Does the WTO have a future?

Gateway House (GH): How can the World Trade Organization (WTO) be reformed and what role can India and Canada play in that effort?

Don Stephenson (DS): The question assumes that there is a future for the WTO and I’m not 100% convinced that we can take that for granted. We have been taking the WTO for granted for some time. The multilateral rules-based system for trade has been under some pressure for some time. Looking at some of the evidence coming out of the World Trade Alert, there is an increase globally that is distorted by subsidies or increases in tariffs. So, we have to decide whether this is just a rough patch or the new normal.

The WTO has three basic functions. The first function is transparency, which is undervalued and unevenly practised, but a core capacity of the WTO.

The second is negotiation: in recent years, some of the members have come to believe that it is no longer possible to negotiate high-quality agreements in such a large organisation with such a disparate set of interests among the members. They have therefore turned to regional and plurilateral arrangements as an alternative.

The third function is what used to be referred to as the jewel in the crown in the WTO: it was the binding Dispute Settlement. The Appellate Body will no longer function in a few weeks and it is unclear what the future of that function is. The principal concerns that have been raised by members with respect to Dispute Settlement are as follows:

1) that the rules don’t sufficiently discipline some economies, particularly those where the state plays a large role;

2) that the panels, the pelvic body, have become ‘judicial activism’. They have strayed beyond the intent of the members with respect to the disciplines, in effect, creating new disciplines and that they have taken an independence from the members, which wasn’t, perhaps, intended.

3) At the same time, because of the difficulty to deliver new agreements, there has been a waning interest within the business community and some of the members have turned to other fora to advance their interests.

4) Perhaps another concern is that because the negotiations function has been weak in recent years, the organisation hasn’t addressed the modern issues in the economy sufficiently.

So, what India and Canada can do to reform the WTO – I think we should all show some more urgency in responding. We should take action – almost any sort of action – to have renewed activity in all fora of the WTO. We should try very hard to see if we can come to a consensus on new issues. Fisheries and domestic regulations are two where we could show some progress and strengthen the credibility of the organisation in the near term. I think that if these could be consensus proposals, made by groups of countries, these could be stronger, but even unilateral proposals and engagement on the issues in all fora of the WTO will be very welcome.

GH: How can we develop a global framework for Trade in Services and how can India and Canada be instrumental in this?

DS: I thought we had a framework for global Trade in Services – the General Agreement on Trade in Services (GATS). Clearly, it was a first attempt at a framework, the Uruguay Round, and much was left to be done in the future; that’s why we had a built-in agenda and agreed to come back to services five years later. That was many years ago.

So, we came back to services in the Doha Round. Regrettably, there wasn’t consensus, either in services or in the Round. Therefore, some have turned to plurilateral discussions to try to advance the framework for Trade in Services. I refer, in particular, to the Trade in Services Agreement (TISA), where a group of countries have tried to go further. But this doesn’t enjoy the engagement or participation of all the members, and we could clearly look for more.

There are other fora in which we can advance and strengthen that framework over time. There are discussions in the Organisation for Economic Cooperation and Development (OECD), the G20 and elsewhere. They don’t enjoy the full engagement of key WTO members either. As a prescription, we all need to be engaged as fulsomely as we can.

Another idea that has resurfaced is to return to the approach where we look at clusters. We can look at a particular industry, at all the issues that affect trade in that industry and the existing agreements – goods, services, intellectual property and other investments – to try to address all the questions that a particular industry has. That’s an approach that India did propose at one point in the discussions for a Comprehensive Trade Agreement. It’s an approach that the United States and others proposed in Geneva, in the Doha Round. It is perhaps a way to arrive at our interests from a different angle. Without trying to balance all the interests of all the industries, we might be able to focus on those of particular interest to us and move forward in that way.

So, it is the same prescription for what Canada and India can do: be heavily engaged in all these fora to try to advance the discussions.

Don Stephenson is the Former Chief Trade Negotiator, India-Canada Comprehensive Economic Partnership Agreement.

This interview was exclusively conducted for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

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