DIRECTOR GENERAL ADJUNTO ALAN WM. WOLFF

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The purpose of this statement is to provide a frame of reference for considering key elements of the called for WTO reform and to suggest some possible responses.  My conclusion is, as always, positive, because the future will be bright, but for this year and those that immediately follow, all depends on actions taken with respect to the crisis of the WTO. 

The expectation exists that the WTO should deliver more, that it can and should be improved.  Indeed, most articles about the WTO during recent years center on calls for “WTO reform”.  In less than a half second on Google, a search of those two words online yields 88,400 results. 

“Reform” is an interesting term.  Like calls for “tax reform” and “prison reform” it suggests that much more is needed than an updating of provisions.  It implies deep change.  It is impossible to catalogue briefly all of the problems a reform-minded Membership might address nor posit a full range of potential solutions here.  So, this consideration is of necessity selective.(1)  It addresses those items that I see as most pressing.  I begin with a question of outlook.  Whether there is reason to believe that the multilateral trading system will endure and prosper.

The story of humankind is one of progress.  We are the beneficiaries of a rich inheritance from a series of philosophers, including David Hume, Adam Smith, and Immanuel Kant, each of whom saw human progress as ineluctably continuing, even if fragile and accompanied by occasional setbacks.  Hugo Grotius and David Ricardo divined for those who followed a natural law of the benefits of international commercial exchange.  These forebears are as important to the current well-being of the world's peoples as Euclid is for the physical world of structures.  They provided the theoretical context for bringing increasing order into a world characterized by chaos for much of the first half of the 20th century.  The institutions that were created to recover from that conflagration are part of a continuing evolution toward greater international co-operation for the common good.  The multilateral trading system, embodied in the WTO, is an essential part of this story.

A brief WTO history

By happenstance, it recently became easier to reflect upon the history of the WTO. Were you able to come here now and walk around the WTO building’s atrium, you would see an exhibition of pictures from the 25-year history of the organization.  Most striking to me were the photos from the late 1990s.  That era was clearly a time of great expectations for multilateralism.  It was a time when it was clear to all that multilateral solutions were infinitely superior to lesser alternatives.  For the 50th anniversary of the GATT in 1998, an array of notables including Bill and Hillary Clinton, Nelson Mandela, Fidel Castro and Tony Blair came to pay tribute to the trading system.  During the same period, the President of the World Bank regularly attended WTO Ministerial Meetings.  Later pictures, of biennial ministerial meetings mark all too often occasions of disappointment.  In part, these apparent misadventures may have been the result of unjustifiable expectations.  Ministerial meetings were occasions that were expected to yield concrete results.  That is not the cadence of the world of the WTO.  Children are generally born after a fixed period of gestation.  The timeframe for conclusion of trade agreements refuses to be as regimented. 

Prior to the founding of the WTO, throughout the years following the end of the Second World War, there were eight major rounds of trade negotiations under the auspices of the GATT.  These negotiations bound the economies of the nations of the world ever closer together. The culmination was the 8th round, the Uruguay Round, concluded in 1993, which created the WTO two years later.  As it turned out, anticipated or not, there was never to be another great and successful all-players, all-subjects, round.  The 2001-launched Doha Development Agenda negotiation failed to conclude, although elements of it have been picked up and carried forward.  The WTO nevertheless has had a number of significant accomplishments during its short quarter-century of existence — an early agreement to provide duty-free treatment for pharmaceuticals, the Information Technology Agreement and its expansion, a ban on the granting of agricultural export subsidies, the Trade Facilitation Agreement, and reference papers for Basic Telecom and Financial Services in 1996 and 1997.  The accessions of China and Russia, respectively in 2001 and 2012, along with 34 other countries during the first twenty years of the WTO's quarter-century history, were welcomed as marking the movement toward universality of this rules-based multilateral trading system. 

