Lessons from the Uruguay Round on Leadership & Vision
It is sometimes healthy to draw lessons from history, sometimes otherwise. Those who were heavily engaged in the Uruguay Round of GATT negotiations have strong views on whether it was a success and, if so, why. Certainly, something worked during the years 1986-94 that lead to what many of us regard as a wholehearted success and others something less. In the absence, so far, of substantial advances since, it is worthwhile considering what went right and what went wrong. Is there a link between the failings of the Uruguay Round and the challenges of the Doha Development Agenda? Such analysis will not provide a blinding flash of enlightenment with which to put right the frustrations of the Doha Round. On the other hand, the recent crises in the WTO are serious and need creative solutions before the credibility of the multilateral trading system collapses. If a look backwards can help generate such solutions, then so be it.
My conclusion is that there are indeed lessons to be drawn from our experiences two decades ago. There are errors that have been corrected, others that have been neglected. There were approaches that worked better then than those used now. At root, however, nothing can make up for a lack of clear-headed vision and effective leadership. The WTO probably needs some bigger, more coherent, new goals.
Was the Uruguay Round a success?
The Uruguay Round was undeniably the most extensive, profound and far-reaching trade negotiation ever undertaken. In essence, it re-tooled the multilateral trading system for a new century. It took the 40-year-old temporary legal instrument, the GATT, and turned it into an institution fit for its time. It did not provide for global free trade – far from it – but it generated a framework of rules, commitments and obligations that would serve to drive economic development and growth. The rules were to be enforced by perhaps the most sophisticated system of multilateral dispute settlement that exists. Those who played a role in the construction of the new system are proud of it; and they are right to be.
Various inaccurate accounts of the Uruguay Round have almost become part of history. What were its foundations? First that developing countries were left out of the equation when the Uruguay Round package was assembled. Second, that the negotiating processes were selective, secretive and unaccountable. Third, that the results changed market access conditions and reduced agricultural subsidies insufficiently to have a meaningful commercial impact. Fourth, that the extensive commitments made by all WTO members as they signed up to the new agreements (especially with respect to TRIPS, TRIMS and customs valuation) were beyond the capacity of many developing countries to implement, even within the extended transition periods.
With the WTO now more than ten years old and with the painful experience of the Doha Round negotiations fresh in our minds, how do the criticisms measure up? Certainly, one can concede that the demands of the Uruguay Round made on some developing countries were considerable and sometimes beyond their means. The need for capacity building and technical assistance was under-estimated and only in recent years has that lack of support been corrected. But were developing countries really left out of the process, and was it so selective? After several years of struggling to make progress in an entirely inclusive process involving nearly 150 governments, the Doha Round itself eventually disintegrated into a negotiation among just four, and later six, members. India and Brazil, the two developing nation flag carriers, are precisely the same two countries that dominated negotiations in the Uruguay Round. To argue that they were crowded out by industrial nations in the construction of the 1993 deal is a delusion.
The once much-derided “Green Room negotiations” – that took place in the Director-General’s meeting room at the GATT secretariat in Geneva and were vital to concluding the Uruguay Round – saw a comeback in the later stages of the Doha Round. As it turned out, they were less exclusionary than the “G4” and “G6” meetings held almost everywhere but Geneva. Sadly though, the Director-General is now largely denied the opportunity to steer the negotiations (through the Green Room or any other process), a role as /honest broker” that helped make the Uruguay Round possible. The Green Room allowed 20 to 30 delegations to exert a first line influence and to ensure that the entire enterprise of a trade round is not reduced to a tiny suduko puzzle largely involving the agricultural interests of just a handful of members. Further, Directors-General always sought to involve all contracting parties with a clear and direct interest in issues under discussion and, equally, ensured that non-participants in the Green Room process were consistently and fully informed.
Certainly the “group” structures that have dominated the Doha Round have been more sophisticated, but more entrenched, than those of the Uruguay Round. Whether the group dynamic has been constructive is a matter that members need to ponder. It is difficult to conclude that the energy put into creating group positions and sticking to them rigidly has created the conditions for deal making. Especially so, given that such positions, negotiated painstakingly among dozens of countries, are already compromises that usually fail to take account of the specific interests of individual countries and economies.
