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On 1 January 2008, the multilateral trading system will celebrate its 60th
anniversary. This year's World Trade Report celebrates this landmark anniversary
with an in-depth look at the GATT and its successor the World Trade Organization
— their origins, achievements, the challenges they have faced, and what the
future holds. The story is one of remarkable change and adaptation, of a system
that has contributed significantly to post-war prosperity, but which has not
delivered all it could and which still faces formidable challenges.
“The global trading system has been a source of prosperity, stability and
predictability for six decades. It has underpinned an unprecedented period of
economic growth and has provided an environment in which many countries have
been able to raise development levels and reduce poverty,” said Director-General
Pascal Lamy. “But the GATT and the WTO have not done all they could,
particularly for developing countries. “In the coming months we have the chance
to deliver more for our member governments and the citizens they represent. By
striking an ambitious and development-oriented agreement in the Doha round we
can greatly strengthen a system which has done much to make the world a better
place.”
The report looks at the circumstances in which the GATT was born and goes on to
explain why governments believe it is in their interests to cooperate on trade
matters. This is followed by a discussion of how the GATT/WTO as an institution
can foster greater international cooperation. Finally, the Report reviews what
the multilateral trading system has achieved in six decades and what remains to
be done.
The authors describe how the first half of the twentieth century does not stand
as a monument to international cooperation. The inter-war years were marked by
far-reaching government failure, limited international cooperation, and economic
hardship in many countries. Trade policy was erratic, punctuated by bouts of
protectionism, discrimination and policy tension. It was against this backdrop
that the architects of the post-war system of economic cooperation set about
designing arrangements that would guarantee greater stability and
predictability.
The report makes clear the multilateral trading system is confronted by
considerable challenges, both short-term and longer-term. An immediate task is
to find closure to the current negotiations in a manner that will offer real
benefits to all parties and prepare the WTO to play its rightful role in
international trade governance. As the balance of economic power and the focus
of international interests shift, the Report's authors ask whether governments
see viable alternatives to the inclusiveness implicit in today's multilateral
trading system. The future of the WTO depends entirely on how far governments
value such an institution.
In looking at why governments choose to cooperate, the Report includes
perspectives by economists, political economists, international relations
theorists and lawyers. The array of different and sometimes complementary
explanations for cooperation provided by this literature is rich. Economists,
for example, emphasize the additional economic gains that flow from reciprocal
trade liberalization. Political economists think about how electoral politics
can help to shape decisions about cooperation and how international commitments
can influence the relative strength of competing interests within the domestic
economy. International relations theorists seek to explain cooperation in terms
of managing power relationships, distributional conflict and shared ideas and
beliefs. Legal theorists emphasize the role of “constitutions” such as
international trade agreements in defending public interests and constraining
government action. The discussion of this literature makes clear that the
motivations for cooperating in trade matters are diverse and far from fully
understood.
Among the contributions an institution like the WTO offers are to reduce
uncertainty, facilitate negotiations, disseminate information, reduce
transactions costs in various ways, help to settle disputes, administer
agreements, monitor policies and act as an agent for surveillance. The WTO's
record in these domains is discussed in the Report.
The report points out that world trade has grown twenty-seven fold in volume
terms since 1950, three times faster than world output growth. The GATT/WTO has
helped to deliver a considerable amount of trade liberalization, but progress
has been uneven and success limited in some areas. Agricultural trade
liberalization has proven particularly challenging and the results have been
limited so far. Similarly trade in labour-intensive manufactures still faces
relatively higher trade barriers in major markets. Other avenues — unilateral
and regional — have also played an important part in reducing tariffs and other
barriers to trade.
The last six decades have also witnessed remarkable developments in the GATT/WTO
dispute settlement system, say the authors. Utilization of the dispute
settlement mechanism has grown significantly since the establishment of the WTO,
not least due to increased activity on the part of developing countries. During
the Uruguay Round, dispute settlement procedures were strengthened in an
unprecedented manner, notably with the introduction of the quasi-automatic
adoption of reports and the establishment of the Appellate Body as a standing
organ for legal review. Enforcement procedures have also been streamlined and
isolated from possible blockage by the defendant. Most cases are settled
successfully, predominantly in favour of the complaining party. In a majority of
cases, compliance is forthcoming. However, a number of high-profile cases have
been characterized by implementation problems and protracted proceedings. In a
few instances, retaliatory measures were ultimately imposed. Additional
improvements to the WTO's dispute settlement mechanism could possibly be made
further strengthening its capacity to resolve disputes in a more timely and
effective manner. The ability of smaller and poorer countries to bring cases
could also be strengthened further.
Despite explicit voting provisions in the GATT, decision-making has
generally been characterized by consensus. This practice has been carried over
into the WTO, but the issue of participation in decision-making has come to the
fore. In designing appropriate decision-making processes, the principal
challenge will always be to find the right balance between efficiency and
inclusiveness. Coalitions have become more important in WTO decision-making
processes, as well as in the formulation of substantive negotiating positions.
Most issues on the WTO agenda do not break along the sort of North-South fault
line which in the past pre-empted the flexibility that characterizes
coalition-building in the WTO today. The Doha Round negotiations have added a
new dimension and a certain fluidity to the creation and destruction of
coalitions and groups within the WTO.
Many of the future challenges facing the WTO system are embedded in the
issues discussed above, ranging from the short-term imperative to complete the
Doha Round to systemic issues that have been part of GATT/WTO deliberations for
many decades. But the trading system has to look ahead too, and new issues will
emerge. Such issues are likely to include the relationship between environmental
challenges such as global warming and trade, and trade and energy. There are
likely to be pressures on the system to build on work that has already started,
such as how to deepen and strengthen the multilateral rules on trade in
services.
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This report may be purchased from the WTO Bookshop or through the
WTO online bookshop.
Download the report in pdf format:
> Complete report
> DG Foreword
> Executive summary and
related material
I- Recent Trade Developments and selected trends in trade
>
A. Recent trends in International trade
>
B.
Selected
trade developments and issues
II- Six decades of multilateral
trade cooperation: What have we learnt?
>
A. Introduction
>
B. The economics
and political economy of
International trade cooperation
>
C. The design of
international trade agreements
>
D. Sixty years of
the multilateral trading system: Achievements and challenges
>
E. Conclusion:
present and future challenges
> Bibliography
>
Technical notes
> Tables
and charts in Excel format
Download this file and use Winzip's “Extract” feature to display tables
and charts from each chapter in a separate folder
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