Multilateral Trade at a Crossroads: 20 Years of the WTO

The World Trade Organization (WTO) is gearing up for a major ministerial meeting to take place in Nairobi, Kenya, at the end of this year.  The meeting will coincide with the 20th anniversary of the WTO. 

This ought to have been the occasion for a happy party and celebration.  It is not.  Officials are struggling to deliver even the tiniest package of positive outcomes and concrete results. 

This is a depressing outcome for an institution starting its third decade.  It matters too, particularly for the smallest, poorest and most vulnerable economies. 

Normally, for a ministerial meeting just six weeks away, members would have already agreed on the basic texts of the final declaration.  All outcomes would be mostly lined up and ready to go.  After all, the WTO is a bit like an ocean liner.  It takes time and considerable effort to get more than 160 member countries to agree on declarations and outcomes, even if the greatest will in the world exists to get these things done.

Unfortunately, political will is in terribly short supply in Geneva, as shown by the meager harvest of possible outcomes for Nairobi:

1.  Negotiations on the Doha Development Agenda (DDA) are at a complete standstill.  These global trade talks, launched in 2001, are supposed to address (at least) agricultural and services trade and help modernize the rulebook for the WTO. 

No one can say so publically, but these talks are dead.  The various partial “deals” that were on the table in the past are simply not going to be the basis for future negotiations.  Key players have moved on and will not accept a return to the past in 2016 and beyond.  Since the WTO is a consensus-based institution, the unwillingness of many to engage in an old agenda or use old frameworks for addressing issues effectively means the DDA is finished.

Where the institution goes from here is a good question.  Unfortunately, discussion of future pathways cannot begin in earnest until the existing approaches are firmly put to the side.  The topics may remain, but the mechanisms for achieving outcomes will have to change.

2.  With the main product stuck, officials are scrambling to cobble together anything positive.  Still on the table as a possible deliverable for Nairobi: a commitment to rule out export subsidies (or, put more crudely, to do anything related to agriculture).  The basic issue with reducing subsidies explicitly for the purpose of export is that almost no country provides such subsidies any longer.  It could be worthwhile to discuss export rules and restrictions, but an export subsidies commitment is going to have minimal implications for the global trade system.

3.  Promises on transparency.  There are lots of things that might usefully be done to increase transparency at the WTO, including full implementation of previous pledges to immediately provide information on new bilateral and regional trade agreements (FTAs).  However, whatever happens on transparency in areas like antidumping actions or fish subsidies or FTA notification requires willingness by members to actually be transparent and timely.  So far, the track record of members to abide by WTO transparency rules is not good—no matter what may happen in Nairobi.

4.  Measures to help Least Developed Countries (LDC)s.  Even here, members continue to disagree on what sort of promises might be usefully made to improve the prospects for LDC members in the WTO.  For example, negotiations on a services waiver have been difficult.  Granting duty-free, quota-free access remains controversial. A new dispute has erupted over extending a waiver on pharmaceutical patents for public health in LDC countries.

5.  In the absence of DDA progress, some WTO members would like to announce progress on other issues.  First up, the Trade Facilitation Agreement (TFA).  This agreement was signed with great fanfare at the last ministerial meeting in Bali in December 2013.  Unfortunately, movement towards implementation has been extremely slow. 

The 52nd country (Pakistan) stepped forward with its implementation commitments on October 27.  This sounds impressive, but do recall that the number is skewed upwards by 28 members of the EU who all accepted at once.  Two-thirds of total WTO members must agree to participate before the deal can start moving.  Getting substantial new members to sign on will be challenging with the limited time remaining before Nairobi.  Two years have already passed.

6.  Members want to announce movement on the Information Technology Agreement II (ITA2).  This is a plurilateral (meaning not all WTO members are involved in the negotiations) agreement designed to extend an existing plurilateral commitment on tariff-free coverage for technology goods.  While members did agree on a list of 201 products for inclusion on the list, they remain quite divided on the timing of tariff reductions.  Hence, the deal is really only partially finished.

7.  The Environmental Goods Agreement (EGA) has also received some positive coverage by the WTO.  This is another plurilateral agreement designed to make it easier for countries to trade in environmentally-friendly goods by lowering tariffs on specified products like wind turbines. 

Looking at the progress of these negotiations closely, however, not much of note can likely be announced at Nairobi.  Of the 665 products on the provisional list at the beginning of this month, member states disagreed about the placement of nearly 200, or almost 1/3, of the total number of items under consideration.   

8.  Another important plurilateral negotiation, Trade in Services Agreement (TiSA), is also not yet ready for unveiling in Kenya.  Negotiations are progressing, but too slowly to achieve results in a few weeks.

Even changes to the Secretariat that might be helpful in updating the institution are proving problematic.  For example, while the dispute settlement system is often described as the “crown jewel” of the WTO system, growing backlogs are tarnishing the crown.  Discussions of how to alleviate a staff shortage and adjust the system have been mostly languishing since 2013.

My own modest proposal to revamp the WTO’s website and extend outreach to new stakeholders with a better use of social media outlets was coolly received at a meeting in Singapore last week of Asian trade officials and Secretariat staff.  Such changes, it was suggested, could require buy-in from members and may also prove impossible given resource constraints. 

