Building on Bali: A new VoxEU eBook

Simon J Evenett, Alejandro Jara , 18 December 2013

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The successful conclusion of the Bali Ministerial Conference and its terrific reception in the international press and from government leaders means that the WTO now has the opportunity to restore its fortunes. Talk of the WTO’s demise as a negotiating forum has been set aside, at least for now. If the WTO membership takes the right decisions in the coming months concerning its near-term work programme, and assiduously follows up, then such talk might be banished for good.

For sure, the Bali deal addressed only part of the Doha Development Agenda and was sealed after its fair share of drama. Still, the run-up to Bali and the Ministerial Conference itself showed that creative solutions could be found, that the membership is prepared to rally around them, and ultimately that the prospect of another damaging deadlock was unacceptable.

How can the WTO build on Bali?

The purpose of this VoxEU eBook, titled Building on Bali: A Work Programme for the WTO, is to identify a number of pragmatic, near-term components of the WTO’s post-Bali work programme. Twenty-seven contributions were commissioned, covering both the strategic considerations that will likely shape near-term deliberations on the WTO’s priorities and the steps that should be taken by the WTO membership in the coming years on a wide range of policy areas.

Together this volume shows how all of the WTO’s functions should be deployed to deliver tangible benefits over the next two to four years, building upon the progress made with trade facilitation and preparing the ground for a range of improvements to the business environment and ultimately living standards across the globe.

Successive trade diplomats were far-sighted enough to construct a multilateral trading system that involved not only negotiating accords to lock-in reforms, but also mechanisms to monitor government decision-making, to resolve disputes, and to deliberate on the merits of potential future initiatives. Each should feature prominently in a post-Bali work programme.

It is unfortunate that in recent years the WTO’s reputation in the eyes of many senior policymakers and commentators is seen solely in terms of its capacity to deliver negotiated agreements. To the extent that such agreements are associated with slashing trade barriers and the like, it has encouraged some business lobbies and negotiators to demand greater and greater levels of ‘ambition’ at a time when it is evident that there is not enough appetite among the WTO membership for far-reaching legally-bound trade reforms.

Still, as many of the contributions to this volume make clear, even with tempered ambitions there is plenty that could be negotiated in the next two to four years (Josling 2013, Desta 2013, Hufbauer et al. 2013). Plus, there is a menu of types of negotiated agreement to choose from – varying in membership and degrees of commitment (Low 2013).

Preparing the next wave of commercial initiatives

There is also plenty of valuable work to be done at the WTO that isn’t about closing deals. A post-Bali work programme should give prominence to the deliberative as well as dispute-settlement functions of the WTO. In the case of dispute settlement, this amounts to making a virtue out of necessity, given that this function is already entrenched in the WTO rulebook. This is not to imply that the current dispute-settlement understanding works perfectly. Indeed, in this regard two of the contributions in this eBook contain recommendations for improving both compliance and the utility of dispute settlement to developing countries (Flett 2013, Busch and Mavroidis 2013).

In the next few years there is a substantial role for deliberation among WTO members. For example, it is not immediately apparent which new multilateral trade rules are needed to address the challenges of ‘21st century commerce’, so organised processes of information collection, analysis, and discussion will be needed if sizeable constituencies for reform are to develop.

We were struck by the number of contributors to this volume whose recommendations emphasise deliberation – or the combination of deliberation and negotiation – as parts of the work programme that the WTO membership could adopt in a number of important areas. These areas range from Special and Differential Treatment and Aid for Trade to migration and assessing the crisis-era resurgence of interest in industrial policy (Jean 2013, Hallaert 2013, Aggarwal and Evenett 2013). Some of the steps proposed by our contributors would also have the benefit of strengthening the hands of trade ministries in national governments. Publishing information that story-hungry media outlets can use would put proponents of beggar-thy-neighbour policies on the defensive.

The mix of deliberation and negotiation will see growing payoffs over time, helping to restore the reputation of the WTO. At the moment a WTO work programme that delivers step-by-step progress in a number of significant policy areas may pale in comparison to the ambitions associated with the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership. But that will change as the exalted ambitions of those mega-regional deals are confronted with domestic realities. Our money is on the tortoise beating the hare. If your money is on the hare, what’s the harm in taking out some insurance?

