: Global Governance Spotlight 1 | 2014

The WTO . Does it mark the resurgence of trade multilateralims? Noemi Gal-Or

In December 2013, the World Trade Organisation continuing to earn high praise for its dispute settle- (WTO) concluded the Bali Package at its Ninth Minis- ment service, the WTO’s role as the chief avenue for terial Conference in . Marking the first WTO trade development via treaty negotiation has been agreement in eighteen years, the Bali Package has overtaken by bilateral, regional and plurilateral trade sparked hopes for the resurgence of trade multilat- agreements and an ensuing global web of accords. eralism. The following analysis distinguishes the main This development stood in stark contrast to the lines of interpretation advanced to explain the Bali WTO’s aim to promote trade by way of multilateral- Package and draws out the likely implications of the ism and foster coherence within a liberalising global deal for concerned stakeholders and in regards to trade regime. the major issues on the contemporary world eco- nomic agenda. It provides signposts to follow when Those rushing to lament the decline of the WTO assessing the achievements of the Bali Declaration should be reminded that in 2004 the so-called cognizant of the impact centripetal and centrifugal Sutherland Report was published by the WTO. Enti- forces exert in either enhancing, or impinging on, a tled “The Future of the WTO: Addressing Institution- multilateral world economic system. al Challenges in the New Millennium”, this signature volume alerted against a presumptive and critical fal- lacy. It warned that “the process of globalization and The WTO Bali Package the role played by the WTO [were] widely misunder- stood” (p. 79), in fact, presaging what now appears to be misplaced expectations attached to the organiza- At its 10th anniversary at 2005, the WTO was per- tion. Ten years ago, the WTO was undisputedly “the ceived as poised to steer the global economy towards most dramatic advance in multilateralism since the further growth. It had set sail with the Doha Develop- 1940s”, as the Sutherland Report put it (p. 79). By ment Agenda (DDA) hoisting the banner of a badly December 2013, it would come as no surprise that needed lift of the least developed countries (LDCs) EU Trade Commissioner, Karel De Gucht, referred to out of their economic predicament and the associated the past decade as “the darkness of the multilateral ambitious plan of reconciling members’ conflicting era” (Asia Times, 13 December 2013), and al Jazeera interests in matters agriculture and non-agriculture alerted to the forthcoming Bali ministerial meeting as market access, development, and the “Singapore representing “a last ditch to salvage the global trad- issues” (transparency in government procurement, ing regime” (3 December 2013). At this backdrop, , trade and investment, and trade will the Bali Package emerge as the WTO saviour? and competition). Throughout the following decade, however, the Doha “Round” managed to achieve little Although legally binding, the essence of the Bali more than turning around itself, a dog chasing its tail Package stated in the Bali Ministerial Declaration in a self-deceptive pursuit. Thus, by 2013, although (Revised Draft) of 7 December 2013, represents an The WTO Bali Package. Does it mark the resurgence of trade multilateralims? 2

