most and there are countersigns of persistent and marked disparities, even between economies at the same level of development. Examples are the participation of the private and public sectors in the supply of public services and social insurance (here the gap between America and Europe has grown over the last 30 years), attitudes to inequality and the redistribution of wealth (where transatlantic differences endure, as shown by transfers as a share of GDP and the impact of inequalities on welfare indexes), risk assessment and how to manage risk (GMOs being a case in point), and the definition of property rights.
. but it is sometimes difficult to accommodate them.
Although trade and diversified preferences are as a general rule mutually beneficial, there is a point at which differences may start to create problems of compatibility. The potential scope for incompatibility is not huge but it is there. By definition it includes collective preferences having a universal dimension that are supposed to be shared by partner countries as well as the country that formed them. The Jews and the Lombards of the Middle Ages were able to operate only because Christianity did not demand of "foreigners" what it demanded of believers. The international division of labour between countries that have different models of labour market is possible only as long as the models are not incompatible, which is usually the case. The European social model is not meant to be copied worldwide, anymore than the American, Japanese or Philippine models are. But there are some social issues - fundamental social standards (such as bans on forced labour and child labour) – that are considered by their promoters to be universal and applicable to all. This sets limits to the working of comparative advantage.
At this point trade, from being the geometric point at which preferences interconnect, becomes the geometric point where incompatibilities emerge. It exposes them. Trade is not alone in doing this. As we said earlier, this applies to any form of international cooperation or exchange and problems of compatibility of collective preferences have played a part in holding back progress in international judicial cooperation.
All aspects of international relations are affected by increasing openness and the interaction between different collective preferences, but trade is at the sharp end, for two main reasons: the underlying stakes are considerable (the exporting countries' offensive interests may not sit well with the importing country's collective preferences) and trade is the only area in which there is an effective and binding mechanism for settling disputes, capable of imposing real penalties. These two factors tend to exacerbate any incompatibilities, which are made even more problematic by the fact that collective preferences relating to trade may coincide with protectionist interests: the suspicion is always there that collective interests could be used by special interest groups as excuse for protection for uncompetitive industries. This is a particularly thorny issue because, as we said above, it is difficult to describe collective preferences without ambiguity (in the absence of unanimous individual preferences).
This is a new difficulty for the trading system, in addition to conventional trade disputes, because it brings two legitimate demands into conflict with each other: the demand that commitments given to the WTO be honoured on the one hand and the demand to exercise legitimate social choices on the other. The old mercantilist barriers to trade such as quotas and customs duties are no longer the only barriers. Now there are also well thought-out rules and standards, seen as a reflection of legitimate social choices.
Collective preferences in international trade are by no means new but, for a long time, their emergence was obscured by the emphasis in trade policy on market access and the dismantling of tariffs. It is only recently that the issue has risen to prominence, as the world economy has become more integrated, the range of traded goods and services has increased and the level of public awareness has risen, resulting in more and more disputes (the turtle-shrimp case, hormones, asbestos etc.), perceived as disputes about collective preferences.
A North-South problem?
The issue of collective preferences in trade conceals a structural divide between the North and the South; sensitivity to collective preferences is one of the features of development. The very formation of collective preferences is dependent on income levels: the trade-off between greater affluence and environmental protection or between greater affluence and reduction of inequalities changes with income levels.
At first sight, this may appear to reflect a contradiction between the North's collective preferences which it is keen to defend and the legitimate development needs of the South. But that is not how it really is: just because there is a difference in the level of awareness of questions relating to collective preferences, it by no means follows that social choices are themselves contradictory. Only occasionally are different collective preferences source of incompatibility (one possible example being the differences in basic social standards between North and South). As a rule, they tend to enhance the benefits of trade. The defence of collective preferences, including universal standards such as basic social standards, is in no way a challenge to the social arrangements that keep the labour-intensive southern countries competitive.
The concept of the legitimacy of choices cuts both ways. Developing countries have their own needs, relating to their situation – Dany Rodrick calls this the "institutions of transition" - and, like industrialised countries, they are entitled to recognition for their specific, and legitimate, social choices.
How has the problem been handled up to now?
One thing needs to be made clear: the WTO has not dodged this issue. It recognises the legitimacy of preferences and attempts to reconcile openness with respect for legitimate collective preferences. It does not lack the means to do this: its rules allow exceptions to be made on grounds of public health, public order, public morality, the environment or national security, and countries have no qualms about adopting standards that reflect their collective preferences. Where these standards have led to conflict, experience has shown that the dispute settlement body has always sought to strike a balance between the need to ensure that standards are not just protectionism in disguise and the need to protect legitimate collective preferences (see inset below).
The Appellate Body and “Collective Preferences”
In its rulings, the AB has been guided by three basic considerations: a) the need to interpret WTO provisions in accordance with rules of public international law; b) the need to ensure that measures that are not in themselves discriminatory are not used for protectionist ends; c) the need to maintain institutional sensitivity and deference in relation to measures taken for non-trade concerns.
At the outset, the AB set out some important rulings to avoid the risk of protectionism concealed behind measures that are not discriminatory per se :
a broad interpretation of the non-discrimination principle, which covers de facto discrimination (e. g. bananas); an interpretation of the term “like product” which, in accordance with traditional GATT practice, is essentially based on product characteristics and competition in the market (tax-discrimination cases, asbestos).
At the same time, a number of important AB rulings have shown sensitivity towards non-trade concerns and appropriate deference (both as regards the actions of members and the expertise of other international organisations):
in the “reformulated gasoline” case, the AB affirmed the fundamental principle that WTO law could not be interpreted in “clinical isolation” from other rules of public international law. On this basis, the AB made a “progressive” reading of Article XX(g) as encompassing environmental concerns. It also shifted the focus of enquiry from the “justification” of the measures to their “application” (i. e., whether the measure entails arbitrary discrimination or disguised protectionism); in the “hormones” case, the Appellate Body reversed the panel's decision and made clear that there was no strict obligation under the SPS agreement to follow international standards. The complainant has the burden of demonstrating that a SPS measure is not based on sufficient scientific evidence. Moreover, Article 5.7 incorporates the precautionary principle. The EC ban was only condemned because of the EC’s failure to carry out a specific risk assessment. (This “case law” has also been applied to SPS measures taken by Japan and Australia.); in the shrimp-turtle” case, the Appellate Body accepted that the protection of the global commons (i. e., migratory species) could be encompassed by Article XX (g), thereby departing from the strict jurisdictional reading of the “tuna-dolphin” panel. It also accepted that a PPM based measure – even if not covered by Article III – could be justified under Article XX. The US ban was only condemned because of its arbitrary nature and the failure to engage in serious negotiations with affected countries. After the US modified the measure and engaged in “good-faith” negotiations, the AB considered that the US had provisionally complied, even though no agreement had been concluded with one complainant (Malaysia). ; in the “asbestos” case, the Appellate Body reversed the panel's decision, taking the view that the ban was justified under Article III and did not therefore require justification under Article XX. It moreover considered that health risk was a factor that had to be considered in determining whether two products could be considered as “like”. Even more importantly, it made it clear that different treatment of “like products” does not automatically imply a breach of national treatment under Article III.
The complaint has to demonstrate that “imported products” are treated “less favourably” than “domestic products”. (How this test would be applied has not yet been clarified.).
Like most courts of law (including of course the ECJ), the AB follows the principle of “judicial economy”, i. e. it interprets law only when it has to in order to solve a dispute. This means, of course, that there are still areas of the interface between WTO rules and non-trade concerns that have not been clarified. It can be said, however, that so far the AB has been a faithful guardian of “collective preferences” under the WTO system.
However, the scope of the rules is not always clear enough and, though it is to be welcomed, the case law is incomplete and leaves room for interpretation. That is one of the reasons Europe wanted WTO negotiations to include discussions on clarifying the relationship between the WTO and multilateral environmental agreements. To the extent that WTO rules explicitly acknowledge collective preferences, they deal chiefly with extreme cases, whereas the issue is an extremely broad and rapidly developing one.
Furthermore, case law has not always been correctly understood and has led to misunderstandings, giving rise to the fear that collective preferences were being challenged.
By their sudden emergence in international trade, collective preferences risk provoking a backlash against market opening when that openness is seen as a challenge to legitimately expressed collective preferences. This backlash is fed by the feeling of "dispossession" traditionally associated with globalisation (the people affected by decisions feel remote from the people who take them), but the feeling goes deeper than that because people feel "dispossessed" of their social choices and unhappy that their social choices are being placed on an equal footing with commercial considerations, in a world where everything is viewed as a commodity.
The Members of the WTO and above all Europe are partly to blame for this, through their failure to explain or educate. But beyond that, the WTO rules are in need of clarity, formal guarantees and symbolic significance, all currently lacking.
Clarification would be in everybody's interests: it would be welcomed not just by those who fear that collective preferences are under threat but also by the defenders of freer trade, assuming they want to maintain majority support in the democracies.
How could it be handled better?
The challenge is to design an open trading system that everyone accepts and that safeguards legitimate social choices. Every player wants respect for their political autonomy and for their collective preferences at the same time as gaining access to their partners' markets. The problem is that the cause of safeguarding legitimate social choices can be hijacked by protectionist interests. This has been the subject of intense discussion, quite understandably so on occasion, in the debate on social standards. The result of this is a certain defiance when these topics are discussed, particularly from the southern countries. Many liberal economists will not even allow the issue to be raised because, for them, it is inevitable that the debate will be taken over by protectionist interests.
That amounts to throwing the baby out with the bath-water. You cannot refuse to deal with a problem just because there are risks involved in doing so. The whole point of discussing how to design a trading system that can take account of collective preferences is to find a way of distinguishing between legitimate collective preferences and protectionist excuses. But to do that, the problem (and no-one can deny there is one) needs to be addressed head-on, the risks need to be clearly identified and instruments need to be devised to contain them.
1. By falling back on the market?
The people most concerned that protectionist interests might hijack policy advocate going back to the market and letting consumers decide: it is difficult to prove that collective preferences are genuine, but we can fall back on individual preferences: give consumers all the information they need to make a choice, through labelling, and let them choose. This is an attractive solution but, on closer inspection, unsatisfactory. First of all, it is not that simple; labelling can also be misused when the very act of putting a label on something suggest that there is something to be concerned about. But, above all, this solution to the problem assumes that individual preferences are paramount, which is highly debatable.
It is all well and good if, in line with the model described above, the collective choice is to allow individuals to make their own choices, as is the case with soft drugs in some countries.
But if there is such a thing as a collective choice, then asserting the supremacy of individual preferences and choices amounts to denying the existence of the entire social edifice and valuing the consumer above the citizen. This is unacceptable. Certain collective choices are binding on society as a whole and transcend individual preferences. The rejection of the death penalty in European countries is binding on all European citizens, even if they are individually in favour of it. As a rule, national collective choices relating to health-care quite closely define the scope of individual choice. Except in relation to tobacco, consumer information is not a substitute for measures to protect public health. Collective preferences mean collective regulation.
This is not incompatible with the existence of individual choices. But individual choices, if necessary facilitated by labelling, are done within the limits fixed by collective choices: this is typically the EU approach regarding GMOs.
2. By adjusting the way the trading system works?
Wrangling can be beneficial if it is done early enough.
We should start by stressing that certain beneficial effects flow from the clash of collective preferences and the constraints imposed by trading rules. The way the EU's agricultural policy has evolved provides a good illustration. Greater openness, dialogue and negotiation led the EU to examine the basis of its agricultural policy and to clearly identify the collective preferences underlying it (rural development, environmental protection, food safety and animal welfare), to distinguish these from mercantilist interests and to rethink its policy accordingly. At the end of this clarification exercise, it was clear that export subsidies are not necessarily the best way of achieving the objectives referred to with the least possible disruption for our partners. The question then remains: what are the best instruments for achieving those fundamental social objectives while creating as little disruption as possible for other countries?
