Future of WTO: 20 years after birth, world body faces attack from its top supporter, the US

Published On: 13, Dec 2017 | Source: financialexpress.com

After over two decades of existence, the World Trade Organisation (WTO) has witnessed a barrage of criticism over its role by one of its staunchest original proponents, namely, Washington, DC, while most others have renewed their pledges to further strengthen its framework, exposing stark differences over how a rule-based multilateral trading system is being perceived today. The divergences have also squeezed the scope for a substantial, positive outcome from the ongoing 11th ministerial conference. Speaking at the plenary session of the ministerial, US trade representative (USTR) Robert Lighthizer said the WTO was increasingly becoming a litigation-centred organisation, losing its essential focus on negotiation, apart from going soft on fast-growing and wealthy developing countries. The EU, China, India and most others, however, called on all members to shore up to further bolster the rule-based multilateral trading framework. The USTR questioned the special and differential treatment to major developing nations, a veiled reference to countries like China and India. “We cannot sustain a situation in which new rules can only apply to the few, and that others will be given a pass in the name of self-proclaimed development status,” he said.

However, EU trade commissioner Cecilia Malmstrom said the successes of the last two ministerials brought some optimism that despite significant differences of views among members, “the WTO is still capable of delivering important negotiated outcomes”. “Unfortunately, however, we start this year’s ministerial conference with more questions than answers, and little sense of concrete progress over the past two years. The system is being challenged, members show insufficient collective ownership and are divided on key questions such as what the WTO should be doing. And there are growing calls for conducting business outside the multilateral setting.”

China’s commerce minister Zhong Shan said: “Let us join hands and take real actions to uphold the authority and efficacy of the WTO.”

Re-invoking its pledge to the WTO framework, Indian commerce minister Suresh Prabhu said: “The expansion of global trade is our vision in the WTO. All countries stand to benefit from it. Therefore, at MC 11 (current ministerial) we urge the entire WTO membership to unequivocally reaffirm the importance of a rules-based multilateral trading system as enshrined in the Marrakesh agreement.”

The USTR’s statement reflects the Trump administration’s critical attitude towards the WTO on charges the US has got a raw deal from the trade body. In late November, the US blocked efforts by the WTO to draft a declaration for ministers to agree on at the Buenos Aires ministerial. Under Trump, the US has blocked the appointments of new judges to a WTO body that hears internal trade disputes. Analysts have already warned of a paralysis in the functioning of the dispute settlement body, as more judges are expected to see their terms end in the coming months.

Hinting at differences on various issues, EU’s Malmstrom tweeted on Tuesday: “Despite all the hard work yesterday we still have no agreed outcomes says MC 11 chair Susana Malcorra. Now the real tough negotiations start.”

On the USTR’s claims on special treatment to developing countries, the Indian commerce minister said although the country is a fast-growing major economy, it’s home to 600 million poor people and that its per capita income is still meagre ($2,000 in 2017, according to a forecast by rating agency Standard & Poor’s).

“We are increasingly seeing that the discourse on development at the WTO is sought to be deflected by specious arguments based on aggregate GDP figures,” he said. Prabhu also drew attention to the fact that many developed countries have gained immensely from long periods of derogation from GATT rules in the area of agriculture and textiles.

The WTO was officially formed January 1, 1995, under the Marrakesh agreement, signed by 123 nations in April 1994, replacing the General Agreement on Tariffs and Trade that was set up in 1948. Analysts say the US seems to favour the pre-WTO framework under which the verdict of the dispute settlement system wasn’t binding on members, unlike the WTO regime.