That the Doha Round has been far less “secretive” – that is, more transparent – than its successor is not necessarily to be seen as an asset for the multilateral negotiating process. The free availability or position papers on the Internet is, of course, much to be welcomed. So is the de facto opening up of formal meetings of negotiating groups. But the idea that negotiation in secret is now both unacceptable in principle and impossible in practice has become a handicap in the WTO’s search for movement and consensus.
What about the charge that there were insufficient market access concessions made in the Uruguay Round package? It hardly felt like that as we fought to get a final deal. Governments seemed to feel they were making some very substantial concessions in goods, agriculture and services! The results speak for themselves: the annual increase in the volume of world goods exports has consistently been more than double that of world production in the years since 1990. As Federal Reserve Chairman, Ben Bernanke, has pointed out1, global merchandise exports have moved from a share of under 15 percent of world gross domestic product in 1990 to above 20 percent in recent years. That is a massive change in any terms. It may not be wholly a result of the Uruguay Round, but the huge boost in investment confidence generated by the final package of the GATT negotiations is hard to understate. Trade in services has, of course, exploded as the underpinning of the globalization process.
Even agricultural trade has grown healthily: WTO/FAO figures2 show total world exports of agricultural products almost doubling in value terms between the Uruguay Round base years (1986-1990) and 2003. Even in volume terms, trade in several major product groups – rice, oilseeds, some dairy and some meat products – came near to or even exceeded a doubling.
Of course, we might have hoped for more. Yet, the Agreement on Agriculture did far more than simply improve market conditions. It realized a completely new architecture in which concessions on market access and reductions in domestic support and export subsidies could be negotiated and guaranteed. It is that architecture that provided the foundation for Doha Round negotiations. Without it, we would not have been talking so ambitiously about eliminating export subsidies and other unfair export support, cutting deeply into domestic support programs and opening up new markets.
If so, why?
It would be wrong to idealize the Uruguay Round. It was hard to launch, near impossible to conclude and the years between 1986 and 1993 were as frustrating, confused and confrontational as anything we have seen since. The round came close to complete failure on several occasions – at least in the minds of observers. Certainly, the final deal required a sense of commitment to the system and a degree of political risk-taking that was out of the ordinary. Some ministers put their political futures on the line; some governments came close to falling.
Why did it happen? In essence, the Uruguay Round finally succeeded – after immense difficulties – because of a broadly shared vision, clear-minded leadership, the fear of failure, and a pragmatic, realistic approach to negotiating.
The vision that underlay the Uruguay Round was never in doubt. It was a vision founded on the need to correct the near calamitous state of the multilateral trading system in the early 1980s. On the one hand, there was concern that we would slip back into an era of unmanageable protectionism, on the other there was a desire to re-start a process of market-opening to enhance economic growth and development. While the terms for launching a round – and especially the breadth of the negotiating mandate – were bitterly fought over for more than five years, the need for a substantial negotiation was widely accepted. The GATT had ceased to work properly. Trade relations were increasingly marked by market sharing arrangements (notably those forced – for the most part, ineffectively – on Japan) that damaged the interests of consumers in Europe and North America. The GATT could only stand aside and watch. The dispute settlement system was failing – habitually and easily blocked by defending parties. Agricultural policies were out of control, notably in the European Community where subsidies and surpluses were mushrooming to the detriment of other players in global markets. Again, the GATT simply was not equipped to cope. There was no need for political spin, the problems and challenges were self-evident.
Over and above these practical and systemic considerations was a fundamental belief in multilateralism. Perhaps because we were then closer to an era where global economic disintegration had provoked havoc on an unprecedented scale, there was a clearer understanding that the system had to be made to work properly. Even if NAFTA emerged towards the end of the Round, the option of pursuing regional or bilateral trade agreements was never seen as an alternative to multilateralism. It was a complement certainly, but only if pursued in a manner that created trade and ultimately benefited the entire trading community. The GATT was ill equipped (as is the WTO) to ensure such an outcome but the necessity was understood. The European Community, for instance, had broadened and deepened over decades, but the United States in particular had always used the GATT – and GATT rounds – as the means of ensuring an outward-looking, steadily opening, Europe. That was a great vision and a great cause.