The constraints imposed by WTO membership and peer pressure provide a powerful incentive to do the work involved in this process. In cases of conflict, the dispute-settlement body has always stressed the importance of dialogue, negotiation and persuasion (as in the shrimp-turtle case, which resulted in approval for American efforts to produce an international convention on the protection of sea-turtles).
It is one of the positive aspects of market opening and the clash of preferences that they make it essential to develop forums for discussion and identify preferences in order to head off conflict. The dialogue between countries and other parties involved in sustainability impact assessments for trade agreements could be used for this. The EU's experience with developing this kind of dialogue shows that the attempt often fails because of differences of opinion between the various parties as to what is at stake and what constraints the trade agreements actually impose on their signatories. Europe's development partners for example, see in Europe's environmental and social concerns the threat of more protectionist measures, which makes analysis of that aspect of trade agreements less attractive.
Using sustainability impact assessments to inform discussions on collective preferences would stand this thinking on its head to create an instrument for revealing trading partners' collective preferences, incorporating dialogue with the various parts of civil society in each of the countries concerned. The purpose of this instrument would be to highlight the difficulties caused by clashes of collective preferences in international trade. This, in turn, would make it possible to anticipate any conflicts that might arise from greater openness, by revealing incompatibilities between collective preferences before greater openness made them apparent, and by examining possible solutions.
This is relevant not just to what is happening now but to the future too. If we are going to start taking account of collective preferences, this will influence the content of future negotiations. The cost effectiveness of discussing specific issues in international negotiations will have to be reviewed, bearing in mind the risk of failure over questions relating to collective preferences. It is advisable not to push for integration in areas rich in collective preferences. [3] Here too, we need instruments that will reveal preferences, so that we can identify potential differences, incompatibilities and difficulties in advance.
Creating a space in which collective preferences can clash without doing so much damage will not stop them from generating tension. We have already said that the way the WTO has dealt with these tensions has been satisfactory by and large but has given rise to certain doubts and questions. To clarify how collective preferences might be integrated into WTO rules, the idea of a special safeguard clause has been put forward. The idea has become a focal point for the many concerns people have about the undoing of international integration, and an undermining of commitments on both sides. The idea has been held up as a bogeyman to stifle the debate on collective preferences.
In fact, a safeguard clause should be seen as an insurance policy, as the ultimate guarantee that trade integration will not pose a threat to legitimate collective preferences. Once again: that is largely how it works now. But it is not seen in that way. So, it would be useful to have an ultimate, formal guarantee to stand as a symbol. It would take some of the heat out of the debate. It would enable the other instruments to fulfil their function more effectively, and stop the issue from paralysing the entire debate on trade policy. The outcome of conflicts involving collective preferences would be much the same as today but the existence of a safety net like a safeguard clause would enable the parties concerned to achieve that outcome without generating so much tension and friction. The European experience could be drawn upon to good effect. It is often safeguards of this type that enable political consensus to be formed.
It is important to realise that, like any insurance policy, a safeguard clause would rarely need to be used. You only have to look at the way the WTO and its existing safeguard clauses work to see that: trade agreements are full of rarely invoked safeguard clauses. Of course the range of areas in which collective preferences could be an issue is immense, which is why there is so much concern about the idea of a safeguard clause, but we should not lose sight of the fact that in practice different collective preferences usually pose no problem, and that allowing countries to make a case on the basis of collective preferences is not the same as giving them carte blanche . It all depends on the conditions attached to use of the clause. The US's experience in the steel case shows that when a country invokes a safeguard clause without just cause, it does not matter how big the country, peer pressure and the WTO's robust rules will soon force it to back down.
Obviously, there is no question of giving WTO members an unlimited right to take any measure they like without just and reasonable cause.
A safeguard clause would have to be accompanied by two major provisos:
one regarding the formulation of social demands: it would be necessary to demonstrate that there really was a coherent underlying social demand and that the measure adopted was consistent with that demand (i. e. that the legal response did not misrepresent the social demand); and another regarding the legal response to social demands: it would be necessary to demonstrate that the measures adopted did not restrict trade more than other measures capable of satisfying the same demand, and complied with the basic principles underlying the multilateral trading system (transparency, non-discrimination, national treatment and proportionality); and, lastly, the safeguard clause could not be used to sanction customs duties, as conventional safeguard clauses do; that would simply fail to address the issue raised.
Countries wishing to use the safeguard clause would have to conduct an internal review of the collective preference underlying the measure adopted, in order to find out more about the nature of it and establish whether it was well-founded. That would entail widespread consultation, study or further scientific research and, in the case of unwarranted collective preferences, educating people with a view to changing their preferences (e. g. where preferences expressed have been radicalised by particular circumstances or where they are a hang-over from a bygone age, with no real raison d'être ).
The protection granted by the safeguard clause should be temporary.
In the debate, there is one fundamental point about a "genuine", responsible safeguard clause that few commentators have raised: it would have to be accompanied by a compensation mechanism. This would increase the cost of invoking a collective preference (a point on which WTO case law is undoubtedly rather soft).
A compensation mechanism (which would act as a counterweight to the guarantee) would be needed to:
keep up the pressure on countries that used the safeguard clause (since it would not be free of charge), and test their determination and the strength of the collective preferences underlying the choice expressed; partially compensate the affected exporters: we should be aware of the effects of our domestic choices on other countries, try to minimise negative effects (when deciding what measures to take in response to a social demand), and help countries, particularly poor countries, that suffer as a result of those choices. Compensation should take account of the nature of the interests affected (the cost of a restrictive measure to African exporters will differ from its impact on American exporters) and should take the form of payment of a pre-set amount or, in the case of developing countries, for instance, complementary policies (trade-related technical assistance or capacity building to help them meet strict health standards and social and educational policies in connection with the ban on child labour etc.)
In more general terms, it is worth thinking about compensation as an alternative to the penalty/dispute settlement solution for conflicts relating to collective preferences. Compensation is perfectly in keeping with the spirit of the WTO, which is more concerned with ensuring concessions are balanced that with free trade per se , and the idea of compensation has already made it into existing agreements. At a more fundamental level, compensation embodies the notions of international fairness and responsibility; we need to be aware that, in an open system, our trading partners pay a heavy price for some of our domestic choices.
This imposes two responsibilities on us: firstly, when looking for ways to put our choices into practice, we have a responsibility to find the measures that cause the least possible disturbance for our partners; secondly, we have a responsibility to bear the external cost of those measures.
The fairness imperative is of course all the stronger when poor countries are affected. Rather than have a two-tier WTO in which only the rich countries are deemed able to "afford" compensation, and favouring the poor countries in this way, we think the ethical thing to do is to make compensation payments bigger when poor countries are affected.
The search for core "collective preferences"
At a more fundamental level, we should be looking beyond the WTO and thinking about what type of social contract we want for the world as a whole. Even if such a thing were possible to achieve, uniform choices would not be desirable from a political or an economic point of view.
However, it would be in the international community's interests to identify certain core shred preferences, or collective preferences, that would translate into universally applicable standards. Most of the difficulties with collective preferences arise when countries think that their choices should apply to everyone, not just to them. Identifying basic core shared preferences on a limited number of the most universal themes would be a first step on the road to tackling those difficulties. These universal preferences would have to be translated into standards, which without being over-ambitious, would apply to everyone. Then the bar could gradually be raised as and when countries started to think in more similar ways. This method has been tried and tested in Europe, in relation to working time, for instance. It does not lead to lowest-common-denominator solutions: it is a first step that enables collective preferences to co-exist peacefully as expectations are gradually raised. The ratchet effect that standards of this kind deliver means that there is no going backwards but the movement forwards is still possible.
There are a great many areas where this sort of agreement on core values seems necessary. That was the idea behind the International Criminal Court, which came into being despite very different political and legal traditions, and certain notable "absences". In some cases, it is not possible to preserve national collective preferences unless agreement is reached on a "collective preference". This is the case, for example, with ethics in relation to life sciences and health care, and related technological and medical applications; without a "new world social contract", they are meaningless. [4] In this respect, a comparison can be drawn between collective preferences and the globalisation of law: beyond the systematic use of comparative law, the need for supranational law is gradually making itself felt; similarly, collective preferences are starting to be needed, rather than just systematic attempts to reconcile different collective preferences.
The fundamental question is how to reconcile different standards with each other when they conflict with one another. This calls for political arbitration of a still more ambitious kind; for government not through the imposition of standards but through choice: deciding how to reconcile two different standards is a political choice par excellence. And it is particularly difficult in the absence of a world government. However, with enough political will and resources, progress is possible. Look at how the developing countries won access to patented medicines.
That involved weighing up two fundamental imperatives: urgent health-care needs and the protection of intellectual property, essential for attracting funding in the future.
The importance of the regional level.
Regional groupings may prove more effective at reconciling collective preferences and limiting the destabilising effects of greater openness. Countries in given region have been shaped by a shared history; their political cultures, economies and demographic structures have certain features in common; it is reasonable to expect that they will more readily form bonds that affect their policies and their sovereignty.
Regional groups are a re-useable resource on the world stage, as initial synthesisers and coordinators of collective preferences. They also play an educational role (teaching members about the constraints that accompany the reconciling of collective preferences) and, at global level, they can act as a precursor (demonstration effect), incite others - regional and global competitors - to emulate them and simplify matters by reducing the number of players on the field.
Looking at it from the other end, the reconciling of collective preferences through regional agreements is probably the biggest single justification for the existence of regional groupings, making it possible to address the hardest problems, the kind on which multilateral trade negotiations often founder, since the "depth" of regional agreements alters the traditional rationale of free-trade agreements, in terms of the creation and diversion of trade.
The issue of collective preferences is at the very heart of the debates on regulating globalisation (i. e. formulating rules for the opening of markets, minimising the destabilising effects and maximising the benefits) and on global governance (how to coordinate collective choices, why and how to foster collective preferences).
Since the issue is a relatively new one and raises certain conceptual difficulties, there is a risk that it may be misunderstood in one way or another and that it will run up against an unholy alliance of opponents: liberals might see it as opening a Pandora's box of arbitrary barriers; the southern countries as protectionism and euro-centrism in disguise; and environmentalists and human-rights activists might see it as representing an unacceptable status quo because it fails to put pressure on those who infringe social standards and destroy the environment.
The ideas discussed in this paper are especially likely to provoke discussion because they bring together two objectives that are viewed as mutually exclusive: to promote greater openness and international integration, except where social choices are at stake, but also to think about imposing limits on international integration to defend the legitimacy and diversity of social choices.
These ideas are not a call for countries to withdraw to more isolationist positions. In promoting a system of governance that takes account of collective preferences, our aim is to make the most of greater openness while ensuring that it does not threaten to override choices in a way that it could not possibly compensate for. And while countries may feel the need to hang on to their regulatory autonomy, they should take those measures that cause the least disruption to others and, if necessary, pay compensation for that disruption.
Beyond that, greater openness should itself improve the way in which collective preferences are expressed, through contact with different preferences and through the creation of common rules.
These ideas started out as a rather defensive reaction to the difficulties caused by greater openness. Now, though, they are paving the way to a more constructive attitude, which views the world as a social entity, not just as a market.
A few final clarifications.
