Is The WTO Deal Good News For Multilateralism?

Tom Hale, WTO

Tom Hale

Last weekend the World Trade Organization’s (WTO) 159 members reached a historic deal to speed up customs and port procedures, helping trade flow more efficiently. While the “Bali Package’s” concrete benefits were rightly celebrated—it could perhaps add $1 trillion to the global economy over time—the real excitement was about the emergence of a deal at all. This was the first multilateral agreement the WTO has reached in its two decades of existence, and comes after the current round of negotiations has been declared dead several times.

On the face of it, this is a good sign for multilateralism. It represents a spirit of compromise among a highly diverse world economy. While recognizing the benefits of global trade, the Bali package includes clauses for ‘special and differential treatment’ for imports from poor countries, and exemptions from agricultural subsidy rules for the first four years (the latter a concession to India, which stockpiles grain for food security reasons).

David Held, WTO

David Held

But the Bali deal is only the lowest hanging fruit on a very tall tree. Of all the complex issues facing the global trading system, trade facilitation is but one small segment. The harder issues were left off the agenda. The lesson of Bali is that it is not ‘political will’ or intelligent compromise that greases the wheels of global cooperation, but rather the lowering of ambition.

This is a bad sign for multilateral cooperation, because across a range of issue areas we need to raise ambition.  For example, two weeks ago 192 countries met in Warsaw to try to negotiate a solution to climate change.  In the face of an ongoing climate crisis, governments around the world were supposed to set out a roadmap toward completing a new binding global treaty, setting out commitments to reduce greenhouse gas emissions from 2020 onward. Yet, at the 19th such meeting in 19 years no roadmaps were drawn, no emission cuts agreed. The only commitment the participating governments made was to allow additional time for negotiations to set targets, nominally to be reached by 2015.

Or consider Syria. International institutions have made real progress to remove chemical weapons from the country, upholding one of the key achievements of 20th century international cooperation. But those same institutions have proven completely unable to address the underlying civil war, which has already cost the lives of over 115,000 people and displaced millions, both within and beyond Syria’s borders.

Kevin Young, WTO

Kevin Young

Why has global cooperation stalled? The negotiators who met at Bali and Warsaw—and their counterparts discussing financial regulation, cyber security, or other pressing matters on the global agenda—are consumed by the knotty details of their respective issues. But they in fact face a common set of underlying barriers.

First, the issues under negotiation have grown more complex, penetrating deep into domestic policies.  Second,  many multilateral institutions, created in the aftermath of World War II, have proven rigid and difficult to change,  clinging to outmoded decision-making rules and established set of interests  that fail to reflect the current state of affairs. Third, in many areas international institutions have proliferated with overlapping and contradictory mandates, creating a confusing fragmentation of authority. And last, these trends are compounded by the rise of new powers, such as India, China and Brazil, meaning that a more diverse array of interests have to be hammered into agreement for any global deal to be made.

Gridlock, then, is not an isolated issue, unique to Geneva, Warsaw, Bali, or other arenas of global negotiations. It is a general condition of the contemporary international system, one rooted in deep historical trends.

Ironically, many of the contemporary barriers to cooperation today derive from the deepening of interdependence, a product of successful cooperation in the past. By preventing World War Three and fostering a more open and rule-based global economy, the postwar international order allowed the world to reach an unprecedented level of globalization. This shift allowed countries like China to engage in the international system, and made all countries more dependent on each other. The result has been unprecedented peace and prosperity, but also a new range of challenges that existing institutions are poorly equipped to manage.

How can we move ahead in a gridlocked world? The first step is to recognize gridlock as a general, historically contingent phenomenon, not a blockage specific to Syria, trade, climate, or any other area. Instead of simply calling for more “political will,” we need to understand the barriers we face and design strategies accordingly.

In some cases, institutional innovation may help. For example, on climate change, a global deal in which emissions targets are assigned from on high and dutifully implement by national governments has proven infeasible. At the same, a dynamic patchwork of climate actions is emerging, including national commitments and voluntary actions by cities, regions, companies, and civil society groups. Instead of only negotiating emissions limits between countries, the UN talks could engage these “bottom up” actions to bring them to a higher level of scale and ambition.

But new institutions can also lead to new problems. On trade, gridlock over hard issues in the WTO has meant that the real negotiations have shifted to the increasing number of regional and bilateral agreements. Many members of the business community see the two as substitutes. The danger, however, is that large regional agreements,  such as the trans-Pacific and trans-Atlantic deals currently under discussion, entrench rules on issues of, for instance,  intellectual property or investment protection that emerging economies will be unlikely to accept, making future multilateral deals harder to reach.

This column first appeared on OpenDemocracy

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