But the vision needed great leadership. I cannot suggest that it was the case throughout the Uruguay Round. Yet the compromises made to launch the negotiations in Punta del Este certainly demonstrated political leadership – especially from countries like India and Brazil. That had taken six years, including one failed attempt by ministers in 1982, when, amongst other difficulties, the European Community was unable collectively to muster the political courage to negotiate on agriculture.
The course of the negotiations was marked by sporadic manifestations of leadership. The United States started with a remarkably ambitious agenda; but Washington knew when to withdraw to something realistic, yet valuable. Contracting parties understood the need for an honest broker to help them get over their domestic constraints. Hence, Arthur Dunkel, my eminent predecessor as Director-General, was able, at the end of 1991, to table his “Draft Final Act” which spelled out what was to become about 95 percent of the ultimate Uruguay Round package. That took courage and leadership; on his part as well as that of the member governments. Finally, the conditions had to be put in place in which the biggest test of all – a conclusion – could be conceived and mastered.
Sometimes political leadership is best generated through fear. In 1993, governments were right to be fearful of the potential – and imminent – failure of the Uruguay Round. Since the need for the negotiations and their objectives were hardly in question, the prospect of losing the entire enterprise was unattractive. The stakes were very high; the downside risk to the global economy of failure, too much to accept with equanimity. It was only at that point that political leaders (notwithstanding their regular – but inconsequential – declarations of positive intent at successive annual G7 Summits) actually bit the bullet. The lesson is clear. For effective leadership in the trade field, there needs to be a shared sense of potential loss, in the event of failure, as well as a shared sense of gain accompanying success. However, the sense of loss needs to be real – not rhetorical. If political leaders and legislators do not believe in the downside of failure, they will not respond by taking the least domestic political risk.
Were the negotiating processes used in the Uruguay Round substantially different from those employed in the Doha talks? Certainly the early phase of the DDA was marked by attempts to make progress in negotiating groups that had universal participation. This works when members are simply setting out their negotiating positions. It quickly stalls when the search for consensus begins. The idea of “bottom-up” negotiations sounds entirely right to anyone not actually seeking a settlement. In practice, it does not work, and that was recognized as the Round fell into ever-deeper crises. Arguably, the Uruguay Round worked because it was not always inclusive yet, at the same time, the focus of negotiation was almost always in Geneva, significantly managed by the Director-General and his staff.
A more important distinguishing factor between the two rounds was the level of precision in negotiating approaches. The Doha Round has been a negotiation by formulae. Bilateral give and take (which has been a feature of all previous rounds) has barely been present. Agriculture, non-agricultural market access, even services for a time were all to be subject to formulaic concessions covering every conceivable difference of interest. It led to apparently highly ambitious headline liberalization commitments attenuated by a myriad of special conditions. The Uruguay Round relied largely on broadly stated objectives, met – and sometimes exceeded – through intensive bilateral bargaining. It is a pragmatic approach that reduces predictability but gets results. In the rules area too, there was a significant element of creative legal fudging. Some elements of some agreements were simply not ripe for absolute legal precision – they reflected domestic constraints and conflicts that were unbridgeable at the time. We knew that ultimately they would be clarified through a strong dispute settlement system: and that has proved to be the case.
What were the failings?
While we could always have wished for more on market access concessions and subsidy cuts, as I have already argued the results from the Uruguay Round were more than respectable. However, three more substantial lacunae in the final package seem, in retrospect, to have sowed some of the seeds of recent difficulties in the multilateral trading system.
The first was the lack of meaningful results in the negotiations on GATT Article XXIV. In essence, we failed to provide coherent disciplines on what would be acceptable in the future if free trade areas and other preferential arrangements were to be effectively overseen at the multilateral level. The criteria remain unclear and the process of oversight largely pointless – notwithstanding a small move towards greater transparency agreed in the DDA. In fact, efforts in the Doha negotiations demonstrated that within less than a decade of the conclusion of the Uruguay Round it was already too late: too many WTO Members now have an interest in bilateral and regional agreements for there to be a chance of consensus on tough – but necessary – disciplines.