Europe has no intention of reneging on its international commitments or giving collective preferences absolute priority over them. We just want to make sure that we get all that we should get from those international commitments (which, in relation to the WTO, means no protectionist or excessive trade restrictions) but without having legitimate social choices threatened. Multilateralism is a European collective preference demonstrated by ongoing support for the multilateral trading system. It is not our aim to identify collective preferences that do not exist but to see things as they are: all societies make collective choices on a range of subjects: whether to have the death penalty; whether to have a minimum wage and, if so, how much it should be; what attitude to take towards drugs etc. The scope of these collective choices varies, as does the scope which they allow for individual choices. We are not trying to change that, but to take on board the implications of those choices for the way societies interact with one another at international level, and to coordinate them as much as possible. Discussion of collective preferences is not a pre-condition for the carrying out of WTO negotiations. Both are essential, but they should be conducted in parallel even though the time-scales are different. The aim in discussing collective preferences is to review the way we think about trade policy so as to respond to the concerns raised by greater openness, to minimise the destabilising effects and, lastly, to help the people who will be responsible for trade policy in ten years' time.
[1] They may also be affected by income: the process of arbitration between, say, increased wealth and environmental protection, or increased wealth and inequality reduction, will vary according to the standard of living.
[2] Obviously, not all Europeans are against the death penalty nor are all Americans for it. But on both sides there has been a collective choice as to whether or not to apply the death penalty that commits each one's judicial system "as if" everyone supported that collective choice.
[3] This is true up to a point. Concentrating on easy integration at the expense of tackling more difficult subjects eventually gives rise to an unbalanced structure if political will runs out (e. g. the construction of the single market without corresponding integration of social policy in Europe).
[4] Collectif, “Pour un comité mondial d’éthique”, Le Monde , 29 January 2003.

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An Enduring Need: The Importance of Multilateralism in the 21st Century, Remarks by Anne O. Krueger.
September 19, 2006.
Special Advisor to the Managing Director.
Singapore, September 19, 2006.
I am greatly flattered by the Managing Director's invitation. When he asked me if I would do this, he suggested I make a "farewell" discurso. Since I don't intend to abandon the issues that I have been concerned with over the past five years, the term farewell is, I venture to suggest, not quite right. I expect to continue, albeit in a different capacity, to be concerned with those same issues. But this occasion offers me the opportunity to speak out—supporting multilateralism and the multilateral system that underpins it—to a degree I did not feel I could when I was FDMD.
Multilateralism has been the key to the huge economic successes of the past half century. My theme this evening is that the achievements of the multilateral economic system are increasingly underappreciated as it is ever more taken for granted, while the need for a well-functioning multilateral international economic system is greater than ever as globalization proceeds. I shall argue that the multilateral financial institutions have performed remarkably well in underpinning economic success of unimagined proportions over the past sixty years. However, just as we take the air we breathe for granted, so, too, do many now take those successes and the multilateral economic system underpinning them for granted. They ignore the "public good" benefits that the multilateral system provides and focus instead on a narrow view of the short-term costs and benefits to them.
On the face of it, there is wide support for the multilateral institutions and for the principle of multilateralism. But too often these days, that support is little more than lip service. On almost all issues, the cumulative impact of decisions that affect the strength and health of the institutions is usually underestimated, if it is recognized at all, and the "common good" is generally under-represented in global fora.
I shall start by considering some of the many reasons why multilateralism is so important. Then I want to remind us of some of the successes of the system over the past sixty years. After that I shall turn to some of the reasons why support for the system is not as strong as one would expect in light of its great accomplishments. Finally I'll examine some of the practical issues on which the common good seems to be underestimated relative to the particular concerns of individual countries or groups of countries.
The Role of Multilateralism.
To their enormous credit, the founders of the post-war international economic system knew, and understood, the importance of multilateralism. They knew it in theory, but they also knew it because they had all experienced the enormous cost of individual actions taken outside a multilateral framework in the l930s. Then, governments, struggling to offset the impact of the Great Depression, undertook measures that, in effect, were designed to export their problems and that could only succeed if other countries did not take similar measures.
Competitive devaluations were designed to boost exports, but could have succeeded only if other countries did not respond in kind. But, of course, there were irresistible pressures on countries against which devaluation had been undertaken to follow suit and retaliate, and competitive devaluations worsened the situation.
Countries also raised their own tariff barriers, hoping to stimulate their own economic activity by reducing imports (again exporting both unemployment and reduced output to other countries). But, again, the fact that other countries were undertaking similar measures negated any beneficial effect. The volume of world trade shrank and high tariff barriers increased distortions and inefficiencies in the global economy. The American Smoot-Hawley tariff of l930 was followed by such calamitous events that after the Second World War protectionism in much of the world was held at bay, if not defeated, for years by the mere mention of the name.
Interestingly, most European countries had learned the difficulties of negotiating tariff levels bilaterally (and therefore discriminating among countries) back in the 19 th century. They had therefore adopted most favored nation (MFN) clauses in their trade treaties, insuring that imports of each commodity would be treated similarly regardless of country of origin. It was not, however, until the l920s that the United States government recognized the drawbacks of bilateral trade treaties (at least as seen from an American perspective): the trading partner with which the United States was negotiating would have to lower its tariff for all its MFN partners, while the American tariffs were not extended to others. Most countries chose to offer more favorable tariffs to countries where they would receive larger reciprocal reductions (across other partners) in exchange. Thus, MFN countries could reduce tariffs with each other, leaving the US (and other countries that did not have MFN clauses) confronting the higher tariff rates. The United States was therefore in a position of bargaining with all MFN countries while being excluded from tariff reductions already undertaken among MFN members. It was largely because of this manifestly unfavorable experience that, in the l930s, Cordell Hull, the American Secretary of State, so enthusiastically supported "reciprocal tariff agreements" in an MFN context.
But the experience of competitive devaluations was equally compelling: an action taken by one country could be in its self-interest unless others followed, in which case all would be worse off. A multilateral framework to avoid this possible outcome seemed clearly warranted.
Correctly, the founders of the postwar international economic system recognized that multilateralism was desirable, not only to reduce and, they hoped, to eliminate the possibility of any recurrence of the l930s, but also to promote nondiscrimination in international transactions. For my purposes today, I shall focus on the three key organizations: the International Monetary Fund, charged with maintaining international financial stability; the World Bank, responsible for the provision of development capital; and the World Trade Organization (earlier the General Agreement on Tariffs and Trade) supervising the world's multilateral trading system.
The founders of the postwar system recognized the benefits to be had from a resumption of international capital flows, but believed that the experience of the l930s had destroyed prospects for a resumption of most private capital flows. They therefore were concerned with enabling official capital flows through the International Bank for Reconstruction and Development—now the World Bank—and did not focus on difficulties that might arise either from discriminatory treatment by source of private capital flows or from the lack of an agreed international framework governing treatment of foreign capital. Hence, the postwar international economic system and organization was assumed to be complete when, in addition to the GATT for multilateral trade relations and the World Bank for official capital flows, the IMF was charged with international financial and macroeconomic stability and rules governing current account transactions. The absence of a regime for private capital flows resulted from the assumption that these flows would be relatively unimportant.
What was enshrined in the Fund's Articles of Agreement was provision for convertibility of domestic currencies for current account transactions. By definition, if a currency is convertible without restrictions, it is multilateral and there can be no discrimination for current account transactions. Issues relating to discrimination on the capital account were not addressed, on the assumption that there were relatively few such transactions. Obviously, trade credits and perhaps some other short-term credits might enter international trade, but it was not thought that issues of discrimination would arise. Interestingly, this oversight led to problems even when private capital flows had resumed at very low levels: difficulties arose because of governments' terms for granting official export credit, aid tying, and related issues.
One of the most striking ways in which the world has changed has been the emergence of private capital flows as a major force in the world economy. I shall return to this issue later and argue that the absence of a multilateral, nondiscriminatory framework governing international capital flows (and exchange control mechanisms) is an important and potentially costly gap in the multilateral economic system.
The arguments for a level playing field in which all transactions with foreigners are subject to the same regime are straightforward, glaringly obvious, and hence very dull. Each country's citizens will be better off sourcing imports and finance from the cheapest available source; and selling goods and services and undertaking capital transactions where they can obtain the best terms. And, as I shall note later, efforts to discriminate by country of origin or destination also confront enormous practical problems that normally can be addressed, if at all, only with a highly complex, distortionary , and costly set of regulations.
While the arguments for multilateral regimes for trade, current account transactions, exchange regimes, and capital flows are profoundly correct, they do not provide a dramatic demonstration of the virtues of multilateralism. Experience with efforts to depart from multilateralism has provided more dramatic illustrations of the need for multilateral solutions to international economic policy issues.
Let me mention just three: efforts to impose trade sanctions bilaterally; American experience with so-called voluntary export restraints; and anti-dumping and countervailing duty administration.
Efforts to impose trade sanctions against a country or group of countries are of course an extreme form of trade discrimination. Yet experience shows that they are seldom very effective unless all countries participate or those imposing sanctions can prevent trade through a blockade or other means. Even in cases where "most countries" are supportive, even one open border (whether the authorities are openly permissive, simply turn a blind eye, or cannot enforce) has generally been sufficient to mitigate most of the potential impact of trade sanctions.
American experience with country-specific so-called "voluntary export restraints" (wherein country-specific levels of the good in question were to be permitted) illustrates the same point: VERs have been greatly reduced in their impact by third-country effects. Perhaps the most famous case concerned semi-conductors: the imposition by the US of a VER led to a major expansion of capacity in third countries and led many American companies to shift production activities using semi-conductors offshore. American semi-conductor producers gained little, if anything, while American consumers of semi-conductors (PC assemblers, etc.) suffered.
But the experience has been more general: when a particular country or group of countries is targeted, the existence of other suppliers (or consumers) of the product significantly reduces, if it does not totally prevent, the intended effect. European car producers were the big beneficiaries of the ill-fated effort by the U. S. to impose VERs on imports of Japanese cars, and Korea became a major auto producer more quickly than it otherwise would have.
Anti-dumping and countervailing duty measures are, by design, discriminatory against countries (and firms) that are found to be using "unfair" means to lower their selling price in the market to which they export. In many instances, firms have been able to shift production from a plant in the country against which the AD or CVD measures is applied to one elsewhere. But when that has not been the case, third country producers are often the big beneficiaries. A famous case was Polish golf carts; the full story is too long to recount, but the main effect of the American effort to impose a CVD on Polish imports was to induce entry of Spanish carts into the American market.
I hope I have said enough to indicate the crucial importance of multilateralism in a well-functioning international economic system. And, since there are occasions when individual countries can perceive it to be in their self interest to pursue discriminatory policies if it is believed that others will not do the same, an international economic regime underpinning and enforcing multilateralism in international transactions is vital. Third country effects; the temptation to retaliate; the fact that an open international economic system has many aspects of a "public good": all of these are arguments that underpinned the postwar international economic system.
But the experience of the postwar years, and the unquestionable success of the system, speak even more strongly as to its importance. In most discussions of globalization today, it seems to be forgotten exactly how far the world has come in the sixty years of the postwar international economic system.
Recall that the war-torn European and Asian economies were devastated and, in the aftermath of the war, had output levels significantly below those of the prewar years. Most had severe exchange controls, often with bilateral clearing arrangements, high tariffs and often quantitative restrictions on imports. The average European tariff on manufactured goods imports stood at over 40 percent, but that number understates the extent of trade restrictiveness as quantitative restrictions often kept imports below even the quantities demanded at those high tariff levels. Only 4 countries in the world had full currency convertibility. And, of course, many countries were still very poor, or underdeveloped, as they were then called, with very low per capita incomes and correspondingly poor indicators of health, nutrition, literacy, and other measures of well being.