agreement yet to be finalised. The details will be emerging economy against a developed one. While worked out throughout 2014, the agreement project- the developed countries complied, their consent has ed to enter into force no earlier than 2016. It marks been reserved since the terms of the agreement left both the first WTO agreement in eighteen years as little wiggle room for developing countries as the well as progress on the DDA front, reflected in the reference figures derive from 1988 data which do not decisions and declarations adopted by the 159 mem- correspond to the current food insecurity circum- bers at the . It is also the first stances. accomplishment of the new WTO Director-General, Roberto Azevêdo. The Bali ministerial saw regional blocs signaling their preference in favour of a multilateral promise of The highlights of the deal consist of modest global economic progress over an unknown alternative. Latin America’s eventual acquiescence 1. temporary protection for national food security to the deal, which required overcoming Cuba’s programs in developing countries administered insistence on condemning the US embargo, is one through the stockpiling of grain to assist the poor; example; Panama’s accommodation of the European 2. the setting up of a monitoring mechanism to concerns, agreeing not to require additional manda- review and strengthen special and differential tory use of customs brokers, is another one. The EU treatment provisions for developing countries as registered gains also in matters trade facilitation for well as specific measures assisting LDCs in their which it has long been pushing (incidentally remind- exports to developed economies; and ing the emerging economies, specifically Russia, of their international obligations regarding freedom 3. an agreement on a series of measures designed to of transit, e.g. Russian gas). The BRIC(S) club with accelerate the processing of goods through cus- the current Brazilian WTO Director-General as its toms including enhancement of transparency by “representative”, has managed to adhere to its Pre- requiring members to publish their customs rules. toria promise to cooperate in Bali in pursuing food security. Concomitant with the Bali Package, as modest as it is, is the estimate that it will effect a 1 trillion dollars Although states are the only direct interlocutors at growth in global trade. Roberto Azevêdo, who consid- WTO ministerial meetings, non-state actors have ers the Bali Package to be signaling the reinvigora- no lesser vested interests in the output of the WTO. tion of the multilateral trading system, recognizes, at These include stakeholders from business, consum- the same time, that the organisation will continue to ers, workers, etc., who participate in articulating, and co-exist with, and complement, other regional and lobbying for, the issues pressing on the world trade bilateral trading systems in a multipolar world. agenda.

Catering to the Interests of Different Assessing Inequality and Multi-Polarity Stakeholders Current pivotal economic subjects can be grouped If as Roberto Azevêdo recalled in early 2014, “the under two overarching headings: Economic (in) very future of the multilateral trading system [i.e., equality and the politics of multi-polarity. Economic the WTO] hung in the balance”, then to the WTO, inequality among sovereign states (distinct from but the Bali Package was the phoenix arising from the not unrelated to economic inequality within states) is ashes. From this stance, even a modest accord might a lingering, chronic international malaise. To be sure, have sufficed to furnish the fuel necessary to bring it is the gaps separating the rich from the poor, and the international organization back on track. As the the poor from the poorest, that have been the focus Director-General has been underscoring, Bali stands of the DDA, which the Bali ministerial was called exactly for that – the WTO had ultimately found a upon to address. In this respect, the multi-layered different approach to keep its wheels turning while membership of the WTO (single states, regional, at the same time maintaining, and adhering to, its and interest groupings) is seen to have produced an original agenda. asymmetric deal: Once again, the developed coun- tries have emerged as the winners while the develop- In Bali, in a show of flexibility, differing and con- ing countries and LDCs have managed to secure an flicting interests of member-states and regional incomplete bargain only, based on promises rather groupings, which have been standing in the way of than tangible and immediate results. African states multilateralism, were partly accommodated. Most pursuing gains in agriculture, in competitiveness in telling was India’s insistence on holding on to its food the cotton industry, preferential treatment to service security measures, and its success in securing the suppliers, and other preferential rules relating to United States’ tolerance for this protectionist meas- rules of origin and access to developed countries’ ure for the duration of the next four years. The food markets noted that the few DDA issues that were security terms achieved, which apply to all develop- finally achieved amount to mere “best-endeavour ing countries equally, exemplify an issue pitching an outcomes”. These include also the developed coun- Global Governance Spotlight 1|2014 3