Second, while it was never entirely within the gift of GATT to meet the challenge head on, it was probably an error not to seek some rational process that would secure the graduation of at least some of the richer “developing” nations out of that status. For sure, the word “graduation” itself was a no-go area. Yet continuing to provide special treatment to such a broad and diversified group of countries made no sense then and makes even less now. Indeed, one of the difficulties in making a practical reality of the “Development Agenda”, as the Doha Round is more correctly known, has been precisely in designing negotiating modalities which ensured those developing countries capable of doing so made meaningful concessions. The need to provide special help to the least-developed countries is clear. But a large number of Members in the broader category of developing nations – especially those that have become such dynamic exporters – should be making their own contributions to concessions in a trading system that has already reaped them many benefits.
Third, the time was too short and the deal too much on a knife edge for negotiators at the end of the Uruguay Round to think as deeply as they might about the institutional arrangements of the new World Trade Organization. For the most part, the negotiating structures of the Round became the permanent delegate bodies of the WTO. Some new decision-making practices were put in place, including potential (though never used) voting procedures. But we did not change much else. We did not allow for the growing membership, or for a more active membership. We did not think enough about transparency: though happily great change has been secured in that area in the past few years. In a sense, we expected members to go on thinking and behaving largely as they had done in the GATT. That was not to be the case. Yet the structures – especially the lack of management and consultative machinery – have hardly proved up to the game. Understandably, Members did not want to think about the institution while Doha Round negotiations were active. The issue cannot be avoided any longer.
Where are the challenges now?
Still, even with its shortcomings, the new institution was born – perhaps the only large new multilateral agency designed specifically for a new era. It may have had a few design faults related to the trimmings, but compared to the rickety old aeroplane – whose range was too short and whose crew was losing confidence in its performance – that was the GATT, the WTO was a shiny new jet. It was too inspired by the time of its birth – a time when the Iron Curtain had collapsed and virtually the entire world embraced the market economy system in one way or another.
For several years, in the late 1990s, the new plane flew magnificently. The WTO succeeded in completing negotiations in some key areas left largely untouched by the Uruguay Round – notably in telecommunications and financial services. But as the new millennium approached the aircraft developed engine trouble. In fact, for the past few years it has been flying on only two of four engines. Certainly the judicial engine is in fine form: hundreds of dispute settlement cases have been treated, among them some of remarkable political and commercial sensitivity. The second engine – that which is responsible for new WTO accessions – also performs well, despite the pressure and turbulence presented by powerful new economic players like China and Russia. Unfortunately, the multilateral negotiations engine, while spinning wildly, has contributed no push to the aircraft. The oversight engine has not fared much better, producing only a spluttering thrust.
In short, just two engines are providing all the lift. It is hardly surprising then that the passengers – already frustrated by delays – are gazing longingly out of the windows at what appear to be smaller but faster aircraft passing them by. On the sides of the fuselages they can read “Fly Bilateral” and “Regional Airways”. They are tempted; especially since the ticked prices appear to be lower.
That is to apply a light and tenuous metaphor to describe the fundamental challenge for the WTO. Why has the negotiating role of the institution been so ineffective?
Help or hindrance – the globalization debate
The first coherent signs of trouble were to be seen vividly on television screens during the Seattle ministerial meeting of 1999. The WTO had become a proxy for what the anti-globalization demonstrators regarded as the evils of economic integration. Suddenly, the new institution was responsible for hunger and poverty in the developing world, the AIDS crisis (because of the TRIPS agreement), the loss of jobs in developed country smokestack industries, child labour, environmental degradation, loss of biodiversity, the undermining of labour and human rights and the loss of livelihoods of peasant farmers from Switzerland to Korea to Mali.
Of course, the claims and protests were largely ill-founded and often ridiculous. But Seattle was a turning point for the WTO in more ways than one. Certainly, the prospect of launching a new trade round had to be abandoned for two more years. More important, the political response to the anti-globalization arguments promoted in Seattle was wholly inadequate. Remarkably, many political leaders not merely espoused some sympathy for the underlying causes of the protests – which, in some instances, were indeed justified – but implicitly or explicitly validated the links made with the supposed failings of the WTO.