But starting in the late l940s, the global economy embarked upon a quarter-century-long period of rapid economic growth, greatly outperforming any prior period of comparable length in world economic history. European recovery accelerated rapidly, and most countries had re-attained their prewar output levels by the early l950s. But they sustained their growth rates well into the l960s and early l970s. At the same time, Japan's economy began growing and by the l960s was achieving rates of economic growth of 7-9 percent—well above anything that had earlier been thought possible.
Expanding world trade was the "engine of growth" in the postwar years. While real GDP was growing at rates far in excess of those realized in earlier eras, world trade was growing at almost twice the rate of real GDP growth. In part, the recovery from wartime conditions and growth of GDP spurred trade growth. But in addition, successive rounds of tariff reductions under GATT and other trade liberalizing measures spurred growth in trade and GDP. At the same time, bilateral trading agreements were gradually abandoned and then multilateral clearing of balances, and, finally, full current-account convertibility followed. It was a virtuous circle: reduction of trade barriers spurred economic growth; and economic growth enabled the further reduction of trade barriers. To leap ahead of my story, by the end of the 20 th century, tariffs on manufactured goods among developed countries had fallen from over 40 percent in the late l940s to an average of less than 5 percent, and quantitative restrictions on trade in manufactures were largely a thing of the past.
Several points about this phenomenal success deserve noting in connection with the role of multilateralism. Perhaps most important, the developing countries, with a few exceptions, failed to participate in trade liberalization in the quarter century after 1950. They mostly erected high trade barriers against imports of manufactures as it was believed that protectionism for "infant industries" was the appropriate policy to achieve more rapid economic growth.
Despite their failure to participate, however, developing countries grew at rates well above those that had been achieved in earlier eras. The fact that the world economy was growing rapidly enabled relatively favorable terms of trade and growth of export earnings (although their share of world trade declined as the industrial countries' trade liberalization led to even more rapid growth there). While the East Asian "tigers", whose policies included increasing integration with the international economy, were growing at spectacular rates, other developing countries benefited substantially from the rapid growth of the world economy, despite their failure to liberalize. In an important sense, those "inner-oriented" developing countries were "free riders" of the multilateral system: the rapid growth of trade benefited them even though they had not themselves liberalized their trade at that time. It enabled them to enter markets more readily than they otherwise would have done, and to increase their exports when domestic incentives were appropriate. That same growth enabled even greater benefits to accrue to them when they liberalized their own trade regimes in the 1980s and 1990s, encouraged by the examples of East Asian success. Trade barriers, both tariffs and quantitative restrictions, have been lowered dramatically in most of the economies now referred to as "emerging markets", thereby contributing to their further growth.
A second, and related, point, is that "globalization" was certainly occurring during the golden quarter century. Trade as a share of global GDP was rising, not only because of falling trade barriers but also because transport and communications costs were dropping sharply. It bears repeating that in 1931 a 3 minute phone call between London and New York had cost $293 in constant 1998 prices. By 2001, that same call cost $1; and today it costs at most just a few cents. Ocean shipping added about 30 percent to the f. o.b. value of exports in the late l940s; that figure had fallen to 3 percent by the late l990s. Air freight, a rarity in the immediate postwar years, now accounts for 40 percent of world trade in value terms. Those cost reductions meant that more and more goods were tradable; that many services were increasingly tradable; and hence that globalization was proceeding during the period.
In that connection, the tremendous advances in living standards around the world that accompanied rapid global growth should also be recognized. For example, life expectancy in India has risen from about 39 years in the early 1950s to over 60 years today. Similar dramatic increases have taken place in most developing countries. Since 1960, life expectancy in the developing countries has risen at roughly double the rate in the richest, with the result that the gap in life expectancy between rich and poor countries has shrunk from 30 years in the 1950s to around ten years today. Literacy rates have risen sharply, and other indicators of well being have improved dramatically in most countries.
But the main point is that the trade liberalization and globalization that took place during the first quarter century after l945 was undertaken in a multilateral context. Bilateral trading agreements fell dramatically in importance; more and more countries adopted Article VIII convertibility; tariff and non-tariff barriers fell sharply.
Almost all of this took place in a multilateral system underpinned by the IMF, the World Bank and the then—GATT. But there was one exception to this generalization, and that exception may have contributed significantly to the current under-appreciation of multilateralism's importance. That was the establishment of the European Common Market, which has evolved into the European Union.
As is well known, intra-European trade barriers were reduced even more sharply than were Europe's external trade barriers. As the common market evolved, the European economies were increasingly integrated until now there is a common currency and Central Bank, a common agricultural policy, an internal customs union, and much more.
And the European economies were dramatically successful not only in recovering to their prewar level of economic performance, but in sustaining that growth over the next several decades. In truth, the European economies were benefiting from their global (multilateral) trade liberalization, increased integration which enhanced competition in each of them (in addition to other benefits) as well as from the worldwide expansion that was occurring. But, to many observers, Europe's stellar performance appeared (misleadingly) to be attributable to European integration. In fact, something like 90 percent of Europe's trade liberalization had been multilateral, and probably around an extra l0 percent had been extended preferentially within the continent.
The misperception that Europe's success has been largely attributable to its internal preferential arrangements has probably contributed to the failure to appreciate the importance of multilateralism, to the thrust toward preferential trading arrangements and to other bilateral and regional arrangements. As I shall argue later, this is highly dangerous for all members of the international economy, as preferential arrangements will achieve their intended purpose only in the context of a strengthening of the multilateral system.
To appreciate more fully why this is so, let us turn to the next thirty years after the Golden quarter century. The l970s represented a major turning point. Perhaps most importantly, the "Bretton Woods system" of fixed exchange rates had to be abandoned, as major countries were unwilling or unable to follow the domestic economic policies that would have been necessary had it been decided to maintain fixed exchange rate regimes. It was probably fortunate for the international economy that that abandonment took place before the quadrupling of the oil price in l973, as flexible exchange rates between the major currencies enabled the absorption of a significant portion of the shock with less economic dislocation than might have occurred had countries been trying to sustain their earlier, fixed exchange rates.
But several other, related, phenomena occurred. Worldwide inflation accelerated. Many oil-importing countries accessed private capital markets to borrow to finance their oil imports in the years immediately after the oil price increase, with the private capital markets in effect "recycling" the windfall gains from oil producers to the oil-importing developing countries. When, in the l980s, industrial countries adopted anti-inflationary policies, the higher debt-servicing costs faced by developing countries, and other factors, led to the "debt crisis" of the l980s.
The official international community—both the IMF and the World Bank—reacted, supporting adjustment efforts in many of the afflicted countries. By the late l980s, growth in emerging markets was accelerating, and debt "overhangs" were addressed through the Brady plan and other measures. The Paris Club—another multilateral effort—found its role in the restructuring of official debt to official creditors greatly enhanced. I should note in passing that these efforts were necessarily in a multilateral context, as the debt which had to be restructured under the Brady Plan was held by a large number of industrial countries, and any country that had alone tried to enable a restructuring of developing country debt held by its nationals would have confronted the awkward fact that nationals from other creditor countries would benefit by its actions. Multilateralism was essential for the resolution of these difficulties.
Over this period, the International Monetary Fund had adapted significantly to its new role. The Fund shifted toward greater emphasis on support and surveillance of economic policies in developing countries, and greater focus on the consistency of exchange rates with monetary and fiscal policies, largely in the context of current account issues.
But in the l990s there was another sea change in the international economic system. The world economy was growing rapidly, fuelled by growth in world trade, in turn the result at least in part of further trade liberalization under the Uruguay Round. At the same time, the collapse of the Soviet Union led to major challenges in transforming those economies into functioning market economies. Again, bilateral efforts to support the transition would, by themselves, have been far clumsier. The existence of the GATT, subsequently the WTO, as a means of bringing trade regimes into the multilateral system, was essential. So, too, was the admission of economies in transition to the Fund and the Bank, enabling them to adopt the rules of the game for their exchange rate regimes and current account transactions.
Simultaneously, many of the developing countries whose economic performance in the l980s had contrasted poorly with that of the successful East Asian economies began undertaking policy reforms, including shifting to a more open economy, in the hope and expectation that their economic performance could be improved. By the mid-l990s, China's rapid economic growth was recognized by all, and India's economic reforms were beginning to bring results.
Earlier, some of the East Asian economies had profitably utilized large private capital inflows—in the case of Korea averaging almost 10 percent of GDP during the high growth years—and had shown their creditworthiness. This, combined with the improved prospects of many emerging markets, had led private creditors to pay much more attention to emerging markets. As a consequence, private capital flows to emerging markets mushroomed: whereas in the early l980s, less than half of capital flows to developing countries had originated from private sources, by the mid l990s, private capital flows predominated. And whereas a small number of developing countries had been significant borrowers from private markets even in the l980s, a much larger number of countries, including economies in transition, were able to access them by the mid l990s.
At the same time, preferential trading arrangements, or PTAs, were proliferating. Until the late l980s, the European Union and the European Free Trade Association (which consisted of some of the European countries that had not joined the EU) had been the major PTAs in the world economy, and the thrust of most changes in trade policies had been for intensification of multilateral relations. There had been some efforts at PTAs among other groups of countries, but most of them had been largely ineffective and, in some cases, abandoned. But after the U. S.-Canada Free Trade Agreement, which eventually became NAFTA, other PTAs abounded. To be sure, many of them were between transition economies of Eastern Europe and the European Union, but there were also many others. Today, there are very few countries that are not members of one or more PTAs and many are members of many!
From the beginning of the stampede toward PTAs, economists noted that these could be either a "stepping block" toward multilateral trading liberalization or a "stumbling block". If a PTA opens the way toward greater multilateral trade liberalization and is consistent with a multilateral system, it can improve the welfare of the countries involved in the arrangement, and will not involve significant "trade diversion" from the rest of the world. If, however, the main effect of a PTA is to divert trade from previous trading partners towards members of the PTA, it will reduce the welfare of members and also lead to increased resistance against, (or less support for) further multilateral opening. In addition, there is also the consideration that, when countries' trade officials are focusing their attention on negotiating PTAs, there are fewer resources—and perhaps less motivation—to support the multilateral system.
While private capital flows were increasing in absolute and relative importance, and countries continued to liberalize, a series of events diverted attention from these trends. These were the crises in Mexico in 1994, Thailand, Indonesia, Korea and Malaysia in l997-98, Russia in l998, and Brazil in 1999. These crises, especially in the Asian countries, came as a major shock, in part because the rapid and sustained growth of those countries over such a long period had led most observers to believe they were invulnerable, and in part because of the rapidity and severity with which the crises erupted. These were different from earlier current account crises, in part because the capital account was more open and thus permitted more sizeable outflows relative to trade flows. It is not my intention here to analyze these episodes: for present purposes, the only point is to note that there was a great deal of learning to be done by all about the factors contributing to the crises and about the appropriate policy responses when crises did occur. Focus on those issues significantly distracted the international community from attention to the larger questions that arose in response to the emergence of such very large private capital flows and the drift away from multilateral international economic relations.
Lessons have been learned, and many countries' economic policies have changed in ways that make them less vulnerable to financial crises: there have been shifts to more flexible exchange rate regimes, attention has been paid to issues of debt sustainability, reserve levels are higher, and there is greater focus on the consistency of monetary and fiscal policy with exchange rate regimes. And, of course, the IFIs played an important role both in facilitating economic reform and disseminating the lessons learned: yet again something multilateralism was best equipped to do.
Where We are Today.
The international economy has prospered over the past few years. World real GDP has grown well in excess of 4 per cent annually for four years running and is projected to sustain this pace into 2007. And all regions of the world are sharing in this growth. The world is a far more affluent place than it was a half century ago. Living standards, measured by indicators such as life expectancy, infant mortality, nutritional status, and literacy, have all improved. To be sure, some parts of the world have been more successful than others, and some have failed to share in the gains, and these problems need to be addressed.