tries’ promise to reciprocate – to reduce what ap- consensus could be formed around a limited list of pears like export subsidies, e.g. in the EU Community objectives proved a welcome change in strategy – at Agricultural Policy (CAP) and American agro-subsi- least in the very short term needed in order to devel- dies. Measured against the record of the developed op the technical details of the Bali Package. Similarly, countries, namely the latters’ failure to keep their rearranging the mix of participants working in the promises from the 2005 ministerial dec- various small negotiating groups marked a departure laration, the Bali vows may sound hollow. But even from previous “club” settings and mentality. Con- if the Bali Package materializes, lowering of tariffs sequently, the dynamics of the process were deter- across the board will still fall short of improving the mined by members’ selective sensitivity to certain competitiveness of those countries which do not have issues rather than their economic power; keeping the much to offer anyway. meetings open-ended – signifying a shift in relation to transparency and inclusion, two missing factors As mentioned above, food security has figured as a for which the WTO has consistently been criticized. pivotal concern of emerging economies, developing From the brink of failure, modifying the negotiation countries, and LDCs. The compromise facilitating process had thus succeeded in galvanizing the good securing food for the poor and needy in the form of will of “everyone” (in the words of the WTO Director- the Bali food security interim mechanism contains, General). Indeed, multi-polarity succumbed to multi- however, many notification and safeguard require- lateralism, or did it? ments that may be diluting this tangible (compared to the other Bali promises) achievement. The EU’s commitment to assist the developing countries in the The Resurgence of Trade implementation of the trade facilitation agreement by infusing 400 million euros over five years, and World Multilateralism? Bank and OECD support earmarked to infrastructure and training, has not assuaged countries’ underlying Three general (though mixed) constructions can be development concerns. delineated from the reactions to the Bali Package. One set of interpretations, based on reactions largely Developed countries have been keen on simplifying of the developing countries, centers on Bali’s short- their access to the developing and LDCs markets, comings with regard to equality and development trumpeting trade facilitation through elimination issues. Another view, reflecting mostly the developed of red tape in custom clearance. Most prominent economies’ perspective, draws the attention to Bali’s among all Bali Package items is the trade facilita- achievement in reigning in multipolar forces that tion agreement which represents a concrete step may disrupt multiculturalism. A third approach, forward in this direction. While chiefly a developed mainly ’s and perhaps Russia’s, takes the Bali countries’ concern, the agreement will benefit also Package with equanimity. developing countries and LDCs as they become more welcoming to foreign investment. At the same time, WTO members which are pursuing mega-regional it will simplify export formalities for their own small negotiations such as the Trans-Pacific Partnership and medium size companies and will therefore be and Trans-Atlantic Trade and Investment Partner- welcomed by many of these countries, especially the ship, as well as those involved in other constellations, land-locked ones. Obviously, implementation of the for instance the BRIC(S), and the most powerful agreement is crucial: Should it prove slow, then the economies developing additional trade avenues same countries may find themselves confronting the (China or the United States), seem not to have been unwelcome alternative of seeking recourse with the troubled by the slow pace of the multilateral pro- WTO . As it stands now, a cess. The Bali Package appears to suit them all well first step towards this objective had been achieved as it would maintain the trade regime a bit above with the election on 31st of January of Philippine its current operative level thus securing a measure Ambassador Esteban B. Conejos Jr. as Chairperson of certainty while freeing them to pursue additional of the Preparatory Committee on Trade Facilitation. agendas. Indeed, according to some experts, the Bali Package is a token, not more than needed to lend Concerns that the multipolar world architecture may the WTO sufficient credibility to sustain its role as a undermine trade multilateralism and consequently global trade dispute settlement adjudicator. destabilise the global trade system have burdened all those attending Bali. At least temporarily, the Thus, while the WTO brings together the largest inter-connectedness of the global economy trumped number of states, sub-set groupings have concur- policy single-mindedness, as governments realized rently formed their own playing fields. The US-EU that they were left with little choice but to breeze life Trans-Atlantic Trade and Investment Partnership; back into the WTO and the multilateral trade regime the Trans-Pacific Partnership expected to become by keeping the Doha Round alive. Bali shows that “the agreement of the 21st century”; and the Re- weakness on substance can be counter-balanced by gional Comprehensive Economic Partnership (RCEP) resourcefulness regarding process. From the outset, negotiated by the members of the Association of expectations surrounding the ministerial meeting Southeast Asian Nations (ASEAN) and their FTA were vastly reserved. Devising a process whereby partners (including China) – all represent heavy- The WTO Bali Package. Does it mark the resurgence of trade multilateralims? 4

