WTO Should Launch New Trade Round in 2001
July 27, 2000
||Jeffrey J. Schott
Washington, DCThe 137 members of the World Trade Organization (WTO) should launch a new round of multilateral trade negotiations in late 2001 with a broad-ranging agenda that reflects the priorities of both developed and developing countries. Starting a round this year, as called for by the G-8 at their recent summit in Okinawa, would be unrealistic because the leading trading nations have failed to resolve the problems that led to the collapse of the Seattle WTO Ministerial in December 1999.
The WTO after Seattle, an Institute book edited by Senior Fellow Jeffrey J. Schott, proposes four broad initiatives for the rest of 2000 and early 2001 through which WTO members could lay the foundation for a new round:
Improve the WTO's dispute settlement procedures. In particular, the compliance provisions need to be fixed to ensure that countries found in violation of their obligations change their practices to conform to WTO rules. Confidence in a rules-based trading system depends largely on the willingness of the most powerful trading nations to live by the WTO rules and comply with its rulings.
Develop a better system for managing the WTO's decision-making process among its large and increasingly active membership. WTO members should establish a small steering group with participation based on simple, objective criteria that ensures representation for all regions and that encourages countries to form groups that pool resources, distribute information and consult on issues under negotiation, and share representation at the negotiating table.
Strengthen the WTO's ties to other international organizations, particularly the International Monetary Fund and the World Bank, to support efforts in developing countries to improve their economic infrastructure and administrative capabilities so that they will be better able to implement economic reforms. Technical assistance is particularly needed in areas such as intellectual property and customs regulation where WTO obligations have already been undertaken and where countries face problems fulfilling their Geneva commitments.
Commission a report to the WTO Council by a small group of distinguished government officials and experts in international trade on initiatives that should be taken to promote world trade and sustainable economic development, reform WTO operations, and strengthen public support for the trading system. Their recommendations could contribute to building consensus among WTO members on the terms of reference for a new trade round that could be launched at the next ministerial meeting, perhaps in Geneva in September 2001, after the new administration and Congress have had time to set trade policy for the United States.
Before a new round can begin, WTO members need to bridge their substantive differences on the WTO agenda, address shortcomings in a way in which the WTO conducts its business and interacts with other international and nongovernmental organizations, and augment the limited "confidence-building" measures already vetted in Geneva to rebuild trust among the world's main trading partners and support for new trade negotiations. Contrary to the claims of anti-WTO protesters, the Seattle meeting fell victim not to protests outside in the streets but rather to serious substantive disagreements inside the convention center among both developed and developing countries over the prospective agenda for new trade talks.
Unfortunately, key substantive issues that divided the WTO membership in Seattle, such as antidumping duties and labor standards, remain off the table. Institutional reforms, notably those cited above, also have been avoided. Trade preferences for the poorest countries (such as the new US programs for Africa and the Caribbean Basin) have been advanced but with scaled-back benefits for key products. Offers of technical assistance fail to match the poorest countries' minimal needs.
The Case for a New Round
Despite the collapse of the Seattle ministerial, the WTO continues to function and new talks have been started on agriculture and services. The relative calm after the Seattle storm has led some to question whether a new round of trade negotiations is really needed. The answer is yes-now more than ever:
to provide a buffer against protectionist pressures in the United States at a time of record trade deficits, especially in the face of a possible slowing of economic growth and rise in unemployment;
to address new challenges to trade and investment in increasingly global markets, including the growth of electronic commerce;
to shore up public support for the WTO and an open international trading system, including among those concerned about the effects of globalization on domestic production, employment, and resource management;
to resolve problems relating to dispute settlement and decision making among WTO members, linkages with other international institutions, and the transparency of WTO operations. Some of these problems could be dealt with under regular WTO procedures, even though past attempts to do so have failed. Others touch on national prerogatives and vested interests in the current system that staunchly resist change and will need to be resolved in a broader negotiation.
to supplement current talks on agriculture and services, which are unlikely to make major progress in the absence of a broader agenda that covers priority concerns of all participants and provides the opportunity to trade off concessions across sectors and issues so that WTO members can negotiate reforms of longstanding and politically sensitive trade barriers.
The WTO after Seattle analyzes the problems and challenges facing the trading system in the aftermath of the Seattle meetings. Leading trade experts from around the world examine why it is in the interests of both developed and developing countries to reengage in new trade talks, and how such talks could promote world trade and economic development, reform WTO operations, and strengthen public support for the trading system.