21st century trade matters – but so does 19th and 20th century commerce

One often-heard gripe is that, after twelve years of negotiating the Doha Development Agenda, work at the WTO has drifted further and further from the realities of international commerce in the 21st century (Aldonas 2013, Baldwin 2013). It is certainly true that corporate reorganisation and the growth of international supply chains, the rise of electronic commerce, and the resort to beggar-thy-neighbour measures since the onset of the global economic crisis have changed the landscape of world commerce. But many export-oriented farmers still face foreign trade barriers and subsidised rivals. And plenty of manufacturers’ export plans are frustrated by tariff peaks and many more by a bewildering array of foreign regulations and procedures.

Moreover, the distinction between 21st century and earlier forms of commerce can be somewhat misleading. While it is true, for example, that the existence of international supply chains alters the interpretation of trade data and potentially national commercial policy priorities, it is worth recalling that what is ‘supplied’ in supply chains are goods and services, for which longstanding multilateral trade disciplines exist.

For these reasons, the reality is that what might be referred to as 21st century commerce matters, but so does the commerce of yesteryear. The next work programme of the WTO should reflect the diversity of contemporary global commerce and, to that end, this volume contains recommendations for the WTO’s near-term work programme in 17 specific areas of public policy.

The Goldilocks solution – not too hot, not too cold

So, in general terms, how can the WTO build on Bali? The starting point is surely to recognise that, while the Bali Ministerial Declaration was a relief, a huge dose of realism is in order. The liberalising zeal of many is evidently not shared by enough of the WTO membership. Frustration has led some to undertake further trade liberalisation outside of the WTO – indeed, the mega-regional trade agreements under negotiation may overshadow developments at the WTO in the near term. The move towards a multipolar world continues. In many WTO member states, faltering economic recoveries haven’t helped. For sure, this isn’t going to be plain sailing.

Yet Bali has provided an opening, and this opportunity must be seized. Clearly a liberalisation-heavy negotiation-dominated WTO work programme is a non-starter in the near term. For too long this approach has generated more heat than light. The polar opposite – drift – risks the WTO being left out in the cold as companies and governments move on. Like Goldilocks, our taste is for porridge that is neither too hot nor too cold.

The recommendations contained in this volume persuade us that a work programme can be cooked up that satisfies enough palates, bearing in mind that some tastes are changing as the 21st century progresses and others have more settled preferences. Plus the chefs involved need to deploy all of the utensils at their disposal, reflecting the full range of the WTO’s functions. For now the resulting fare won’t be the promised banquets of yesteryear – but it will provide a nutritious, more balanced diet from which the WTO can gain in strength over time.

References

Aggarwal, V and S J Evenett (2013), “The Return of Industrial Policy: A Constructive Role for the WTO”, in Evenett and Jara (2013).

Aldonas, G (2013), “Trade, Global Value Chains and the World Trade Organization”, in Evenett and Jara (2013).

Baldwin, R E (2013), “APEC-like Duties for a post-Bali WTO”, in Evenett and Jara (2013).

Busch, M L and P C Mavroidis (2013), “Developing Countries and DSU Reform”, in Evenett and Jara (2013).

Desta, M (2013), “The WTO Negotiations on Agriculture: What Next After Bali?”, in Evenett and Jara (2013).

Evenett, S J and A Jara (eds.) (2013), Building on Bali: A Work Programme for the WTO, VoxEU.org eBook, December.

Flett, J (2013), “How can the Extent and Speed of Compliance of WTO Members with DSU Rulings be Improved?”, in Evenett and Jara (2013).

Hallaert, J-J (2013), “Revamping Aid for Trade for the post-Bali WTO Agenda”, in Evenett and Jara (2013).

Hufbauer, G, J Schott and C Cimino (2013), “A Plurilateral Agreement on Local Content Requirements”, in Evenett and Jara (2013).

Jean, Sébastien (2013), “Moving Towards A Refined Special and Differential Treatment”, in Evenett and Jara (2013).

Josling, T (2013), “A Post-Bali Agenda for Agriculture”, in Evenett and Jara (2013).

Low, P (2013), “Depth and Breadth in the WTO: Can We Square the Circle?”, in Evenett and Jara (2013).

Topics: International trade
Tags: Bali package, WTO

Professor of International Trade, University of St. Gallen and Member of the Warwick Commission on the Future of the Multilateral Trading System after Doha. Co-Director of the CEPR Programme in International Trade and Regional Economics.

Former Deputy Director-General, WTO, and Senior Counsel, King & Spalding