weight potential regional/plurilateral trade alliances instead focused on limited issues addressed indepen- unmatched in trade dimension and capacity. Ne- dently – this time as part of the, but not entire, Doha gotiations towards a plurilateral Trade in Services Round and its DDA. Even if resulting in amendments Agreement (TISA) have engaged twenty four states to the WTO Agreement (as some have chosen to (including the EU and Taiwan) with economies label the change, and as the WTO sets out to effec- representing seventy percent of the world’s trade in tively introduce by inserting a new Trade Facilitation services, and which may choose to either integrate Agreement into Annex 1A) rather than committing with or stay outside, of the WTO. And a plurilateral to a “single undertaking”, members will still have to Anti-Counterfeiting (ACTA) has so ratify the trade facilitation agreement. And because far been signed by nine (largely) developed countries some will procrastinate, the agreement will, in fact, as well as the EU and 22 member states (the Europe- be plurilateral to be subsequently “multilateralised”. an Parliament rejected its ratification though). Each of these agreements is distinct in subject matter, Regardless of process, membership, and objectives, objectives (free trade or other), membership com- the principles underlying the global trade regime, position, political interests, etc. There is therefore a embedded and “standardised” in the WTO/GATT, concern that coherence of the global trade regime be have continued to serve as the bedrock for all the undermined. Where disputes arise in matters outside less-than-global trade liberalization alternatives. the purview of WTO panels, adjudicated by compet- One should be reminded that by comparison to most ing dispute resolution mechanisms established in of the other agreements (except the EU), the WTO plurilateral agreements, inconsistent jurisprudence is an organization. Being the second and successful might further this tendency. Thus, the proliferation attempt after the failed 1947-8 Havana conference of bilateral trade treaties, regional agreements, and which sought to establish the International Trade plurilateral conventions could be sidelining not only Organisation, it has become the banner of trade co- multilateralism but also the development agenda’s operation. Representing more than a set of “marriage egalitarian aspect. of convenience” agreements, the WTO (embraced by all the powerful economies) has, at least partly, been Although smaller economies have been taking part in driven by a post WWII rationale and ideology, there- these projects, the group of developing countries has fore radiating a reassuring “aura of permanence” been more fragmented than their developed counter- which is too important to let fail. In an interdepend- part. The Bali ministerial meeting saw the developing ent world economy, it may therefore suffice for the world divided into several main groupings – the large Bali Package to provisionally be reinforcing the WTO, emerging markets of Brazil, India, China and South if only as a point of reference for other non-WTO Africa, and the Russian petro-economy; those that agreements. Perhaps, what the intricate web of bilat- trail them economically, for instance, Indonesia, the eral, regional, and plurilateral overlapping teaches us meeting’s host; and lesser developing economies, and is that periodically, the predicaments of a globalized the LDCs. In this very uneven environment, smaller economy, might bring the various actors together, as countries have often been marginalized in a negotia- in a pendular rhythm, to collaborate in the forum of tions process led by the major powers. the WTO for yet another “rescue” operation. Multi- lateral corrections may be required occasionally in order to stimulate a fluctuating and straying trade Outlook environment and return its actors back on track. As always, there will be losers and winners, yet thanks to the overlapping nature of the various trade arrange- There is no crystal ball to tell whether or not the ments perhaps to ever lesser detrimental effects. Bali Package represents a rebounding of the WTO. Global multilateralism has never been the only game in town. After all, albeit not global, regional negotia- Author tions are indeed multilateral; plurilateral agreements – also not global – may in part be negotiated multi- Professor Noemi Gal-Or | Professor of Politics and Inter- laterally; and as experts have recalled, the WTO itself national Law at the Political Science Department as well as had followed on the heels of the GATT’s plurilateral Director of the Institute for Transborder Studies (ITS) at arrangements. In fact, the Bali negotiation process Kwantlen Polytechnic University, Canada. She practices law itself did compromise traditional multilateralism in Vancouver, Canada, and is currently Senior Fellow at the in favour of some elements of plurilateralism. This Centre for Global Cooperation Research (CGR) at the Univer- is because the newly introduced approach to WTO sity of Duisburg-Essen. negotiations broke away from the big rounds and

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