Nonetheless, the broad brush picture is one of phenomenal economic success encompassing virtually the entire world, unparalleled by any period in economic history. And the multilateral system has underpinned much of that success. Countries undertaking reforms have realized gains far greater than they would have had the world economy been significantly less vibrant. And experience with reforms has been applied elsewhere, in part because the IFIs have enabled rapid transmission of lessons learned. The fact that trade and capital flows take place on a level multilateral playing field enhances efficiency, and increases competition in ways that are further growth-enhancing. On the surface, therefore, the outlook appears extremely promising.
But, beneath the surface, there are causes for concern. These arise in significant part because the multilateral system is so deeply embedded in today's international economy, and has been for such a long time, that it is largely and dangerously taken for granted. There are three major, related but not identical, factors that give rise to worry. One is the increased reliance on preferential arrangements, with their implied discrimination. The second is that private capital flows, despite their increased importance, do not yet fall into any coherent multilateral regime. The third is the tendency, probably increasing, for individual countries to place emphasis on their own position vis-à-vis the system, without regard to the extent to which their desired outcome may weaken the institutional underpinning of the very institutions they are trying to influence.
I shall close by considering each of these in turn.
I have already discussed the tendency for increasing proliferation of PTAs. By their very nature they are discriminatory, and each arrangement builds in some vested interests against multilateral liberalization. The best recent demonstration of this is the assertion that the reduction of barriers against imports of agricultural commodities by industrial countries would reduce the preferences that some developing countries receive. Yet the idea of preferences was to give developing countries a chance to develop their agricultural sectors over the medium term. So such an assertion for the longer term promises either a permanently inefficient pattern of production; or current investment in activities that will later have to be dismantled when preferences are removed.
It is not often asserted that the existence of preferential arrangements is a reason for failure to support, or opposition to, further multilateral liberalization. But the fact is that producers already exporting to PTA markets are either efficient and have already achieved the benefits (to them) of trade liberalization or they are inefficient and do not want multilateral competition. Either way, support for further multilateral liberalization has eroded. Many in the policy community have noted the absence of strong support from the US business community for the Doha Round, as compared to support for the earlier rounds of trade negotiations. It is not possible to prove that the absence of support for Doha is the result of PTAs (or the prospect of further PTAs) but it is certainly possible and even, I would argue, likely.
And, regardless of the causes, the multilateral trading system will inevitably be weakened should the Doha Round end without agreement. The failure to recognize the importance of open, non-discriminatory global trade is clearly a major factor in the current impasse. While the unraveling of the system would be a gradual prospect, it is nonetheless one that should be greeted with alarm by all who have shared in the rising living standards and global prosperity of the past six decades.
The second issue, the failure of the international economic system to have a coherent regime governing capital flows, is obviously more serious as private capital flows increase in size and importance in the global economy. Internationally-recognized rules for treatment of foreign assets and capital flows that provide for uniform treatment regardless of country or origin, and otherwise ensure a level playing field and efficient allocation of the world's capital resources, are clearly needed. The fact that most countries have to date extended uniform treatment to inflows and assets regardless of origin or ownership is heartening. But that may owe much to the traditions of the open multilateral trading system. Preferential trading arrangements permit the possibility of negotiations for favorable treatment for PTA partners and, hence, for discrimination among non-members. This should be cause for alarm and we should seek to head off such pressures before they gain currency. There would be less resistance now to developing protection for multilateral regimes for capital flows than could happen at a later date should preferential treatment become more prevalent.
Some may argue that a uniform regime is desirable for the treatment of foreign direct investment but unnecessary for other forms of capital flows. A major problem with this argument is that money is fungible: transforming one capital flow into another is relatively straightforward. Should investors in one particular country be able to transfer assets to another on preferential terms, it would not take them long to develop ways of using that favoritism to advance the cause of foreign investors from that second country. And, of course, such favoritism would have its flip side in discrimination against foreign investors from countries excluded from preferential treatment.
The third issue—the tendency of countries to place their own short-term interests ahead of their systemic interests in the multilateral system—is also cause for concern. More than one person has told me that his country has nothing to gain from the realignment of voice and representation in the Fund, indicating indifference, at best, to recent efforts. Yet that argument says that the country in question has no interest in the long-term health of the institution. The Fund will be strengthened by changes that better reflect the current relative positions in the international economy: and countries that do not gain shares will nonetheless gain from the healthier international economy that will result from stronger, better-functioning multilateral institutions.
Similarly, more than one major country has taken a position in the Fund supporting a program that violates Fund policies simply because the larger country politically favors the potential recipient of the program. Over the longer term, a weak program is likely to result in a less favorable outcome for the "protected" country. Quite aside from that, however, such behavior weakens the Fund itself, making it less valuable both to the members wanting favorable treatment for their favored clients and to the borrowing countries. There are similar problems with some diversity issues, where there are pressures for one country's national to be appointed or promoted on the grounds of diversity rather than merit. Cumulatively, the damage can be substantial, especially as other countries then argue that they should also be treated favorably, or advocate favorable treatment for their own nationals or a favored client country. Each successful intervention elicits still further interventions. It is a very slippery slope.
The proliferation of PTAs and the continuing absence of a multilateral regime governing capital flows are both glaring and dangerous departures from multilateral principles. The tendency to push narrow national interests is less obvious, and its impact if incremental: but it is no less dangerous a threat to multilateralism and one which we multilateralists ignore at our peril.
The very success of the multilateral system over the past six decades is both a cause for celebration and a strong argument for doing all we can to preserve both the system and the benefits it has brought. The international economy has been hugely successful over the past sixty years. Real rates of economic growth and, with them, poverty reduction, have surpassed what anyone thought possible at the end of the Second World War. There is still a great deal to be learned and done—not least to extend the benefits of economic growth to all citizens—but progress has already exceeded expectations by a wide margin.
The dramatic progress we have seen was made possible by the multilateral economic system and the liberalization that has come about through unilateral actions, through compliance with the conditions of membership of the multilateral institutions, and through multilateral negotiations. The fact that globalization has greatly intensified economic linkages and interdependence among countries increases the importance of open multilateralism. In addressing the challenges we face, therefore, we must be careful to appreciate the continuing—even growing—importance of the multilateral system, and to strengthen it.
Of course, international institutions need to adapt to changes in the international economy. They have and they are. But as calls are made for them to achieve those objectives, the message should be clear that changing roles are in the context of a multilateral system: and that multilateralism has been a success that must be fought for and preserved.

Fact Sheets on the European Union.
The European Union and the World Trade Organisation.
The World Trade Organisation (WTO) has worked to guarantee a rules-based international trading system. Despite the impasse in the Doha Development Round, ways of addressing new global trade challenges are being explored. The 2013 Trade Facilitation Agreement paves the way for new developments in WTO trade rules. Under the Lisbon Treaty, Parliament legislates jointly with the Council and has an important scrutiny role on international trade policy, including EU action in the WTO.
In the early decades of the twentieth century, trade issues prompted countries to engage in increasingly complex interactions, creating the need for a platform to facilitate and regulate trade relations. The resulting 1947 General Agreement on Tariffs and Trade (GATT) not only provided a round-table discussion forum, creating a multilateral approach to trade, but also established a system of internationally recognised rules on trade. The underlying idea was to create a level playing field for all members through the ‘substantial reduction of tariffs and other barriers to trade and the elimination of discriminatory treatment in international commerce’[1].
As international trade moved beyond the exchange of tangible goods to include services and ideas, the GATT was transformed and institutionalised as the World Trade Organisation (WTO). It was established in 1995 as a result of the Uruguay Round of trade negotiations and it incorporated earlier trade agreements, such as the GATT itself, the Agreement on Agriculture and the Agreement on Textile and Clothing, and additional general agreements. The most significant new agreements were the General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
Statistics show a clear link between free and fair trade and economic growth. The creation of the WTO was a significant step towards a more comprehensive and thus more dynamic international trading system. The WTO works to promote free trade, namely by ensuring that countries keep up the momentum in dismantling barriers to trade in trade talks. Currently, two thirds of the WTO's members are developing countries, which enables transition economies and least developed countries (LDCs) to use open trade to advance their development efforts.
The trade dispute settlement mechanism.
One of the WTO's most important achievements has been to consolidate its Dispute Settlement Body, which has the power to rule on trade disputes and to enforce its decisions. This dispute settlement mechanism works on the basis of predefined rules enabling WTO members, regardless of their political weight or economic clout, to lodge complaints over alleged breaches of WTO rules and to seek reparation. This mechanism, has led to a reduction in unilateral defence measures, to which countries previously resorted and which often provoked retaliation by the countries targeted, at times leading to fully-fledged trade wars.
The WTO system guarantees that stronger members do not prevail over weaker ones and provides clear rules on retaliatory measures.
Since the creation of the WTO, the EU has been one of the biggest users of its dispute settlement system. The Union has been involved in 181 dispute settlement cases, 97 as complainant and 84 as defendant[2]. In 166 other cases it has requested third-party status, which allows WTO members to monitor disputes involving other parties. The EU, which is represented by the European Commission, has also often sought to improve and clarify WTO agreements by requesting rulings from its panels and its Appellate Body.
The European Parliament closely monitors the evolution of disputes involving the EU. Parliament’s Committee on International Trade airs its views on trade disputes through reports, public hearings, and oral questions to the Commission and the Council. This is the case, for example, with the Airbus-Boeing dispute between the EU and the US.
The Doha Round and beyond.
Since 2001, the WTO’s members have been engaged in a broad round of multilateral trade negotiations known as the Doha Round, or Doha Development Agenda (DDA). The main goal of this, the ninth round of global trade negotiations, is to place development at the heart of the world trade system. The Doha talks seek to give developing countries an increasing role, as the weight of this group in the world trading system has grown enormously over the past decade. The idea is to strengthen developing countries’ capacity to benefit from international trade and help them to combat poverty.
The DDA was based at the outset on the principle of a ‘single undertaking’[3], and is still open. Like the previous rounds, it seeks to further liberalise trade. Negotiators are also charged with reviewing trade rules and adjusting them to the constantly evolving world trading system.
The DDA is based on three pillars:
Market access for agricultural products (including tariffs and subsidies), for industrial goods (also referred to as ‘non-agricultural market access’ or ‘NAMA’), and for services; Rules, for example, on trade facilitation and anti-dumping; and Development.
However, the talks have stalled over major issues, mainly related to market access. The most significant differences are between the positions of major emerging countries and industrialised countries or blocs concerning the way the international trading system should be reshaped.
The EU supported the launch of a broad and ambitious round. It saw it as the best way to deliver economic growth and development gains for all participants and to allow for the necessary trade-offs. Yet, despite the considerable efforts of a number of participants (notably the EU), the successful conclusion of the negotiations as a whole does not seem to be within reach.
In order to overcome the impasse in the Doha negotiations and keep protectionism at bay, WTO members have focused on achieving results in less controversial areas, which could largely deliver on development goals. In December 2013 the first multilateral legal instrument since the WTO was established 22 years ago was agreed — the Agreement on Trade Facilitation. Two years later, in December 2015, there was further tangible progress with an agreement on rules restricting trade-distorting support for agricultural exports — an area of specific interest to least developed countries.
Although less far-reaching than the Doha Round's initial agenda, these positive developments, particularly the entry into force of the Trade Facilitation Agreement in February 2017, confirm WTO members' commitment to the multilateral trading system. They pave the way for revamping the negotiations under the WTO, to address new global trade challenges and help shore up the multilateral rules-based trading system. The European Parliament has been following these talks closely. It has adopted various reports assessing the state of the discussions.