The positive trade news during 2020 was not about the multilateral trading system.  It was about Brexit, in the spotlight for its drama of the attempts made to avoid ending up with no deal.  The news talked of RCEP, a long-sought Asian trading arrangement mostly about tariff elimination, and that the African Continental Free Trade Agreement was due to be implemented.  Mid-year, the USMCA, successor agreement to NAFTA, became effective.  Governments proclaimed the success of these sub-multilateral agreements.  Commentators were increasingly reaching the conclusion that the WTO had become irrelevant.  Often left unstated was what may seem a technical point: these regional agreements are built on the foundation of the WTO’s rules and could not function without them. 

The centrality of the WTO

It is useful to keep sub-multilateral agreements in perspective.  Most of them — with the very significant exception of the Brexit deal’s level playing field/competitive neutrality provisions — do not pioneer the creation of new kinds of trading rules.  The heavy lifting of invention is most often left to the WTO.  It is seen in the efforts to curb fisheries subsidies, in the joint initiatives on e-commerce, domestic regulation of services, in the efforts to improve the participation of micro, small and medium enterprises in trade, in an agreement being sought for the facilitation of international investment, and for considering how best to foster the empowerment of women through trade.  These Geneva-based efforts were not, however, newsworthy for the simple reason that they did not reach a conclusion in 2020. 

Unremarked but remarkable is the endurance of the WTO acquis as the foundation of  world trade.  By far most of world trade — conservatively estimated at 75-80% takes place at WTO-agreed rates (or below) and 98% of world trade is governed by its rules(2).  The costs of moving trade across borders are gradually but continually being lowered pursuant to the WTO’s Trade Facilitation Agreement.  During the pandemic, trade proved indispensable as a remedy, as it usually does when calamities such as natural disasters strike anywhere.  The reliability of the global trading system during the pandemic was supported by a stream of data and information notes issued by the WTO Secretariat that allowed governments to make better-informed decisions, in the main refraining from restricting exports and instead facilitating imports to fight the pandemic. 

The civilizing (conflict-preventing) mission of the WTO continues. Where those rules are effective, compliance with them in general is to be expected.  A very sizeable exception consists of some of the high-profile actions taken by the United States and China with respect to each other’s trade.  However, Members usually seek to justify their trade measures under the WTO rules, even if the justifications are occasionally seen as being thin.(3)  The excursions outside the rules do not diminish the fact that in general black letter rules of the WTO are lived up to, not primarily through threat of litigation but because nations generally live up to their commitments.  While this general proposition is under siege by apparent nonconforming conduct, the floodgates have not opened, and there is reason to believe that they will hold, although continued apparent noncompliance especially by the larger players pose risks of a more widespread decline in voluntary adherence to the system's requirements.  Evidence that we are not at the negative end of the history of global economic co-operation is that resort to panel procedures to resolve disputes is still common.   An example is the choreography of the Airbus-Boeing-related trade measures, imperfect perhaps but notionally within the rules.

The trading system not only endured during this horrific pandemic; it played a vital role in supplying the world’s needs for essential medical supplies. This steadfastness in a time of great stress is not the public image of the World Trade Organization.  2020 was a year in which the head of the organization left prematurely for a job in the private sector and a successor could not be immediately named.  It was a year during which it became evident that there would be no agreed cure to the loss of the appellate level of the WTO’s dispute settlement system, with half a dozen results from panels now placed into limbo by parties through a procedural trick known as “appealing into the void” (that is, appealing to an Appellate Body that no longer exists other than on paper).  It did not help that during this year the pandemic claimed the organization’s Ministerial Conference as well as its well-regarded Public Forum. 

What is wrong with the WTO?

Any analysis of what is wrong with the WTO should start with a clearer understanding of what the WTO is and what it is not.  It is basically an assembly of the Members supported by a secretariat.  It is not a supra-national body.  Understandably the press often uses shorthand stating what the “WTO” did or did not do.  When it is reported that “the WTO finds a trade measure as being inconsistent with WTO rules”, it is the judgment of a dispute settlement panel ratified (however automatically) by the Members.  When “the WTO fails to reach a negotiated outcome”, it is its Members who could not agree.  The institution did nothing but provide a platform with staff support in either case. 

