Next Phase in the WTO System
In the World Trade Organization, governments have been gearing up to tackle the liberalization of agricultural trade and the anti-competitive aspects of domestic regulations bearing on trade and investment in financial, professional, transport and other services. They have also been exploring, in working groups established in 1996, whether to extend the WTO system to investment regulations, competition laws, “transparency” in public procurement and “trade facilitation”.
Threat of "Ethical" Protectionism:
Rapidly integrating markets, however, along with dramatic technological
advances in transport, communications and production methods, are leaving
some people bewildered, even frightened, by what is happening around them.
Importance of Consensus Building: Building support for initiatives in the WTO system, given its large and diverse membership, requires a greater effort by governments to put across economic arguments, to take into account the interests of others and to participate in informal discussions aimed at raising the sights of governments.
Need for Renewed Leadership: The WTO was established at the end of the Uruguay Round negotiations to administer the agreements reached on trade in goods, services and ideas (intellectual property rights) and the understandings reached on the dispute-settlement and policy-review processes.
Negotiators and close observers realized, however, that remaking the world trading system had only just begun. Many issues were papered over, others were put off for another day and, inevitably, new ones were surfacing.
At the fourth WTO Ministerial Conference, held in Doha on 9-14 November 2001, the new round of multilateral trade negotiations was finally launched, but on two tracks:
Cartoon by KAL on the cover of Jimmye Hillman and Robert Rothenberg, Agricultural Trade and Protection in Japan (Aldershot, Brookfield and Sydney: Gower, for the Trade Policy Research Centre, 1988).
Importance of MFN Treatment
In the mid-1980s dispute between the United States and Japan over the latter’s restrictions on beef imports, a bilateral agreement looked as if it would hurt the interests of third countries. Australia and others insisted on their GATT rights and the agreement on opening the Japanese market was extended to all other suppliers on a most-favored-nation basis.
MFN treatment and national treatment are two expressions of the principle of non-discrimination, the cornerstone of the multilateral trading system, which has been increasingly under threat for three or four decades. In the 1960s, the principle began to be undermined by the first wave of regional trade agreements, nearly all of which failed to meet the requirements of GATT Article XXIV for departures from the principle to form customs unions or free trade areas. The principle also began to be undermined by bilateral “voluntary” export restraints (VERs).
Bilateralism was one of the mistakes of the 1930s when it took the form of import quotas, which were substantially dismantled in the 1950s, at least in trade among industrial countries. In the 1970s and 80s, bilateral VERs threatened to overwhelm the GATT system, but they were eventually prohibited in the Uruguay Round negotiations. Today bilateral RTAs, more or less ignoring GATT Article XXIV, are threatening to overwhelm the WTO system and are on the agenda of the Doha Round negotiations.
Stuart Harbinson, Chairman of the WTO General Council in 2001-02, played a crucial part in the launch of the Doha Round negotiations by securing agreement on the negotiating agenda ahead of the WTO ministerial meeting in November 2002. In April 2002, he set out, in an address to the Cordell Hull Institute in Washington, DC, the lessons to be drawn from the success of the preparatory process he conducted.
“The business community has a substantial stake in the multilateral trading system… That is too little understood in business circles and the public at large. But it is not a function of business to provide leadership in the WTO system. That is the function of governments, of their political leaders, their ministers of trade…
“Trade ministers look to the business community for support, as they do to other sections of society that also have a stake in the WTO system’s role in promoting economic growth and development, but the responsibility remains that of political leaders. In fact, political leadership, especially from the majors, is a sine qua non in maintaining, developing and extending the multilateral trading system.
“Even so, the WTO system needs the support of businesses, both individually and through their organizations. In the absence of business leaders speaking up for the rules-based trading system, the WTO is identified with 'corporate greed', rather than corporate responsibility”STUART HARBINSON, “Lessons
from the Launch of the Doha Round Negotiations”, Washington, DC,
18 April 2001