The Parliamentary Conference on the WTO, co-organised by the European Parliament and the Inter-Parliamentary Union, regularly offers an opportunity for constructive participation (see below for more information on this conference). On several occasions, Parliament has called for negotiations to resume, emphasising the importance of the Doha Round for world trade and economic development.
Parliament has also been closely associated with negotiations for more limited agreements. It sent a delegation to Bali and Nairobi, in December 2013 and December 2015 respectively, to attend the WTO ministerial meetings. A further WTO ministerial meeting will take place between 10 and 13 December 2017 in Buenos Aires. Parliament is following its preparation carefully and is again sending a delegation to the ministerial meeting.
The EU and the WTO.
So far, the EU, together with the US, has played a central role in developing the international trading system since World War II.
Like the GATT (and later the WTO), the EU was itself originally designed to remove customs barriers and promote trade between its Member States. The EU single market was partly inspired by GATT principles and practices. The Union has always been among the main promoters of effective international trade based on the rule of law. Such a system helps ensure that its businesses enjoy fair market access abroad, and thus supports economic growth, both domestically and in third countries, particularly less-developed ones.
The EU’s Common Commercial Policy is one of the areas in which the Union as such has full and exclusive competency. In other words, the EU operates as a single actor at the WTO and is represented by the Commission rather than by the Member States. The Commission negotiates trade agreements and defends the EU’s interests before the WTO Dispute Settlement Body on behalf of all 28 Member States. The Commission regularly consults and reports to the Council and the European Parliament on the content and strategy for the multilateral discussions. Under the Lisbon Treaty, the Council and Parliament are co-legislators with an equal say on international trade matters.
Through the WTO, the EU has also sought to promote a multilateral framework for trade negotiations, intended to complement, and possibly supplant, bilateral negotiations. However, the stalemate in the Doha Round and the fact that other trading partners have turned to bilateral agreements have compelled the EU to partly reconsider its long-standing strategy and return to regional and bilateral negotiations.
The impasses at the WTO are also a sign that the international trading system has changed dramatically in the past 20 years. The old system, largely dominated by the EU and the US, has evolved into one that is more open and multifaceted, with new actors — essentially transition and developing countries — playing a central role. The liberalisation of the international trading system has benefited some developing countries, which have experienced an unprecedented phase of sustained economic growth. The EU is well aware of these new dynamics. It has pointed to the need to move beyond the negotiation approach of the past years and try innovative approaches in line with the evolution of global trade in the 21st century and the increased importance of regulatory issues, as compared to tariffs.
The Parliamentary Conference on the WTO.
The Parliamentary Conference on the WTO is jointly organised by the European Parliament and the Inter-Parliamentary Union (IPU) and is intended to strengthen democracy internationally by bringing a parliamentary dimension to multilateral trade cooperation.
The first formal meeting of parliamentarians at the WTO dates back to the December 1999 WTO Ministerial Conference held in Seattle. In 2001, the European Parliament and the IPU agreed to pool their efforts and sponsor a parliamentary meeting during the WTO Conference in Doha. This meeting laid the foundations of what has become the Parliamentary Conference on the WTO.
This conference provides a forum in which parliamentarians from all over the world exchange opinions, information and experiences on international trade issues. Participants monitor WTO activities; promote the effectiveness and fairness of the WTO; advocate transparency in WTO procedures; work to improve the dialogue between governments, parliaments and civil society; influence the direction of discussions within the WTO; and build up national parliaments’ capacity in international trade matters.
The Parliamentary Conference on the WTO meets annually, as well as during WTO Ministerial Conferences.
[1]GATT Agreement (1947), introductory paragraph.
[2]Figures as at 22 March 2017:
[3]The ‘single undertaking’ principle essentially means that ‘nothing is agreed until everything is agreed’.

Multilateral trading system has evolved as a result of

Cambridge University Press.
978-0-521-86276-9 - WTO Law and Developing Countries - Edited by George A. Bermann and Petros C. Mavroidis.
GEORGE BERMANN AND PETROS C. MAVROIDIS.
Developing Countries in the WTO System.
In this volume, we have put together an internally coherent series of papers discussing the most crucial, to our mind, aspects of developing countries’ participation in the WTO . Its timing was deliberate: The Doha Round, hailed as the development-round, was supposed to address issues of concern for developing countries. And there are many: preference erosion (as a result of tariff reductions during the Uruguay Round), asymmetric (across sectors) tariff liberalization, the onus of implementing the TRIP s Agreement , participation in dispute settlement procedures, and the current remedies régime, to name a few. Special and differential treatment , the cornerstone describing developing countries’ participation in the GATT / WTO , is very much under discussion in the ongoing round. There is widespread (across developing countries) dissatisfaction with its current workings, and voices for change are multiplying.
   One of the major challenges facing the WTO is how to facilitate the fuller integration of developing countries in the multilateral trading system. Although the share of developing countries as a group in world trade has increased to 30 percent in recent years, the majority of developing countries, particularly the least-developed countries ( LDC s), have seen their share in world trade stagnate or even decline. The lack of active participation of LDC s in the multilateral trading system has been a source of concern. Historically, special and differential treatment, technical cooperation, and capacity building have been at the forefront of the GATT / WTO ’s efforts to facilitate the integration of developing countries into the multilateral trading system. In recent times, however, doubts have been expressed as to the effectiveness of special and differential treatment in assisting developing countries to participate actively and derive significant benefits from the multilateral trading system. Still, however, most developing countries dispute the assessment that preferences have not been helpful and that their integration into the multilateral trading system would have been achieved at a faster pace, had they accepted to follow WTO disciplines like other Members. Moreover, these developing countries have always insisted on the legal enforceability of special and differential treatment provisions like any other provisions of the WTO Agreements. Developed countries, in contrast, have mostly taken a contrary view and argue that special and differential treatment-related provisions should be seen for what they are: voluntary commitments assumed by developed countries in favor of developing countries.
   Our invited authors did a magnificent job in bringing out all those issues and more in the pages that follow.
   We begin with the contribution by Edwini Kessie , who discusses the many provisions in the WTO contract regarding the special and differential treatment accorded to developing countries. This paper briefly examines the concept of special and differential treatment and how it has evolved in the multilateral trading system; it then identifies five classes of special and differential treatment provisions and discusses whether they are legally enforceable before offering some concluding remarks on the role of such provisions in the multilateral trading system. Kessie concludes that, in general, these types of provisions are not far reaching because they are often expressed in best-endeavors terms. There is, however, one very notable exception: the generalized system of preferences ( GSP ), whereby donors will accept products originating in beneficiaries at a preferential tariff rate, in contravention of the non-discrimination principle.
   The paper by Nuno Limão and Marcelo Olarreaga offers us an assessment from an economic perspective of the value of the GSP to developing countries. They draw a parallel between preferential trading agreements (like free trade areas) and GSP schemes to make their point about preference erosion. The proliferation of preferential trade liberalization over the past 20 years has raised the question of whether it slows down multilateral trade liberalization. Recent theoretical and empirical evidence indicate that this is the case, even for unilateral preferences that developed countries provide to small and poor countries, but there is no estimate of the resulting welfare costs. Moreover, beneficiaries come to eventually oppose non-discriminatory ( MFN ) liberalization, because reduction of MFN rates equals erosion of their preferences. Hence beneficiaries become a stumbling block working against the function of the WTO . This stumbling block effect can be avoided by replacing the unilateral preferences by a fixed import subsidy, which the authors argue generates a Pareto-improvement . More importantly, they provide the first estimates of the welfare cost of preferential liberalization as a stumbling block to multilateral liberalization. By combining recent estimates of the stumbling block effect of preferences with data for 170 countries and more than 5,000 products, they calculate the welfare effects of the United States, European Union, and Japan switching from unilateral preferences to LDC s to an import subsidy scheme. Even in a model with no dynamic gains to trade, they find that the switch produces an annual net welfare gain for the 170 countries that adds about 10 percent to the estimated trade liberalization gains in the Doha Round. It also generates gains for each group: the United States, European Union, and Japan ($2,934 million); LDC s ($520 million); and the rest of the world ($900 million).
   In the next chapter, Frederick M . Abbott shifts the focus to a very idiosyncratic developing country, China. He examines the legal and WTO governance implications of China’s alleged failure to fulfill its obligations under the TRIPS Agreement. The significant escalation of interest by the United States and other developed countries in China’s intellectual property rights enforcement activity merits, in the author’s view, special attention because of its systemic implications. This subject matter forms a critical part of China’s continuing WTO dialogue with the United States, European Union, Japan, and Switzerland and tests the capacity of the WTO dispute settlement system to constrain state behaviors. China appears to perceive that its national interest is not aligned with its TRIPS Agreement and Accession Protocol obligations. Though the United States may well initiate a WTO dispute settlement action, it seems unlikely that doing so will result in near-term changes to China’s conduct. WTO dispute settlement is not designed to force immediate changes to government behaviors, particularly when the party under complaint is not overly concerned about the potential for withdrawal of concessions. Politicians and industry leaders who are demanding changes by China will almost certainly be frustrated at the WTO . This frustration raises two questions: First, will the United States be justified in imposing extra- WTO -legal sanctions on China? Second, if this action is justified, is it a good idea? The answers to these questions, explored in this paper, are “probably yes” and “probably no,” respectivamente. To paraphrase the title of Olivier Long’s classic work on the GATT , this case may help define the limits of the law in the WTO system.
   With Juan A. Marchetti’s contribution we shift focus yet again, this time to evaluate the impact of GATS on developing countries. In the author’s view, the task in the months ahead in the Doha Round of multilateral trade negotiations is particularly challenging for developing countries in the services negotiations. This is an opportune time to assess what developing countries have done so far and what they should be doing to achieve (1) a deeper integration of their economies into the world trading system and the (2) advancement of higher and sustainable levels of economic growth. Trade liberalization is a necessary but not a sufficient condition to attain economic development. Many other factors, such as geography, resource endowments, the protection of property rights in its largest sense, and the quality of the institutional and regulatory frameworks, are determinants of success. It would be unfair to place all the expectations of success in only one aspect of any development policy like trade and even more myopic in only one subset of the trade in general (i. e., services). Nevertheless, services are essential for development, and further liberalization of trade in services can lead to improvements to human welfare. As such, developing countries should take the initiative (unilaterally) to liberalize their own trade regimes as they pertain to services within the context of multilateral negotiations on the further liberalization of trade in services. After an elaborate discussion on the significance of services for development and the costs of protection and an analysis of developing countries’ overall negotiating positions thus far in the current round, the following basic themes emerge from this discussion: first, the essential role of services for economic development; second, the high costs imposed by trade protection; third, the benefits of liberalization; fourth, the need to make use of the WTO forum to enhance credibility and sustain domestic regulatory reform programs; fifth, the challenges of regulatory reform and the importance of appropriate sequencing; and, finally, sixth, the benefits of seeking further market access overseas in those areas in which developing countries have a comparative advantage.