The WTO’s existence as an independent entity is very limited.  It can, for example, employ staff, and it can sue and be sued — say for a violation of a contract for goods or services procured for the use of its Members or employees.  But as opposed to a corporation, it is given no right to speak, to espouse public policies.  Walmart, Apple or Carrefour, for example, can support green public policies.  While the WTO acts to make its premises more environmentally friendly, it makes no proposals to improve the global environment.  Its Members can and likely collectively will do so.

The WTO as an institution cannot add to or subtract from the rules its Members created and it cannot choose whether or not to enforce them(4).  It is a place where Members can collectively do all these things.  The WTO has no executive arm in the sense that a corporation or a government has.  For the creation of new rules, for their interpretation and for their enforcement, the WTO is simply a location with a supporting staff.  A crisis of inaction, when one exists, exists collectively in its Members.  When the G20 leaders seek change in the WTO, they are, without acknowledging that fact, solely addressing appeals to themselves, or perhaps to all 164 WTO Members.  The WTO is a place where they can accomplish all that is needed or choose not to do so.  In fact, whatever the five or six of the largest Members agreed to would have a very good chance of being agreed to by all Members.

The call for WTO reform

The Leaders of the 20 largest economies in the world, as well as their trade ministers, have collectively given no indication of what direction to take in pursuing WTO reform.  It is easy to suppose that for most G20 members, the trigger for the call for reform was their witnessing binding dispute settlement being dismantled by one large, disgruntled Member — a Member which happens to also be a chief founder and historic guarantor not only of the WTO but also of the multilateral trading system under the GATT’s rules established over 70 years ago.  WTO dispute settlement is not, however, the only candidate for change. The inquiry cannot stop there.  Other causes for concern exist. 

Take one recent example: Less than a month ago, a General Council meeting took place which lasted over 15 hours (over two and a half days), a recent record for length.  It had only one substantive trade policy item on its agenda for decision, the consideration of which produced no agreement.  The issue was whether Members would agree to forego a modicum of the policy space they now have by agreeing not to impair procurements by the Nobel-Prize-winning World Food Program.  A witness to the proceeding could be forgiven for perceiving drift of the organization in its not living up to its potential.  Viewed through a different lens, this was no more than sovereigns reaffirming that they could not be bound without their consent. 

The potential tyranny of the veto

In the name of multilateralism, the WTO has since its inception operated on the basis of consensus.  To be clear, this is not a requirement of unanimity. No 100% consensus currently exists on anything other than wrapping up a twenty-year process of trying to discipline fisheries subsidies (and in that case, the consensus still needs to be formed as to how far in the end to do so).  “Consensus” in practice has been taken to require that no Member objects to a particular proposed action.  The problem arises if the threshold for invoking this right is too low.  When considering travel on a train, if there is the perception that every passenger, or too many of them, may reach for the emergency brake, the prospects for forward motion can be very dim.

It is argued that this method of operation is not really the problem, that the problem lies deeper, in fundamental policy differences among Members.  It is true that there are some divisions, among the Members, in some instances along North-South or East-West lines.  In a global organization of 164 Members, certainly there will be differences, some of them fundamental.  The most commonly cited division consists of the effects of a presumed Thucydides Trap — the notion that a conflict between a rising power and the incumbent is presumptively highly likely.(5)  To date, however, geopolitical rivalry has not been central to the problems of the organization.  The WTO is not immune from difficulties in external bilateral relations, but it has not been dominated by them.  In terms of external pressures, the WTO has been more affected by the shift of manufacturing to lower cost locations, advances in technology that cause turmoil in labor markets, and the consequent rise of populism.

Income inequality has become a growing concern in many parts of the world, both within and among countries.  This economic and political fact, with its accompanying shift in public opinion has resulted in the absence during recent years of any Member calling for major new negotiations to lower tariffs by sector or more generally — this, in a system built in part on continuing trade liberalization.  The same resistance should not be encountered to the negotiation of new rules.  Members should not be inhibited from providing fairness even when faced with populist pressures.  But here too there is reluctance.