The political failure to separate the nonsense from the reality was to prove enormously damaging to the WTO and what became the Doha Development Agenda. Certainly, a more coherent reaction – especially in Europe – to anti-globalization and anti-WTO campaigning would have meant standing up to some powerful and influential non-governmental organizations. It might have meant explaining the nature and role of the WTO; in particular, that the WTO is neither responsible for all the economic distress in the world nor capable of responding to it. It is unfortunate that we have suffered too long from an entirely exaggerated notion of what the WTO can achieve – good and bad. That misunderstanding is nowhere more evident than in the perception of the nexus between trade rules and concessions and development.
Focus on development – disappointment at the end of a blind alley
The idea that the WTO can, unaided, alleviate poverty is wrong. No conceivable WTO agreement can, at a stroke, lift millions out of poverty. It is no more credible than the often-heard claim that WTO concessions made in one country automatically will create jobs in another. The dynamics that link economic reform, trade, investment, job creation and development are more complex than political leaders care to acknowledge. That is not to say, of course, that the dynamics of open markets and growth are not positive. However, the more realistic nexus is between trade liberalisation and growth within the market that is opened rather than in the supplying markets. That is economic orthodoxy, of course, but avoiding it has made nonsense of seeking development objectives through WTO membership and negotiation.
It cannot be stated too often that if “special and differential treatment” means that developing countries sit on their hands while waiting for market access from others then it is a self-defeating concept. Much of the rhetoric surrounding the Doha round suggests that this is indeed the case. Special and differential treatments – indeed, WTO membership itself – makes sense only where governments have made their decision to move in the direction of economic reform, institution building, administrative efficiency, infrastructure development and a pro-business environment. And a “pro-business environment” does not infer unconstrained freedom for large companies – it is always important for large businesses to be subject to open and coherent regulation. It means creating the conditions under which the thousands of small and medium sized enterprises – including farmers – to be found in poor countries have some better prospect of, at a minimum, thriving in their domestic markets and the chance to be competitive overseas. That is the starting point for injecting trade into poverty reduction.
The WTO – like the GATT before it – merely provides a legal framework within which such change can be contained and managed. By making bound concessions and adhering to WTO rules, governments have the opportunity to provide a basis for such a pro-business environment. Many governments have gone, and are going, down that road. In so doing, they are not merely establishing the conditions for long-term investment by domestic players; they are also providing new opportunities for inward investors.
. It is unfortunate that much of the Doha Round has been marked by such contempt for the idea of contractual commitments – as distinct from voluntary but reversible domestic liberalization – in the WTO. Some large economies may be capable of generating and attracting investment without such binding commitments. Most small poor nations – especially those with negative governance records – simply must build the stability, security and predictability that the WTO system offers. Without that, domestic investors will keep their money safe and potential overseas investors will look elsewhere.
Many governments understand and accept these realities: indeed, many are acting on them independently though perhaps quietly. Such governments deserve the solidarity and support of the international community represented in the WTO. Sadly, much of the debate in Geneva – and not only at the WTO – seems to start from quite different premises. If we continue to see the avoidance of commitments as the objective of a development agenda, then it will be to the detriment of those governments seeking to help secure a place for their productive companies and farmers in the global market. It is for this reason that it is important to make well-considered decisions on the use of the very large sums of money that are becoming available through Aid for Trade.
A good starting point would be to base trade policy, and therefore potential WTO positions and commitments, on a rigorous assessment of the real problems faced by businesses – large and small – in individual developing countries. For that to be happen – and for it not to be captured by narrow vested interests – there needs to be an active, transparent and properly informed relationship between the private and government sectors. What really impacts the prospects for producers, services providers and investors? The issues on the ground tend to be related to the availability of trading rights, import and export licensing, unpredictable tariff and tax changes on imports, arbitrary changes in customs rules and procedures including import valuation, lack of consultation on legislative and regulatory changes, capricious and discretionary fee structures at the border and excessive paperwork.
