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Talking Trade blog

The WTO needs reform, but there’s a context

Published 16 September 2020

In the early days when I helped to launch a venture in Geneva that enabled trade policy to become a better tool for sustainable development, there were so many visions about what the World Trade Organization (WTO) meant and what it might become.

Ultimately, there was really only one compelling idea: empower members and advocates from around the globe to interact within an informed context of trade and work with the institution as it actually existed. It was—and remains—a fundamental point.

The WTO is currently winnowing down candidates to fill the vacant Director General post and considering a wide range of reform proposals and suggestions.  The institution’s faltering legal system just ruled in a dispute between two of the largest members in the system, setting up another round of inquiries into the health and functioning of what has always been called the “crown jewel” of the organization.

As WTO members grapple with the biggest sets of challenges faced over its 25-year history, maintaining a clear-eyed view of possibilities is important.

The WTO may become anything the members want it to become, but for the moment, it does not operate with the same logic or functions like the UN, the IMF, the World Bank, the OECD, a national government, a corporation, or an NGO.

Transposing the “wishful thinking” that WTO reform will take place based on experiences with these other institutions and organizational forms, no matter how good, will fail.

The WTO, as it stands now, has been built on a very particular system of member participation, growing out of a historical context shaped by a few powerful interests for both economic and political reasons. Members have changed since then and many more added to the mix, but the context still applies until members decide otherwise or until the institution falls into complete disrepair.

Currently, the WTO Secretariat and its Director General (DG) do not constitute an executive body. They are not free to set an agenda.  Getting to solutions on the myriad problems in the global trading system is made harder by an eroding international consensus on trade.  Disputes or disagreements more broadly on security and geopolitics are rending the fragile bonds that have held the WTO together.

The search for a new Director General candidate has crystalized the calls for reform.  Book makers and wise men and women have been calling out front runners with increasing intensity, but as far as I can see, they are whistling fine tunes in the wind. We need an African, an executive, a woman, a politician, a trade expert, they say. But what do WTO Members need?

In an earlier Talking Trade piece, entitled “Wanted: An Unusual Suspect for the Next WTO Director General,” I asserted that the WTO members did not need a Director General who reflected any particular identity, but rather one with the skills to undertake the reform needed.

The context for such reform, however, is not a fantasy version of the future, as many seem to now wish. It is a reform process that understands and addresses underlying problems, evolving interests, and does so with respect for the space left for the possible.

I am a fan of righting the wrongs, but justice will not be enacted alone through a front door entry to the WTO’s Secretariat building, Centre William Rappard. It will come through the development of a new consensus, which is absolutely not guaranteed, on the role of the WTO that accords with highly diverse and increasingly divergent agendas of influential global powers and those they can persuade—by hook or crook—to join their camps.

Such an evolution requires someone with special skills.  The new DG needs to be able to manage the members and their geopolitics, taps on influential members and mobilises the Secretariat.  The DG needs to be able to see all the various parts of a multilateral trade agenda in today’s contexts.  The DG needs to understand how various aspects of the increasingly sprawling agenda relates to other elements.  He or she needs to be able to see the relationships of this reform agenda to the interests of each WTO member and observe how these interests have evolved over time.

In short, this sort of holistic approach to reform needs to become the WTO’s new “single undertaking” effort.

The single undertaking has always been a challenging standard: nothing is agreed until everything is agreed.  In the context of WTO reform, the idea of a single undertaking needs to be revised.  It should be about understanding the many strings that tie the institution together and managing the unravelling and reworking of the organization to better match today’s realities. 

This is about being practical: any new consensus will likely be less than the founders of the WTO had hoped when, in the mid 1990s, they saw a WTO vision of “progressive liberalisation” rippling across the world. A revised institution, even if it does not reflect the pure vision of its true-believer founders, may be the best that can be done at the moment and certainly better than dissolution.

What the WTO needs now is not someone who can “take control” and ratchet up the drama or “solve” dispute settlement, fisheries, subsidies, transparency or any number of other problems. Rather, it needs someone who understands the system, the players, their aspirations and—most of all—their potential trade offs in the context of the whole; as many “red lines” for negotiators are actually closer to grey if the price is right.

Don’t hire for stature and respect; these are things that come naturally with the office to any committed candidate prepared to do the necessary. Hire for natural diplomatic skill, management skills, and a deep knowledge of the variable geometry of each member and the whole.

As in the early days of the WTO, everyone now seems to have a fantasy version of how things should go. The DG post is a very particular job, requiring particular skills. WTO members will winnow the field in the coming days and this should be relatively easy, even if unpleasant, among a group of very well qualified candidates.

The next cut, however, is serious and it is best that members have clearly examined their interests in terms of the tasks ahead.  To do less, will be to throw the WTO under the bus rather than giving it a helping hand.

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Andrew Crosby is currently the founder and director of Third Horizon Earth, an independent think tank to accelerate the adoption of regenerative development globally.

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