In analyzing why progress is so difficult, an examination of how the organization operates is needed.  Internal procedures, matter.  There should be no individual Member's right, for example, to prevent other Members from beginning a conversation for change, whatever the topic.  That bridge was crossed with the formation at Buenos Aires in December 2017 of the Joint Statement Initiatives (JSIs).  Since that Ministerial Meeting, the indivisible convoy system has begun to give way to coalitions of the willing acting through the JSIs.  How these will fit into the multilateral trading system, the WTO acquis, is yet to be determined.  There appear to be ways of doing so.

It is well understood that matters of fundamental national interest are protectable by the right of exercising a veto. But what about a myriad of lesser matters?  Safety devices, like fire alarms and emergency brakes, are best enclosed within a plastic or thin glass cover, to make their use less likely to be invoked outside of necessity.  Likewise, the operation of an institution where every member has a veto requires self-restraint in its use.  The expectation that a large Member would readily oppose a widely-supported action, does more than preventing a negotiated outcome, it inhibits the taking of initiative by both other Members and the Secretariat staff.  This must be overcome.  Members must be proactive, braving opposition, for example with respect to establishing trade rules that address the pandemic now, and later on other obvious challenges, such as climate change. 

The cure can lie in a clearer understanding of the appropriate boundaries of when consent on any matter will be withheld.  Although the subject will be very contentious, a discussion should begin of appropriate limits for claiming exceptions, such as for national security or for short supply.  A rule of reason can be spelled out, with wide and deep deference to national judgments.

“Free trade” agreements

Some of the problems of the WTO (and GATT) were baked in from the beginning.  The cornerstone of the WTO, and the GATT before it, was the principle of MFN, nondiscrimination.  The principal exception was to be for regional and bilateral trade agreements.  The governor on the engine of these preferential trading arrangements was to be that they cover substantially all trade between and among participants to any given agreement.  That requirement did not in reality much confine resort to this exception. 

The founders of the multilateral trading system could not have contemplated the proliferation of bilateral FTAs.  A case can be made that the emphasis on bilaterals and regional agreements drained the multilateral trading system of energy, as governments devoted much of their resources to these alternative trading arrangements.  On the other hand, it is also true that some of the agreements are innovative and contain precedents useful for fueling multilateral negotiations.  At an early stage, the WTO e-commerce talks examined relevant clauses from prior bilateral and regional agreements to find examples of rules that might be adopted multilaterally.  TPP contained a number of innovations. However, while few bilateral agreements have contained sufficient innovations worthy of emulation, they all contain specific trade benefits limited to the participants (what Alan Beattie at the FT based in Brussels has called “standard-issue competitive mercantilism”). 

One can differentiate different kinds of sub-multilateral agreements.  There is a strong economic case to be made for regional integration — in Europe, North America, Asia and now Africa, but less of a case can be made for agreements not dictated by geography but by national commercial objectives often at the expense of nonsignatories. 

Bilateral agreements that are not driven by regional integration may turn out to be stumbling blocks rather than building blocks for the world trading system.  Preferential access builds up a constituency for preferential treatment.  Rather than these agreements spiraling upward toward multilateral outcomes, they can create a perverse incentive to refrain from further liberalization. The very term “free trade agreement” is somewhat misleading.

Approval of any preferential trade agreement should be judged on whether the world is better for it having been concluded, not simply that the parties are pleased with it. The size and duration for the use of this exception to the requirement of nondiscrimination needs to be revisited. 

The inability to legislate

Trade negotiators are judged almost solely by whether they conclude agreements.  The applause for walking away from a less than perfect deal is evanescent.  It is even worse for an organization created substantially for facilitating negotiations. 

