It did not even bother to issue a final declaration since during the two-and-a-half days it had nothing substantial to declare despite its general theme of “The WTO, the Multilateral Trading System and the Current Global Economic Environment.” Even the street protests by those opposed to the WTO’s role in globalization failed to match the violent “Battle in Seattle” during the Third Ministerial Conference in Washington state exactly 10 years ago. The WTO’s Ministerial Conference, its highest level decision-making body, is supposed to convene at least once every two years. But last week’s conference followed long after the Sixth Ministerial Conference in Hong Kong in December of 2005. These are serious indicators of the WTO’s shaky presence and diminished authority in coping with the complex problems in global trade and the myriad trade-related issues as world trade has suffered its most drastic decline in 80 years. The WTO’s problems are bound to get even more complex if and when the global climate change controversy, which will be the subject of this week’s United Nations Climate Change Conference in Copenhagen (COP15), leads to disputes over trade restrictions on the exports of countries that either fail to join or inadequately enforce a global climate agreement.
One would have expected, naturally, that the immediate and urgent task of this conference would be to break the gridlock in the eight-year-old Doha Round multilateral trade talks. But WTO Director-General Pascal Lamy revealed that it would not be a negotiating session and that although the ministers would consider the Doha Round, they would focus on other matters instead, “like a shareholders’ meeting to review annual activities and priorities,” things boring for journalists. It would be “a platform for ministers to review the functioning of this house [the WTO] and an occasion to send a number of strong signals to the world with respect to the entire WTO waterfront of issues.” Mr. Lamy was evidently discouraged by the last failed ministerial-level attempt to revive the Doha Round in July 2008 and did not want to risk another embarrassing failure. It is perhaps unfair to expect Mr. Lamy, or even the WTO, to singlehandedly revive the Doha Round when the three G-20 economic summits, after repeated declarations, have not been able to do so.
Mr. Lamy, as well most trade ministers, including Turkey’s Zafer Çağlayan, called for the speedy conclusion of the Doha Round, many setting 2010 as yet another deadline, with the WTO Web site bragging that the ministers had shown “political energy” regarding this task. But the reality was different, with almost everyone agreeing that the domestic political obstacles in WTO member countries, especially in the United States, to concluding the Doha Round successfully during the still fragile recovery from the global economic crisis looked insurmountable. This reality check prompted the proposal to chop up the Doha Round’s 20-topic agenda into politically acceptable bites and negotiate several more manageable mini-deals, especially outside of the most intractable agricultural issues. But Mr. Lamy said at the end of the conference that unless all members agree to split the Doha Round into several mini-deals, it would remain a “single undertaking,” an all-or-nothing deal. He stressed the advantages of having an all-or-nothing deal which enables the most comprehensive multilateral exchange of concessions among the maximum number of member countries. There were also attempts to strike plurilateral deals among groups of members, such as the industrial tariff reduction agreement among 22 emerging market economies, which, however, did not include China. We can view these attempts from the perspective of the recent proliferation of bilateral and regional trade agreements, which although compatible with the WTO rules under certain conditions, work against both the spirit and objectives of global trade negotiations such as the Doha Round.
The tough problems confronting the WTO’s mission and governance structure, similar in some ways to those facing the International Monetary Fund (IMF), have been the subject of two recent studies, both published last month, just in time for the WTO’s Ministerial Conference. The 25 chapters of the 248-page e-book titled “The Great Trade Collapse: Causes, Consequences and Prospects,” a VoxEU.org publication edited by Richard Baldwin, focus on the causes and consequences of world trade’s sudden, severe and synchronized collapse, the sharpest in recorded history and the deepest since the Great Depression. The consensus emerging from this publication is that the Great Recession caused the Great Trade Collapse, as the demand for durable consumer and investment goods, as well as their parts and components, plummeted, amplified by the central role of global supply chains in creating “compositional” and “synchronicity” effects. In other words, it was not the much feared but fortunately evaded spread of beggar-thy-neighbor protectionism, similar to that during the Great Depression, that caused the collapse. Whether the WTO deserves some or most of the credit for avoiding widespread protectionism is debatable. In the chapter titled “Prospects for the Global Trading System,” Professor Anne O. Krueger of The Johns Hopkins University explains how the Great Recession and the Great Trade Collapse exacerbated each other through mutual causation. She emphasizes how resuscitating the dormant Doha Round and fortifying the WTO multilateral trading system can help accelerate the recovery at no or miniscule fiscal cost in contrast to many other costly stimulus programs.
The other study, titled “Strengthening Multilateralism: A Mapping of Proposals on WTO Reform and Global Trade Governance” (Discussion Draft) by Carolyn Deere-Birkbeck and Catherine Monagle, jointly published by International Centre for Trade and Sustainable Development, Geneva, and the Global Economic Governance Programme, University College, Oxford University, focuses on the major debates and proposals put forward since 1995 in reforming the WTO and improving global trade governance. This 185-page study is a valuable compendium of a wide variety of proposals, reflecting several different objectives such as environmental sustainability which deal with every aspect of the WTO as an international institution and the multilateral trading system. Reform of the WTO will become even more urgent if the Doha Round’s long coma ends in its dreaded death.