Every one of these practical hurdles to the conduct of business and trade finds a reflection in WTO rules – the rules as they stand. Thus, any government that chooses to seriously implement WTO commitments of this kind will put itself on the road to promoting business, investment and growth. Aligning policy with WTO disciplines is not a cost or a burden it is an opportunity. If governments need technical assistance to achieve the goal, then, no doubt, it will be forthcoming.
Too many of the positions adopted by developing country groups in the Doha Round appear founded on doctrine rather than analysis of need. They are sometimes based on a fallacious notion that poorer nations have been the victims of the trading system to date. A better analysis would demonstrate that poorer nations are often precisely those that have refused or been unable to take their WTO obligations seriously. The idea that a good Doha result would result in even less developing country members needing to observe WTO disciplines would be utterly counter-productive. This analysis is not, however, to discount the terrible reality, that some of the poorest states are denied access to the trading system because they have neither the necessary human nor physical infrastructure.
Loss of political direction where it counts
If certain developing countries have driven up a blind alley in the WTO, this is not to diminish the responsibility of the rich nations for the difficulties the institution has experienced over recent years. Those that have already gained most and prospered from the system have an obligation to ensure its health and vigour. That sometimes means paying a “price” in terms of domestic political discomfort. One of the most evident shortcomings in the Doha negotiations has been the apparent unwillingness of major participants to pay any price at all: most have given the impressions of wanting a round on the cheap – a deal that requires everyone else to shoulder the burdens. The Uruguay Round, and its predecessors, all demonstrated the need for shared “pain” (real or imagined) as well as shared benefit.
It is clear that for the WTO to function properly again attitudes in the capitals of the key players have to change. The United States, for instance, has always been a facilitator as well as a driver of multilateral negotiations. In the past it has known when to push for the moon and when to step back to positions that aided the search for consensus. In recent years the approach has been more nuanced. The notion of “competitive liberalization” through bilateral trade agreements as a counterpoint to the multilateral track has undermined the credibility of US claims of wholehearted commitment to the WTO. It has not helped in Geneva. Further, the collapse of the traditional bipartisanship on trade in Congress has been clear for all to see. The trading partners of the US in the WTO will certainly hope that the new Congress will find a more coherent and less confrontation path on trade.
Another capital in which a re-think on trade and the WTO is due is Beijing. For the WTO, China has been a great success story. Its accession was the product of years of intensive economic reform and that reform has continued as the balance of its commitments are progressively implemented. Companies and consumers throughout the world have benefited from the remarkable emergence of China as a market and a supplier of highly competitive goods. China has fully exploited its rights under the WTO: while feeling the impact of some protective action in a few markets it has generally been spared any extreme or illegal response to the formidable growth in its exports. That is the way it should be, and reflects the strength of the WTO system.
Yet, as China takes its place as one of the world’s biggest economies and one of its fastest growing (it is now the third largest exporter of merchandise goods), its leaders will have new obligations to other WTO members. One response will be to go further with bilateral and regional trade agreements. Another should be to take additional responsibility for the multilateral trading system from which it has already gained so much. It has taken a low profile during the Doha Round, understandably perhaps so close to its accession. As the period of transitional arrangements draws to a close a more active leadership role for China would be welcome. Indeed, it might well shake the institution out of its apparent lethargy.
Does Europe still have a role? As the world’s largest economy, it could hardly be otherwise. It is devoutly to be hoped that the days when the interests of its agricultural sector dominated the European Union’s position in multilateral trade negotiations will shortly be passed. That does not mean sacrificing farmers for industry and services. But it should mean finding a more appropriate balance. The Union has moved a long way in the past decade or so in reforming the Common Agricultural Policy. That should be recognized by its trading partners even if they would like to see some further movement towards a less distorted, more competitive market. However, Europe needs to be in a position to negotiate on services and manufacturing without permanently looking over its shoulder at the farm lobbies. In the meantime, its political leaders could do a far better job of promoting the benefits of more open trade with the rest of the world as well as within the internal market.