The impediments to success judged by the standard of producing new agreements are easily listed.   One hurdle is that Members have differing priorities.  That fact of life can be overcome by leadership, as long as the Members share common purposes.  The trading system was created originally through the efforts of a largely benevolent hegemon, aided by allies in the cause, and from time to time joined by a skilled and proactive WTO Director-General. 

The cure for the current deficiency of leadership is leadership, with Members forming new alliances, which may change from issue to issue, to work for the greater good.  An important element is to have on board a new Director-General who can join with proactive Members in providing that leadership. 

A second impediment is that there are still vestiges of a convoy approach as a means, all too often ineffective, for seeking negotiated outcomes.  The convoy has gotten too big, the capabilities and interests too diverse, to consider that all will be able to simultaneously move at the same speed to embrace new rules.  A continuing belief that matters should be joined in by all from the outset blunts the drive to propose and pursue initiatives.  The Joint Statement Initiatives (JSIs), open to all, and transparent, are not a second-best alternative in a pragmatic world, they provide a way forward.

A third impediment is the chilling effect of the potential single Member veto, discussed above.  A rule of reason needs to be applied to the exercise of the veto power.

A fourth impediment is the scarcity, outside of the fisheries subsidies negotiations and the JSIs, of sufficiently active engagement, of deliberation among Members.  Deliberation is essential of a democratic legislative body.  The convening power and moral force of a proactive Director-General can restore a dialogue that can yield the expansion of common ground.

The problem of WTO dispute settlement

The pride of the WTO was widely seen to be its binding dispute settlement system. On the whole, with its serious (and as it happened, fatal) flaws in the eyes of at least one Member, later joined by others, it did some very good service.  The panel and appellate processes were quasi-judicial, not judicial, in that the final word on any matter was specifically reserved for decision by the Members meeting in the WTO's Dispute Settlement Body and was not given to the Appellate Body or panels. 

Decisions of the Dispute Settlement Body are taken by negative consensus.  That is, all, including the prevailing party, must agree to reject a dispute settlement decision, otherwise it is considered to be adopted.  This gives automaticity for adoption of panel reports, the effect sought.   Otherwise, panel results would not be binding.  A problem is that since the legislative function became substantially nonoperational, there was no counterbalance, no check on what was intended to be only a quasi-judicial process.   The reservation by the Members of the authority to make final determinations was in form only, given that the Members meeting as the Dispute Settlement Body could in fact only approve and never reject or modify the quasi-judicial outcomes.  As noted, a corrective could have been through exercise of the legislative power of the Members, but in 25 years they have not negotiated any agreement that overturned a quasi-judicial ruling. 

The ability to stop any rulemaking initiative through exercising a veto and the use of negative consensus, resulted in a condition of paralysis when a key Member decided to use the general consensus requirement (the need for no objection to Appellate Body Members being appointed) to obliterate the latter — (the binding nature of dispute settlement through the use of negative consensus) there being no final appellate review. 

The solution to the problem of WTO dispute settlement lies in the panel and appellate processes being accountable to the Members collectively.  No suggested cures have been tabled that have gained approval of all key litigating parties.  This does not mean that binding two-stage independent dispute settlement can never be attained.  The problem could likely be solved by a Director-General bringing interested parties together.  

Finding common ground — S & D and inequality

Internal structural defects are magnified by a growing question of whether the Members in fact share fundamental purposes.  Clearly, for some issues they do not.  A few examples stand out.

Members are divided over the existence of a blanket right to special and differential (S&D) treatment.  The practical effect of this difference in position is the subject of debate within the WTO.   Few Members would state that regardless of their capacity, they expect a comprehensive pass to undertake a lesser level of obligations in any future negotiation.  (An exception where there appears to be no difference in view — there is no objection to agreeing to accord special treatment in advance to least-developed countries.)   