& # 160; & # 160; & # 160; Kal Raustiala focuses on four interesting questions about trade in services raised by Marchetti in his contribution. First, why does the multilateral trading system not discipline protectionism in services as much as it does in goods? Ostensibly, services trade, which also encompasses professional services, will undoubtedly dramatically increase over the next decade. Although the structural barriers that keep some services purely local still exist, trade in services increasingly transcends these barriers through technology. On basic economic grounds, services trade should rationally have a larger part of the WTO agenda in the current round and perhaps an even larger part in future rounds of negotiations. Trade barriers in services tend to be in the form of complex nontariff barriers, which are more difficult to regulate effectively compared with more transparent barriers like tariffs. Moreover, unlike trade in goods, disciplines on services were only negotiated and later agreed to during the Uruguay Round, almost 50 years after GATT , in which membership was much less heterogeneous than that of the GATT CONTRACTING PARTIES . Second, what is the role of WTO negotiations in reducing regulatory barriers? Raustiala comments that the inference that the GATS has actually resulted in a decrease in the trade in services is unlikely, though it leads to speculation as to what evidence exists indicating that GATS is actually promoting rather than inhibiting trade in services. Third, what promotes or demands more unilateralism in the trade in services vis-à-vis other areas of WTO negotiation? In this context, the author borrows from cooperation theory to advance his conclusions that account for the particularities of services trade. Fourth, why has there been a lack of progress on mode 4? The comment suggests that in the final analysis political obstacles are at play, impeding serious liberalization in the movement of persons within the WTO , despite the enormous economic gains that would accrue to both migrants and their host countries.
& # 160; & # 160; & # 160; Jayashree Watal ’s contribution concerns the developing countries’ adherence to the TRIPS Agreement, one of the most contested topics regarding their participation in the WTO . The TRIPS Agreement provides minimum standards for the protection of intellectual property rights and does not envisage harmonization of these rights among all WTO Members. It makes it clear that Members are not obliged to implement more extensive protection but does not prevent them from doing so. The demandeurs for the inclusion of an intellectual property agreement in the Uruguay Round of negotiations were developed countries. One of the reasons for inclusion of this subject in trade negotiations may well have been the attractiveness of the trade enforcement mechanism. However, more importantly, developed countries saw the trade forum as one in which the chances of making progress from their perspective were higher because of the possibilities of making trade-offs with other areas. Even if not all developing countries participated in these negotiations in equal measure, it would be fair to say that their perspective was represented. As is widely acknowledged, the TRIPS Agreement, in an effort to strike a proper balance among the differing interests of the participating countries, provides for significant flexibility in the protection to be given (see examples in the Annex). This flexibility, which went considerably further than some of the demandeurs in the negotiations would have liked and were achieving in bilateral agreements at the time, resulted from a compromise achieved through negotiation by developing countries acting collectively and making issue-based alliances in a multilateral context.
   The TRIPS Agreement continues to be the generally accepted point of reference for the protection that countries should give to the intellectual property of others. This does not mean that it is not criticized, but this criticism comes from both sides. On the one hand, some developed countries do not accept it as necessarily providing for adequate and effective protection of their intellectual property, and there has been a continuing effort to get trading partners to provide enhanced protection in important respects. On the other hand, developing countries have proposed, and in one important case – that of TRIPS and public health – achieved amendments to the TRIPS Agreement to improve the balance from their perspective.
   The next five chapters discuss developing countries’ participation in the WTO in general and in dispute settlement proceedings in particular. Håkan Nordström discusses participation of developing countries in the WTO . The WTO takes pride in being a member-driven organization, with decisions taken by consensus among all member states. But how active are the various member states in reality? In particular, to what extent do developing countries participate in the proceedings – and if not, why not? This chapter offers new evidence on this subject from the WTO official records for 2003. The data he put together show that the activity level is highly uneven and, further, is correlated closely with size and income levels. The poorest LDC s often lack WTO representation in Geneva. When it comes to active participation, the data are even more telling: the relative silence of smaller and poorer member states is especially telling at the technical level (Committees and Working Groups) where the substantive work is carried out. This paper suggests that there is a positive correlation between the income level of participants and the intensity of participation in the WTO in general.
& # 160; & # 160; & # 160; Jeffrey L. Dunoff , in his comment, first congratulates Nordström for making at least two important contributions to the literature on developing state participation at the WTO . First, in his view, the author correctly directs our attention away from developing state participation in WTO dispute settlement and toward developing state participation in the WTO ’s legislative processes; second, the empirical research provides a large and suggestive body of data that can usefully inform discussions of developing state participation. In the author’s view, Nordström’s data and his richly suggestive analysis could support an entire research agenda on developing state participation at international organizations. The comment further addresses the paradox that lies at the heart of Nordstrom’s analysis and notes that elucidating that paradox points toward important methodological and normative questions that his paper does not address: Nordström’s data perhaps misleadingly suggest that developing states played a relatively minor role in WTO processes during 2003, even though it would seem that they played a critical role then in the lead-up to the Ministerial Conference in Cancun. It is difficult to square these two accounts, and the tension between them suggests that there are difficult methodological questions about how to measure participation and influence at the WTO . Cancun’s failure does suggest the need to think carefully about both the virtues and the drawbacks of increased developing state participation at the WTO .
& # 160; & # 160; & # 160; Marc L. Busch and Eric Reinhardt discuss developing countries’ participation in WTO dispute settlement proceedings. It has long been observed that developing countries made scant use of dispute settlement under the GATT . Some observers go so far as to suggest that developing countries will have greater recourse to the WTO dispute settlement system because of its more legalistic architecture compared with the GATT ’s power-based diplomatic system. Busch and Reinhardt argue that this conventional wisdom is wrong. In assessing how developing countries have fared in dispute settlement, two questions beg empirical attention. First, have developing countries secured more favorable trade policy outcomes in WTO versus GATT dispute settlements, and second, what explains any differences in the outcomes realized by developing, as opposed to developed countries? The authors dissent from the well-accepted view that the ushering in of a rules-based dispute settlement system would result in greater participation of developing countries than in the GATT power-based system. They argue that the Dispute Settlement Understanding ( DSU ) only serves to reinforce the (1) inability of developing countries to extract concessions from (mostly) developed country defendants in WTO litigation in light of the incentives to litigate and (2) developing countries’ lack of capacity to push for early settlement. The authors argue that “early settlement” offers the greatest likelihood of securing full concessions from a defendant at the GATT / WTO , a pattern that has been less evident in cases involving developing countries. The data provided bear out their argument: on the one hand, poorer countries have not secured significantly greater concessions under the WTO than under GATT , and, on the other, the increasing gap between rich and poor Members in the performance of the dispute settlement stems from a lack of legal capacity, not a lack of market power with which to threaten retaliation. The main implication of their argument is that developing countries need more assistance before litigation commences.
& # 160; & # 160; & # 160; Niall Meagher’s chapter sets forth some thoughts based on the author’s personal experience in representing developing countries in WTO dispute settlement proceedings. There have been very many thorough statistical studies relating to the dispute settlement system and, in particular, developing country participation in it. This paper is not intended to duplicate that work. Rather than trying to draw empirical conclusions from the statistics about which developing countries have participated in the system and the rate at which they participate, the paper proposes instead to discuss some practical aspects of the resource constraints facing developing countries in participating in WTO dispute settlement. Any discussion of representing developing countries in WTO dispute settlement proceedings must probably begin and end with the question of the resources available to them and whether these resources enable them to participate on equal terms with developed countries. The question of resources is frequently approached simply from the point of view of developing countries’ financial ability to obtain adequate legal advice. This is, of course, an important factor – and perhaps is the most important factor – but resource constraints are not limited simply to the ability of a developing country to retain good legal counsel. Instead, they can manifest themselves in many other ways and influence every aspect of the decision of whether to participate in dispute settlement proceedings. These resource constraints condition developing countries’ ability to participate in and benefit from not just the dispute settlement system but all aspects of the WTO . This paper therefore reviews some of the practical ways in which these constraints – financial and otherwise – impede developing country participation in the dispute settlement system on an ongoing basis.
& # 160; & # 160; & # 160; Chad P. Bown in his comment on Meagher’s paper presents a very interesting, accessible, and poignant account of some of the practical problems facing poor countries (and the individuals who advise them) in WTO dispute settlement litigation. The comment focuses on three areas related to the provision of WTO litigation assistance to poor countries. It uses an economic perspective to expand on (and complement) some of the points that Meagher’s analysis touches on only briefly. It first highlights the role that economics could play, before advocating for an increased role for the complementary and necessary services that economists should contribute to the lengthy process of WTO litigation. If the purpose of subsidized intervention on behalf of poor country governments is to more fully inform (as opposed to simply guide) the client’s consideration of the WTO litigation tool, the author argues that providing poor country litigants with more economic information is extremely important. Finally, the comment considers a somewhat broader perspective by discussing some of the benefits to expanding legal assistance center services like the Advising Centre on WTO Law ( ACWL ), relative to alternative sources that might provide basic legal services to developing countries.
& # 160; & # 160; & # 160; Mateo Diego-Fernández’s contribution concerns the current remedies in the WTO . An unpopular remedy, retaliation is the last resort by which to enforce a WTO ruling and has often been criticized as being trade-disruptive and one that affects the Member that exercises it in the first place. It could also be an unworkable tool in the hands of many, because of its associated costs. However, retaliation (or the threat thereof) is a key element for compliance or for reaching mutually acceptable solutions. In addition, it is the only tool for rebalancing the level of rights and obligations in the absence of compliance. The author collaborated in preparing Mexico’s proposal to formally introduce tradable retaliation (remedies) in the WTO dispute settlement understanding ( DSU ), whereby the entitled-to-retaliate Member could auction off to another Member its right to do so. Mexico’s proposal to amend the DSU aims at solving what it believes to be the central problems in the functioning of the DSU ; namely, the period of time during which a WTO -inconsistent measure can be in place without.
consequences and the fact that retaliation is an empty shell in the hands of many. Accordingly, the proposal contains the following four suggested ways of dealing with this problem: first, early determination and application of nullification or impairment; second, retroactive (as opposed to prospective) determination and application of nullification or impairment so that retaliation is exercised taking into account the time that has elapsed since imposition of the measure; third, an injunction-like mechanism that allows Members to obtain relief where a measure causes or threatens to cause damage that would be difficult to repair; and, fourth, negotiable remedies, which offer the possibility of transferring the right to retaliate to third Member(s) that may use it more effectively. The paper also addresses the issue of how enhancing rules on retaliation would benefit developing countries above all and elaborates on how the Mexican proposal to amend the DSU might contribute to this end.
& # 160; & # 160; & # 160; Gene M. Grossman and Alan O. Sykes deal with the most notorious GSP -related dispute submitted to the WTO so far. The WTO case brought by India in 2002 to challenge aspects of the European Community GSP brings fresh scrutiny to a policy area that has received little attention in recent years – trade preferences for developing countries. Preferential tariff treatment is inconsistent with the MFN obligation embedded in Art. Ⅰ GATT . However, the legal authority to deviate from the MFN obligation was incorporated into the law of the WTO along with the GATT itself with the adoption of the so-called Enabling Clause by the GATT CONTRACTING PARTIES in 1979. Although trade discrimination favoring developing countries is the essence of any GSP scheme, India’s WTO complaint raised the question of what type of discrimination is permissible – must all developing countries be treated alike, or can preference-granting nations discriminate among them based on various sorts of criteria? The WTO Appellate Body formally affirmed the ruling in India’s favor in early 2004. However, in substance , by modifying the Panel’s findings in a way that seemingly authorizes some differential treatment of developing countries based on their “development, financial and trade needs,” this ruling gave India a pyrrhic victory, if at all. The purpose of this paper is to review the current state of the law in the WTO system and to ask whether economic analysis can offer any wisdom about the proper extent of “discrimination” through GSP measures. The issues are challenging ones, both from a legal and an economic standpoint. There are good economic reasons to be concerned about discrimination and reciprocity in GSP schemes, as well as respectable legal arguments that they should be strictly limited. GSP benefits are “gifts” of a sort; however, tight limitations on their terms may put an end to them altogether. It is exceedingly difficult to say whether discrimination and reciprocity in GSP schemes make the trading community worse off or better off over the long haul. The authors take the view that, in the India case, Pakistan was paid by India’s money due to the ensuing trade diversion. They go one step further though, and argue that, in light of substantial empirical evidence, it is probably the case that the candle (income) is not worth the flame ( GSP schemes).
