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Capling, A. and R. Higgott Introduction: The Future of the Multilateral Trade SystemWhat Role for the World Trade Organization
Global Governance 15 (2009), 313325

Richard Higgott
Richard Higgott is a Professor of International Political Economy (and Pro-Vice Chancellor for Research) at the University of Warwick. He was (198990) president of the Australasian Political Studies Association. now Vice Chancellor of Murdoch University, Australia

Ann Capling
PhD at the University of Toronto Currently Deputy Vice Chancellor Academic at Murdoch University

Notes:
Multilateralism has fallen on hard times in the twenty-first century 313 o The 2008 FC exacerbated imbalance of the global economic governance system o The WTO is under duress, both because of the stress of the financial crisis, but also because of problems in its constitution that preceded it Dramatic problems in the financial sector, drastic decline in the international trade o Affecting both OECD countries and BRICs o Trade restrictions mounting in line with protectionist policies o Bailouts of key industrial actors had trade-distorting effect o The crisis resulted in reduced amount of liquidity, difficult to reach, inhibits production and trade In light of the current IT deterioration the utility of the WTO questioned 314 o Is WTO irrelevant? No. Rather, some of it problems were exposed o Key question: Are WTO rules sufficient to withstand the pressures for retaliation that will ensue if domestic protectionist policies are enacted? o The successful completion of Doha Round has crucial consequences for the health of the WTO trading regime The faring of the WTO is important indicator of the health of the emerging global multilateral regulatory system (a rule based action frame) A bit of history 315 o the system of international institutional governance emerged out of the wreckage of the interwar economic crisis and post-war apocalypse o Key elements of the system remain largely unchanged today While intl trading system has undergone vast changes, the financial institutions mission and modus operandi has changed little o the dual aims of the multilateral trade system (beginning with GATT) 1

simon.fiala@seznam.cz preventing a retreat to the discriminatory economic blocs promoting economic recovery and growth through int'l trade o challenge: establishing rules that enabled a compromise between the quest for open and non-discriminatory markets and the objectives of states embedded liberalism principles etched into the constitution of ITOGATT o GATT Proved to be a robust and effective institution Membership steadily expanded ongoing liberalization of trade in manufactured goods was achieved the Uruguay Round of negotiations produced an expanded scope of activity incl. Intellectual property rules, services, foreign investment dispute settlement mechanism was endowed with teeth o the WTO today global trade regime now having a firm legal foundation, a strong organizational basis, and an effective dispute settlement mechanism persistent problems surfacing during the Doha Rounds e.g. agricultural subsidies and protection a pervasive sense of crisis WTO in danger other forces in the global economy may be now more important in maintaining an open, liberal trading regime the proliferation of regional trade agreements and bilateral investment treaties undermined WTOs role recently a couple of studies examined the challenges that the WTO faces Report of the Consultative Board (the Sutherland report) of 2004 The Warwick Commission report of 2007 The Warwick Commission Report o five central challenges facing the world trading system i. a paradox: ongoing liberalization and internationalization of the economies of the major OECD countries vs. declining support for liberal policies ii. the multipolar nature of the global trade system (vs. the need for engagement of all parties) iii. the need to reconcile the competing objectives of the WTO and the need to renegotiate boundaries of the WTOs activity iv. justice and fairness, transparency, democracy legitimacy important in order to keep the diverse membership engaged need to establish a balance of rights and obligations among its members that will be perceived as legitimate and sufficiently flexible v. the problem of preferential trade agreements Studies undertaken o Patrick Low: Even though the TWO is losing its status of the preferred venue for trade liberalization talks, it is still important in terms of negotiating global trading rules o Diana Tussie: trade-related research has served a number of important purposes in advancing the interests of developing countries. 2

simon.fiala@seznam.cz Andrew Mitchell and Tania Voon and Simon Evenett: The WTO and developing countries Reconciliation of conflicting agendas: while the US and the developed countries push for openness and intellectual rights protection, developing countries want more assistance with development, to which the WTO formally committed itself naming the current Doha Round development round. Problem: development agenda is politicized and ill-defined 321 S&DT must be more finely distinguished and targeted o Simon Evenett: The Aid for Trade initiative may become the third pillar of WTO o Peter Gallagher and Andrew Stoler: application of the recommendations made by both the Sutherland and Warwick Commission reports to WTO decisionmaking processes With growing variety of membership, the principles of consensus and the Single Undertaking (nothing is agreed until everything is agreed; all members have to subscribe to the negotiated package) are becoming too cumbersome and demanding impediment to the process Difficulty to reach decisions makes the WTO less preferred forum for negotiation decreases the relevance of the WTO Solution? Voting system, stronger executive? Realistically, critical mass decisionmaking would be the best option o Heribert Dieter: preferential trade agreements (PTAs) and their consequences to the multilateral (non-discriminatory) system The WTO has to come to terms with PTAs and internalize them; the WTO should review PTAs in the process of signing by involved parties Conclusion: the WTO remains an important institution for global governance 323 o we should appreciate the other public good dimensions of the WTO: fairness, rulemaking creating a facilitating environment for intl trade in general o the WTO can be seen to provide socialization into the global community and to facilitate overcoming of cultural differences o