WTO needs to go back to core principles

Comment: Ten years after the birth of the World Trade Organisation (WTO), the institution has much to be proud of, writes Peter Sutherland.

It was the first multilateral institution designed for the new global economy. It has faced public criticism and suspicion but has managed to perform well.

China's accession is especially worthy of note as is the consistently impressive record of the dispute settlement system. Enormous attention and effort have been directed at the particular trade problems of the poorest countries. From most points of view, the world is better off for the existence of the WTO.

Yet any organisation must examine itself and the way it works from time to time. Eighteen months ago, I was asked to chair a consultative board to think about the institutional challenges with which the WTO must cope in the coming decades. We were not asked to intervene in the substance of the Doha trade round, and the board is as one in insisting that absolute priority be given to securing a worthwhile result in that initiative.

At the same time, the Doha round has illustrated some of the difficulties the WTO faces in fulfilling its long-term mandate. Launching the round, meeting deadlines, making substantive progress in sensitive dossiers - all these areas have led to deep frustration. At their meetings in Seattle and Cancun, trade ministers faced confusion, confrontation and failure.

The report of the consultative board*, released yesterday, follows two tracks. The first concerns multilateralism and the essential role of the WTO. We believe strongly that political leaders and the WTO must go back to the basic arguments in favour of open trade and a rule-based trading system. These have been lost or corrupted by often well-intentioned but misinformed reaction to the largely beneficial processes of globalisation.

Among the best-intentioned arguments in trade policy are those that relate to development. There is absolutely no doubt that poor countries need help if they are to assimilate successfully into the global economy. These countries need desperately to trade and they need to attract investment to do so.

The WTO can help but it can offer no guarantees, it can provide only opportunities. However much market access is offered and however many special conditions are attached to WTO rules to cushion developing members, it will always be up to governments and businesses to grasp those opportunities.

We have also sought to rectify some of the confused thinking about sovereignty and the role of international organisations such as the WTO, where governments cede some policy space for the greater good, including the more effective management of the global economy.

But our biggest concern is the erosion of the pillar of non-discrimination in global trade conditions. This principle, essentially seeking to ensure equality of opportunity between members of the system, has been undermined by the proliferation of "special deals". This has created what one of our members, Jagdish Bhagwati, has described as a "spaghetti bowl" effect. The need to bring order and effective oversight to the continued proliferation of preferential trade agreements is urgent. The greatest benefits of WTO membership are in danger of being severely undermined by the drift towards politically motivated trade relationships. Governments must take greater care with the multilateral trading system or face some grave consequences.

The second track examined in the report concerns many practical matters of institutional improvement.

While the WTO often fails to make progress simply because its members are too divided on substance, the need to improve decision-making and negotiating procedures in the WTO presents a significant challenge. Those procedures can be frustrating for countries that wish to use the institution to secure new trade opportunities and better trade rules. Equally, they can be a concern to those without the capacity to adjust easily to new obligations. The consultative board has suggested a variety of options to improve negotiation and decision-making techniques while safeguarding the rights of all members.

The board is also convinced that ministers must have greater and continuing involvement in the work of the WTO. The issues at stake are too important and politically sensitive to be left to high-level gatherings every two years. Nor do informal "mini-ministerial" sessions outside the WTO framework fit the bill. Instead, there should be annual ministerial meetings and a heads-of-government trade summit every five years. Other machinery should be put in place to keep ministers and senior officials from member governments fully engaged in Geneva. And it is vital that the financial means be made available to ensure that poor countries participate consistently at these levels.

Ministers need to exercise particular care in the selection of a new WTO director-general, a process currently under way. Experience and ability should weigh far more heavily than nationality or regional affiliation of candidates. There are few more important international appointments: the process should not become a diplomatic football game.

Ministers, officials and other interested constituencies must reflect on the findings and recommendations of the consultative board. I hope they will do so carefully, in the knowledge that the realities (not just the myths) of the WTO deserve their undivided attention.

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Peter Sutherland is a former director-general of the World Trade Organisation