I would argue that an institution that cannot fix its own outdated website without encountering pushback and internal disagreement is not well-positioned to handle many of the toughest trade issues as it heads into a third decade of existence.

***Just in—Indonesia’s President Jokowi apparently told President Obama that Indonesia “will join” the Trans-Pacific Partnership (TPP).  The New York Times did not provide a timeline for this “eventual” commitment.  Bets anyone?

***Talking Trade is a blog post written by Dr. Deborah Elms, Executive Director, Asian Trade Centre, Singapore***

Transparency, Congress and the TPP

The EU Commission’s decision (discussed in the Talking Trade blog post of January 12, 2015) to publish proposal texts was prompted by increasingly strident complaints about secrecy in the TTIP negotiations. 

These concerns follow similar criticisms about a lack of transparency in the Trans-Pacific Partnership (TPP) negotiations.  Claims of silence from the TPP talks are not new.  From the earliest days of negotiations in 2010, some groups have been fighting against the “excessive secrecy” surrounding the talks. 

Such language has only escalated in the nearly 5 years that bargaining has been taking place.  For example, on January 8, US Congresswoman Rosa DeLauro (D) held a press conference where she denounced the lack of transparency in TPP negotiations. 

Politicians, of course, frequently make statements that do not entirely match the facts on the ground.  In DeLauro’s case, as a sitting member of Congress, she has complete and total access to every element of the TPP texts.  She does not need to go across to the US Trade Representative’s (USTR) office either, as she can summon someone with the exact documents she requires at any time.  A staff member would likely sit with her and explain whatever specific questions she might have with the materials.

In addition, USTR has held over 1,600 briefings for Congress over the course of negotiations.  The Congresswoman could have attended these meetings where she would have been able to provide her specific inputs to whatever sections or clauses she felt necessary.

For the past several rounds of TPP negotiations, key Congressional committee staff members have been traveling with the negotiators to each meeting.  These staff members (and, presumably, their elected bosses) have extensive knowledge of the contents of the agreement. 

To prevent leaks of information, though, USTR has imposed a set of specific rules for the TPP texts.  These limit the ability of all Congressional staff members to view the texts.  Instead, only staff members of the Senate Finance Committee or House Ways and Means Committees with security clearances are allowed to read the texts.  Congress members are not allowed to have or make copies. 

These rules have probably made it more difficult for members of Congress to analyze the whole document.  However, if all 535 members of Congress and their staff had access to texts, it might just as well have been posted directly to the Internet.

A remarkable number of people have had access to all or portions of the texts in the United States, since “cleared advisors” are allowed to review proposals and materials.  It is true that the bulk of the cleared advisors are industry representatives, with smaller numbers of labor, environmental groups or academics on the list.  Obama administration rules to dilute the power of lobbyists also affected the composition of cleared advisors.  But it also means that USTR has not created the pages of the TPP rulebook in a vacuum without input from Congress and others.

Nor are these rules unique to the TPP.  Similar rules were first outlined by Congress in 1974, when legislators created provisions that used to be called fast track and are now called Trade Promotion Authority (TPA).  In fact, at the time of the original fast track, the advisory committee included 700 industry representatives appointed by the President.  Just a handful of Congress members were entitled to review materials at all and nothing was to be provided to the public.

The content of the final TPP agreement has also benefitted from a unique element of these negotiations—the “stakeholder” meetings attached to negotiating rounds.  All sorts of industries, associations, and activist groups were able to give presentations directly to negotiating officials from across the TPP members.  These stakeholder meetings were held from about Round 6-Round 19, giving firms and others an opportunity to express a wide variety of views about the negotiations.

It is not clear yet how much the stakeholder meetings influenced the negotiating texts or final positions.  But it did provide a novel way for government officials across the set of participating countries to gather feedback and suggestions.

As noted in the earlier post, there is a continuum between releasing texts and sharing no information at all.  I am opposed to releasing even draft texts as this severely limits the ability of a negotiator to find creative compromises and solutions to satisfy the needs of the parties.  But USTR might have done a better job communicating about the TPP. 

However, for all the complaints about a lack of transparency in the TPP from people based in Washington, DC, information about the talks has been even more scarce in the other 11 participating countries.  The other members have varying degrees of formal feedback mechanisms available for providing input into the talks, but no one has had the degree of access provided to U.S. companies and others in Washington.  In many cases, foreign companies and groups have gone to DC to present their information to the Americans, rather than try to reach their own representatives.

If it were not for American outreach efforts and communication through advisors and lobbyists that have been picked up by media outlets of all kinds, there might be zero news on the TPP today. 

For a demonstration of the relative openness of the TPP, try searching for news on the Regional Comprehensive Economic Partnership (RCEP).  This is a trade deal that brings together 16 countries in Asia, including China, Japan, South Korea, India, Australia and New Zealand with the 10 members of ASEAN.  Without cleared advisors, Congressional briefings, or stakeholder events, there is almost nothing at all getting out from the RCEP talks after 6 rounds of negotiations. 

So, although communication on the TPP could certainly be improved, claims of excessive secrecy are overblown—especially those criticisms coming from members of Congress.