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The linchpin of multilateral and rules-based international trade, the World Trade Organisation is facing the do-or-die situation. The three key functions of the organisation i.e. the negotiation mechanism to strengthen the international trading system, the trade policy monitoring mechanism and the dispute settlement system is facing challenges. To reinvigorate the WTO, reform needs to cover all three pillars. This article restricts its ambit to the negotiation reforms at the organisation.
The current negotiation structure had its inception in the Doha Development Round of 2001, but negotiations have been repeatedly failing since 2008 barring a few exceptions like the Trade Facilitation Agreement concluded in Ministerial Conference of 2013 held at Bali. There are two main reasons why the structure of the negotiations at WTO is in crisis- the first being imprudent trade policy and the second being secret negotiations.
The imprudent trade policies are reflected in the sense that the privileged members at WTO have seen liberalization of trade as the only answer to every problem or crisis. Ignorance of market failure and refusing assistance to the developing and least developed countries during times of crisis which requires state intervention and international support clearly manifests this idea.
Now coming to the second problem of secret diplomacy, it has been seen that although closed-door negotiations may give rise to the successful settlement of disputes and creation of new opportunities but these private negotiations don’t prove beneficial to the majority of states. According to WTO Rules, any market concession enjoyed by a particular member country should be extended to all the member countries. Non-compliance of this rule is regarded as trade discrimination. Designating third or outsider parties as an observer to a particular dispute settlement procedure will reduce this discrimination and helps in preventing uneven gains.
In the present negotiations structure, negotiations are conducted under the mandate of the “single undertaking” principle and in this case, the conclusion is reached through consensus and not through majority. The similar mechanism is followed in case of appointments to the appellate body and every member of the selection committee has to agree to the appointment otherwise, the appointment would fail, which is quite similar to the UNSC veto power. It is through this mechanism only that the US has been blocking the appointments to the appellate body.
Due to the always stalled negotiation process at WTO, many of its members led by US and EU have moved to bilateral and regional trade agreements which might pose a threat to multilateral trade order. The implications could be explained through the following example. For example, the US while concluding a free trade agreement with any country might impose a condition that this particular country should not maintain trade relations with any of the countries on which the US has currently placed a trade embargo or economic sanctions. This is a violation of the principles of strategic autonomy and free trade. The bilateral and regional free-trade agreements also violate WTO’s most favoured nation principle as this principle prohibits the WTO members treating some of the trade partners in a preferential manner.
Other areas of concern which are raised by developing and least developed countries are lack of internal democracy, transparency, improper scheduling of meetings without consultation, little or no feedback from meetings, insufficient technical assistance, etc.
The WTO, instead of using its negotiating mechanism, can involve negation mechanism for regional or bilateral trade agreements which are currently not on WTO’s agenda and can allow any agreement to be brought to more countries and can declare those rules to be applied multilaterally.
The Developing and Least Developed countries need to proactively participate in the negotiations. The WTO negotiation process should be designed in such a manner so as to suit the needs of the developing and LDCs. The number of meetings held each week should be limited to the number that the smallest delegations can feasibly attend, or be represented at. Meetings on similar subjects should be scheduled together and timed to coincide with relevant meetings in other institutions in Geneva to reduce costs of travel and pressure on time for developing and least-developed country delegations.
An ‘early warning’ system should be established to provide non-resident delegations of new issues and negotiations that allows them sufficient time to reflect and decide on their positions and participation and information should be provided to non-resident delegations giving them an in-depth report and analysis of discussions at WTO meetings.
The digital divide prevailing between the first, second and the third world needs to be addressed and the participation of MSME Sector which is one of the most important sectors in the second and third world countries should be seriously considered. The WTO which, unfortunately, is currently catering to the needs of only a few countries should ensure that its rules enable the developing and the least-developed countries to pursue industrialization and raise the standard of the living through inclusive action and structural transformation and thereby achieving inclusive development. The only solution can be an inclusive, transparent and member-driven process.
Negotiations at WTO can only be successful if the organisation is able to provide an open, transparent and predictable system which aims to promote and protect the rights and interests of each member with emphasis on the developing and the least developed countries for which trade is one of the most important instruments for robust development and will help increase their amalgamation in the international economy. The WTO’s democratic credentials can only be sustained by making the rules-based international trading system more accessible and equitable for the developing and the Least Developed Countries in the Sub-Saharan, the Caribbean, Pacific region.
ABOUT THE AUTHOR
Aditya Raj is a law student at National Law University, Jodhpur.
In Content Picture Credit: The Economic Times
Kindly note that the views and opinions expressed are of the author and not of the Indian Journal of Law and Public Policy.