Inequality rankles.   Too many Members are aggrieved over the freezing of relationships over decades.  Article XII Members (those who joined the WTO after 1994 and therefore later than its original Members) progressively paid more on entry than original Members as accession is the result of a negotiation and interests have evolved.  Industrialized countries express dismay that industrializing countries do not take on a greater level of obligations over time (through binding their applied tariffs, for example).  An additional item of apparent difference was revealed in the recent 23 November 2020 G20 Leaders Meeting as part of the discussion of the Riyadh Initiative on the Future of the WTO.  It concerns whether adhering to “market-oriented policies” is a principle of the WTO.  What this term means is that in general the outcomes of commercial transactions should be based on market forces, that price, quality, delivery, and not government fiat, matter. 

Since all Members profess that the multilateral trading system is crucial to their well-being, ways must be found to bridge these differences.  Deliberation facilitated by the Director-General would be a reasonable beginning.

Structural issues

One subject that generally is not addressed among Members is whether the governance of the organization impedes its functioning more effectively. 

What are the internal governance structures?  How should the Members organize themselves?  Other international organizations, albeit with different missions, have Boards of Governors and Executive Directors.  Democratic nations have chosen representative forms of governance.  The WTO has none of these structures.  It relies on ambassadors to chair committees often only for one year.  Continuity relies on briefings from permanent representatives who are leaving and from secretaries of Committees supplied by the Secretariat.  In any negotiation, knowledge and trust takes some effort to maintain in a body characterized by the impermanence of its members. A review of the governance structures of the WTO should be undertaken.

A surprising deficiency for those familiar with other institutions is the absence of a chief legal officer for the agreements.  The WTO should have a general counsel with a broader mandate, to advise Members particularly on matters of procedure. 

Missing also is a policy planning function, a characteristic of military and sometimes civilian departments and ministries in the governments of most if not all of the largest countries.  There is at the WTO the very beginning of a launch of a strategic foresight activity to identify future challenges.  In his exit speech from serving his three-year term as WTO Director-General, Mike Moore, a very dear man, said

Asked what qualities were required of a politician — and I might add a Director-General — Winston Churchill replied:  “The ability to foretell what is going to happen tomorrow, next week, next month and next year.  And to have the ability afterwards to explain why it didn't happen.” 

It would be better to try to be prepared and fail, than not to have tried at all.

Preparing for the most obvious needs should be a combined Member-Secretariat function.  Examples do not require all that much foresight:  When major Members and heads of international institutions are calling for a carbon tax which could have deep and far-reaching effects on trade,  an internal study should be undertaken immediately as well as having serious Member discussions on that subject.  Living through a pandemic and not improving the ways to adjust the trading system to meet its challenges would be unforgivable.  

An early topic for consideration should be the role of the Director-General and WTO Committee chairs.  An organization where some Members have their foot poised ready to apply the brake, and where pressing the accelerator requires coordination among (or no objection from) 164 members, it is hard for any issue to achieve cruising velocity.  There have to be animators.  In the case of the Joint Statement Initiative on e-commerce for example, three Members stepped forward and began a process in which a majority of the Members joined representing a high percentage of world trade.  Committee chairs have to be impartial as to differing views in discussions over which they preside but must not be impartial as to whether there is a positive outcome.  Similarly, the WTO DG must involve herself in actively facilitating the beginning of negotiations, of finding solutions and bringing about results.  In an organization which has been charged with negotiating, the Director-General and Committee Chairs must constantly actively work to get negotiations started, for moving them along, and to the extent possible seeing that there are results to which all or most can agree. 

The Director-General has important convening powers to foster engagement and negotiation.  To this should be added the ability to make proposals.  The Managing Director of the IMF and the ECB each have decided that there should be more focus on promoting environmentally relevant policies.  They cannot make policy for their institutions, but they can bring ideas to the Members to stimulate action.

There would not be a WTO at all but for the efforts of a courageous GATT Director-General, Arthur Dunkel.  I can assure you that there were great fractures within that organization during his time. He had to overcome them, and it came at a cost.  There is a famous and here apt quote from U.S. President Theodore Roosevelt that “The credit belongs to the [man or woman] who is actually in the arena … who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends [herself/himself] in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if [she/he] fails, at least fails while daring greatly, so that [her/his] place shall never be with those cold and timid souls who neither know victory nor defeat.”