& # 160; & # 160; & # 160; Jeffrey Dunoff also comments on the contribution by Grossman and Sykes . In his view, the authors provide an insightful analysis of the GSP dispute. Their contribution generates a number of conclusions, nearly all of which emphasize the difficulty of the issues raised by this dispute. The ultimate question raised by the authors’ analysis is whether the GSP dispute is one of those hard cases that make bad law. The comment examines why conventional analyses cannot inform us as to whether the Appellate Report created good law and raises the following three questions about the report: first, the relationship between the exceptions to GATT disciplines found in the Enabling Clause and Art. ⅩⅩ GATT ; second, the institutional role of the Appellate Body in “hard cases” like the GSP dispute; and, third, the purpose of GSP programs. As to the first question, the comment raises the point that there is possibility of a serious tension between the logic of Art. ⅩⅩ GATT and the logic of the Enabling Clause, which reflects a larger, unresolved tension over whose preferences count in the context of measures related to labor, environment, and other forms of conditionality. With respect to the second question, the comment states that it seems the Appellate Body’s “middle course” effectively positions WTO adjudicatory bodies as the arbiters of evaluating preference programs, and as such they address fundamental policy questions on a case-by-case basis. Accordingly, the comment suggests that from an institutional standpoint the Appellate Body may have created bad law by carving out a continuing and primary role for itself in the highly politicized field of GSP . As regards the final question, the GSP dispute is a hard case because at some level it pits against each other two plausible approaches of international law: international law in general and international trade law in particular help states solve collective action problems, address externalities, and generate public goods, whereas the other approach, which the comment supports, is that a primary function of international law is to influence and improve the functioning of domestic institutions. In the final analysis, the comment concludes by stating that the Appellate Body may have avoided speaking to these conflicting visions of international law by deciding the case on procedural grounds and may have thus minimized the extent to which the GSP dispute was a hard case that made bad law.
   In his comprehensive comment, Jeffrey Kenners first begins by tracing the contested provisions of the European Communities ( EC ) GSP scheme to the emergence, in the early 1990s, of a broader conception of EC development policy that incorporated the promotion of democracy and human rights, including labour rights. Against this background, his comment evaluates the extent to which it has been possible for the European Community to confirm that there is now an objective process for granting special trade preferences in its reformed GSP following the Appellate Body rulings in EC – Tariff Preferences . In its remodeled GSP + scheme, the EC , in principle, currently offers special incentives to an unspecified number of applicant countries for the purposes of encouraging “sustainable development” and “good governance” with reference to a list of international conventions. The GSP + is open to all developing countries with “the same development needs.” Accordingly, the European Community believes, and the author agrees, that it is able to demonstrate that it is pursuing its development policy priorities in a WTO -consistent manner.
& # 160; & # 160; & # 160; Anastasios Tomazos’ contribution aims at providing a critique of the Appellate Body’s reasoning and its ultimate conclusion in the EC – Tariff Preferences dispute. After putting forth the argument that the Appellate Body’s ruling cannot be supported on either legal and economic grounds, the paper advances the argument that the decision is also untenable on broader political/systemic grounds primarily because it maintains the status quo and squanders an opportunity to give WTO Members the impetus to thoroughly review whether the Enabling Clause, in whole or in part, still fulfills its original mandate.
   Finally, Patrick Low , as the title of his paper suggests, argues that the contribution of the WTO to developing countries, be it negative or positive, is in the hands of others. The additional question posed in this paper presupposes that developing countries can also influence the contribution that the WTO makes to their growth and development. Both of these questions inform the paper’s analysis. It has become increasingly obvious that important differences in interests and priorities exist among developing country WTO Members: they are different in fundamental ways and these differences are bound to be reflected in their priorities and interests. Accordingly, developed countries will not agree to uniform policy treatment for all developing countries in the multilateral trading system, and many developing countries have similar reservations. The paper employs the following four-fold characterization of the WTO for the practical purpose of ordering questions about potential and actual benefits derived by developing countries from the multilateral trading system: first, a system of rules; second, a negotiating forum; third, a dispute settlement mechanism; and fourth, a vehicle for reducing information asymmetries among nations with respect to trade policy. Before going into the details, the paper considers, at a slightly more abstract level, the theoretical cost-benefit set for developing countries arising from involvement in the WTO . The following basic questions are posed and subsequently addressed. Why does it make sense for developing countries to embrace a legally binding set of rights and obligations internationally? Why do countries simply not act autonomously in policy formulation? What are the supposed benefits of international cooperation in trade policy matters? The paper attempts to address and provide some insight to some of these issues and questions raised.
& # 160; & # 160; & # 160; Wilfred J. Ethier takes the view that Low ’s contribution is a thoughtful and comprehensive discussion of the relationships and prospective relationships of developing countries to the WTO . The purpose of his comment is to place this discussion in the context of how the global economy has been changing in recent decades. The comment briefly examines the following three fundamental historical developments that emerged during the Uruguay Round: first, the South and the East undertook fundamental reform and now are trying hard to become part of that multilateral trading system; second, free-trade areas and customs unions were formed; and, third, foreign direct investment ( FDI ) began to accelerate and also began to flow into the South and the East (selectively) in significant amounts. Against this background, Ethier also looks at the question addressed by Low: what do the developing countries want from the WTO ? The author concludes by asserting that in the final analysis the question is not whether the WTO is doing enough for developing countries, but rather what the developing countries are doing for themselves.

Multilateral trading system has evolved as a result of

Increasing trade is key to ending extreme poverty and boosting shared prosperity. The World Bank Group helps its client countries improve their access to developed country markets and enhance their participation in the world economy.
Increasing trade is key to ending extreme poverty and boosting shared prosperity. Evidence shows that countries open to international trade tend to grow faster and provide more opportunities to their populations. The World Bank Group helps its client countries improve their access to developed country markets and enhance their participation in the world economy. On the global stage, the WBG supports an open, rules-based, predictable, international trading system.
The trade policy agenda has evolved significantly since the early 1990s when trade liberalization was the focus of the debate. Now, countries world-wide have relatively low import tariffs, and new challenges have emerged. Non-tariff measures have increased sharply, sometimes because governments hope to protect domestic industries. Restrictiveness to trade in services and limited competition in services markets remains pervasive among developing countries, reducing the scope for integration in services. Finally, the proliferation of regional and bilateral preferential trade agreements complicate the trade policy landscape.
Developing countries also struggle with indirect factors that hinder their access to global markets, such as anti-competitive business practices, regulatory environments that are unfavorable to business growth and investment, or limited infrastructure capacity. Even a country with liberal and transparent trade policy suffers if its markets are not connected, and many of the “bottom billion” live in countries – or regions of countries – that are landlocked, remote, or otherwise ill-served by international trade links. The World Bank Group (WBG) is the main multilateral provider of Aid for Trade, development assistance designed to help developing countries more effectively engage in international trade. Experts within the WBG’s Trade and Competitiveness Global Practice are working around the world to help the institution’s clients overcome the obstacles they face.
The WBG is supportive of an open, rules-based, predictable multilateral trading system, and among its objectives are to help countries participate in and enjoy the benefits of such a system. Key strategies for reaching these goals are supporting trade agreements, emphasizing trade and competitiveness at the core of national development strategies, and promoting trade-related reforms through effective Aid for Trade programs.
The WBG helps governments design and implement policies to maximize their trade competitiveness in both goods and services. The approach encompasses the full set of policies that shape individual firms’ capacities and incentives to import and export. The work aims to help governments reap the gains from openness to trade and regional integration, and also to manage risks of economic changes, such as adjustment costs and external shocks. The main pillars of the World Bank Group’s work in trade are:
· Trade Policy and Integration : Analysis and policy advice to help countries eliminate unneeded non-tariff measures, or NTMs | Modernizing services regulations and trade | Addressing the poverty and labor impacts of trade policies and shocks | Supporting global and regional integration, including free trade agreement negotiations and World Trade Organization accession and participation.
· Trade Performance : Help for governments in designing and implement policies to maximize their trade competitiveness in both goods and services. | Assistance to create a comprehensive policy frameworks that shape individual firms’ capacities and incentives to import and export | Help for governments to reap the gains from openness to trade and to manage both adjustment costs and external shocks.
· Competition Policies : Eliminating anti-competitive market regulations | Strengthening antitrust rules | Promoting pro-competition sector policies | State-owned enterprises.
· Trade Facilitation and Logistics : Strengthening trade corridors, supply chains, and trade logistics | Modernizing border management | Enhancing connectivity between firms, markets, and consumers.
To fund much of this work, the World Bank Group has five main, trade-related trust funds totaling $122 million:
• The Multi-Donor Trust Fund for Trade and Development 2 (MDTF-TD2) is the largest source of donor funds supporting analytical trade work across the WBG. The WBG has received $34.5 million in pledges to the MDTF-TD2 over three years.
• The Trade Facilitation Support Program (TFSP) is multi-donor platform launched in June 2014 that provides developing countries with rapid-response technical assistance to help them align with the World Trade Organization’s December 2013 Trade Facilitation Agreement. To date, 30 countries have sought support from the $30 million trust fund.
• The Trade Facilitation Facility (TFF) supports improvements in customs and other trade facilitation systems that help developing countries reduce trade costs and improve competitiveness. As of March 2015, 76 projects with an allocation of $49.8 million have been approved. Eighty percent benefit African countries.
• The Enhanced Integrated Framework (EIF) trust fund supports WBG work as part of the global EIF partnership’s efforts to help least developed countries tackle constraints to trade. It funds capacity-building in LDCs, diagnostics that identify key trade constraints, and implementation of technical assistance projects. The trust fund has received $4.3 million and is currently providing trade-related support to 15 LDCs.
The Transparency in Trade (TNT) trust fund is an ongoing partnership between the ITC (Geneva), UNCTAD, and the WBG, with active support from the AfDB. Its goal is to collect and make available data on non-tariff measures and services trade policies. Currently, Russia, contributing US$1.5 million, is the only donor to the TNT.
Lending and Technical Assistance :
The Great Lakes Trade Facilitation Project, currently under preparation, is a $140 million, multi-country investment operation that tackles constraints to cross-border trade between the Democratic Republic of the Congo and its five neighbors, Burundi, Rwanda, Tanzania, Uganda, and Zambia. Investments in cross-border infrastructure, policies relating to border operations, and cross-border administration will help lower trade costs, improve trading capability, reduce time to cross borders, and help integrate conflict-affected communities.
Policy Advice and Analysis:
The WBG’s Trade Competitiveness Diagnostic Toolkit facilitates a systematic assessment of a country’s performance and capabilities in export markets. It has been applied in over 25 countries.
Open Trade Data:
In cooperation with other international development partners, the WBG launched the Transparency in Trade Initiative to provide free and easy access to data on country-specific trade policies. This initiative includes the recently revamped World Integrated Trade Solution (WITS) and the Services Trade Restrictions Database.
Trade AT THE WORLD BANK GROUP.
MULTIMÍDIA.
The Role of Trade in Ending Poverty.
AO REDOR DO GRUPO BANCO.
Find out what the Bank Group's branches are doing on Trade.
GALERIA DE FOTOS.
PERMANEÇA CONECTADO.
TCdata360.
TCdata360 is an initiative of the World Bank Group's Trade & Competitiveness Global Practice, which helps countries achieve the Bank .
Política comercial.
Policymakers around the world want to know how they can increase their firms’ chances on the global market, create more jobs through .
Trade Competitiveness.
World Bank Group Experts Help Countries Compete In Global Markets.
Aid for Trade.
Aid for Trade is a multilateral initiative designed to assist developing countries integrate into the world economy.