What about Japan? It is sometimes forgotten that Japan remains the third largest economy, after the EU and US, the fourth largest exporter of merchandise goods and the third most successful services exporter. There can be no doubting the value of the WTO to Japan, and yet it has not always played a large or positive role. That changed somewhat in the later stages of the Doha Round. With Tokyo apparently concerned that its strategic economic role in Asia is now challenged by China, an even more active presence as a key WTO player would be appropriate. Like the EU, it is time for Japan to take positions in Geneva that reflect broader interests than those of the farming constituencies.
Finally, New Delhi and Brasilia must take more of the strain if they are to continue to be counted among the pivotal elements in WTO negotiations. They are both large countries with increasingly successful economies – in Brazil’s case, especially as an agricultural exporter. They are not especially representative of the developing world. Their pre-eminence rests on size, political weight and the talents of their negotiators and representatives. If they are to retain their privileged positions in the WTO they need to be driven as much by commitment to the multilateral system as by doctrine and self-interest.
What do we need to get back on track?
Leadership is important but so to is a shared vision. If Members want the WTO to deliver more then they must have a coherent, solid and far-sighted vision of what they want the system for. It seems to me that there are five pre-conditions for success.
First, all WTO Members need to be clear about the value of multilateralism and realistic about the potential of other approaches. It is now unavoidable that we will continue to see a profusion (and confusion) of bilateral and regional trade negotiations. Some will lead to full-scale agreements and will be globally positive. Many, perhaps most, will fail to be agreed or fail to be ratified. Most of those will be partial accords that avoid the more difficult sectors, like agriculture. Inevitably, governments will return to the multilateral system. It is to be hoped they will do so – wholeheartedly – sooner rather than later.
The second condition for moving forward in the WTO is that we get right the relationship between trade, trade liberalization and development. The delusions that have plagued the Doha Round will need to be abandoned for the reasons I have outlined above. The governments of poor nations will have to decide what is the significance of their WTO membership.
If they decide that the role of the WTO is to provide a framework and opportunities for the development of a competitive private sector capable of efficiently delivering goods and services at a reasonable price locally as well as the integration of their most productive enterprises into the global economy then they must be helped. The potential for capacity building offered by the Aid for Trade initiative is very considerable. The scheme needs good management, relevant targets and an absence of doctrinaire thinking. What counts are practical solutions to practical problems.
Third, the institution of the WTO needs attention. Ideas for reform are not lacking; not least, those presented to the Director-General, in 2005, by a consultative group under my own chairmanship. Members cannot go on ducking the issue. There are shortcomings; as the membership changes and expands – notably with a more active China and perhaps Russia in a few years – the shortcomings may become severe. One objective of reform will be to ensure a continuing and profound debate about the process of globalization – in all its forms – within the institution. That debate – which could include civil society and the private sector – should be the ever-present backdrop to the contractual decision-making activity among governments in the WTO.
The fourth prerequisite is to agree some big goals. In recent years governments have been modest about their objectives in the WTO; understandably, because their sights have been focused on other forms of trade negotiations. The WTO needs something large but achievable to induce the same excitement that drove us forward in the Uruguay Round. Vacuous statements of intent, supported by spin in the media, will not do – as we have seen in recent years.
What should those goals be? My view is that it would be logical (given the extent to which governments are seemingly prepared to open their markets in bilateral free-trade ideas) to set a date for zero tariffs in goods, including agriculture. Now is not the time, perhaps, but governments, without any commitment, ought to begin debating the objective. Further, now that the anti-globalization hysteria is calming, WTO members should re-consider the case for investment and competition policy agreements in the WTO. If they could be evaluated in a sober and open-minded manner, they would be seen to have great potential in the underpinning of development. Rather predictably, we lost these dossiers in the Doha Round. That is not say they were ill conceived, though probably they were ill timed. Certainly, together they would make of the WTO a more effective and complete instrument for enhancing global growth.
Finally, WTO members are going to need to get the buy-in to succeed. That means convincing business, legislatures, NGOs and consumers. It would be a long haul, but we probably have the time. Re-launching the WTO in an imaginative and ambitious manner may not be for now, but it should not be long in the future either. Whenever it happens, providing WTO stakeholders with a creative, relevant and inspiring set of goals will probably win out over diplomatic timidity. But first we have to re-convince those stakeholders that the WTO is worth their attention and their commitment.