Chairs need to be chosen for their interest in the subject, their capabilities, and given enough time in place to do the job expected of them.  Secretariat staff should be graded on helping to illuminate the path forward, and to carry as much of the burden as is possible.  Ambassadors will always, when serving as chairs, also have to manage other responsibilities, for their own staffs at their Missions, for all other subjects at the WTO, and often for all other international organizations and sometimes for relations with Bern and other European capitals.  Everything must be done to assure that Members have the scope and the support they need from the Secretariat, which must be proactive and given adequate resources to make sure the job gets done. 

The external environment

None should accept the proposition that because there are major stresses in international relations, the WTO must succumb to paralysis.  No problem among nations as reflected in the WTO is unsolvable.  During the Cold War, Russia and the U.S. found areas of mutual interest.  This is equally true of rivals and competitors today.  The WTO cannot wholly escape reflecting disharmony on the global stage, but that is not an excuse for sinking into a state of lassitude. 

Many commentators see in the present a “crisis of the liberal international order”, and worse, the end of neoliberalism, subject to forces pushing toward literal global dis-integration.  In too many lands there is a Weimar-like whiff of instability about democratic institutions.  UN Secretary-General António Guterres warned over a year ago of what he called the Great Fracture due to “surging geopolitical tensions, the climate crisis, dangerous technology and deepening mistrust.”  The Secretary General’s pronouncement was made before the pandemic, which to be sure has added its own stresses, and before the events of January 6th 2021 in Washington.  

In all the low points, in this pandemic, in domestic problems and international competitions, there are also reasons for optimism.  Nations ultimately (actually rather quickly) came together to help each other meet the challenge of the pandemic.  Trade played its part.  The systems proved their resilience. 

WTO Members and their Secretariat will have to deal with a number of external problems because there is no choice.  Do differing economic systems affect the bargained for conditions for trade?  Is the WTO of the future to be about convergence more than coexistence?  How will Members dealwith problems that have a significant impact on trade?  How will the benefits and risks of IT technologies as they affect trade ultimately be confronted in the e-commerce negotiations?  Can the rules of the WTO do more to deal with income inequality?  There is no shortage of challenges, but all have within them opportunities.

Conclusion

All of these forces, internal and external, and the responses made, will ultimately shape the future of the global trading system.  The status quo is unsustainable to meet the full range of challenges.   Drift is not an acceptable option.  The global trading system that we have is imperfect, but it is very good, and it is better than any known alternative.  It needs to be improved and it certainly can be.  What we thought could be taken for granted can no longer be assumed to continue in perpetuity.  Corrective actions need to be taken.  I believe that they will be.

Notes:

  1. Whether only the largest Members of the WTO feel greater freedom to depart from or skirt WTO rules and norms, or just that they receive more attention from the press and commentaria would require study.  back to text
  2. Since joining the WTO Secretariat, formally on October 1, 2017, I have given some 30 speeches addressing WTO reform.   They are all available by searching my name at WTO.org.  There is no attempt here to provide a comprehensive catalogue of suggestions for changes that Members and the WTO Secretariat should consider.  Members are increasingly engaging in activities potentially leading to reform, in the Ottawa group, in a Trilateral configuration (U.S., Japan, EU), and others.  This process is likely to continue to grow.  Whether it will become more regularized, brought into a working party format, for example, could be considered.  Some would argue that the chances of change would be made more difficult if various proposals were linked in any way rather than pursued individually.  The counter argument of trade negotiators is that there must be enough on the table to construct a deal for formal adoption of changes.  These two approaches are not entirely mutually exclusive. back to text
  3. This is not to say that there is 100% compliance.  No system of laws can make that boast. back to text
  4. The Secretariat could however bring to the attention of Members areas of likely noncompliance. back to text
  5. https://en.wikipedia.org/wiki/Thucydides_Trap. back to text

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