A decade old, where does the WTO go from here?

Gary Sampson is Chair Professor at UNU Institute for Advanced Studies and Professor at the Centre for Business and Public Policy, Melbourne Business School, Melbourne University. This commentary first appeared in the Japan Times on October 26, 2005. These are his personal views

As the World Trade Organisation (WTO) reaches its tenth year, symposiums are taking place around the world to inquire into its past achievements and future directions. From 25 to 27 October, scholars, government officials, members of international organisations, and non-governmental organisations will be meeting at the United Nations University in Tokyo to debate the past, present, and future contribution of the WTO to the world economy. The symposium is particularly timely.

Not only is the WTO one decade old, it also finds itself on the eve of a make or break meeting of trade ministers in December in Hong Kong. For the Hong Kong meeting to be successful, and for the WTO to prosper in future decades, it requires broad based support. However, as public support for the WTO is flagging to say the least, it is timely to address the question of how to change this public perception.

Many fiercely criticize the WTO and argue that its rules constitute an unwanted intrusion into the domestic affairs of sovereign states. It’s true that as a result of a rather ill-thought out process, trade policy - as conducted by the WTO - extends its influence well beyond what has traditionally been considered as international trade policy.

But there are many reasons for this. Some non-conventional trade matters have gravitated to the powerful WTO dispute settlement mechanism as it has the power to enforce decisions that other institutions lack. Its decisions result in compliance with WTO respected obligations, compensation for adversely affected parties, or legally sanctioned retaliation. This is not the case for treaties falling under the auspices of the United Nations, for example. Further, the coverage of WTO rules has been extended to new areas—such as intellectual property rights and trade in services--with many of the implications being unforeseen at the time of their adoption. In addition, other recently negotiated treaties, such as some relating to the environment, certainly raise questions about the compatibility of WTO rules with their own.

The extended reach of the WTO is evident in domestic regulations relating to patents, financial services, subsidies, and support measures for agriculture. Some WTO agreements raise ethical questions about the patenting of life forms, precaution and risk management, access to essential medicines, the rewarding of indigenous peoples for their genetic resources, and the legality of labels introduced for environmental and other purposes. There are WTO negotiations on the legitimacy of fishing subsidies that lead to fish stock depletion, and recent disputes have dealt with internet gambling, genetically modified organisms and the conservation of endangered species.

Many would argue that all these items are on the agenda of other institutions – frequently the specialised agencies of the United Nations—with the skill and mandates to deal with them. In the same vein, WTO members have made it clear that they have no desire to belong to anything other than a trade institution mandated to oversee agreements adopted on the basis of consensus by the 148 member countries. In other words, the WTO has no desire to be an agency for the enforcement of environmental or social standards. If non-trade matters are gravitating to the WTO, they argue, it is because governments have willed it, or the institutions that are supposed to deal with the subject matter are failing in their tasks. It should not lead to a lack of public support for the WTO.

The bottom line is confusion over what the WTO should, and should not, be doing. This has manifested itself in uncertainty, mistrust and eventually animosity towards the organisation. Understanding why the WTO is engaged in some areas and not others would clarify the role of the WTO and do much to promote public confidence.

This is particularly the case for the United Nations and its specialized agencies which are charged with many of the issues that are now gravitating to the WTO. The issues include important aspects of the Millennium Development Goals and the World Summit on Sustainable Development.

While recognition of the need for greater coherence of this sort is not new in the WTO, it has taken on a new importance. One outcome of the Uruguay Round (the predecessor to the Doha Development Agenda) was agreement among ministers that ‘‘growing interactions between national economic policies meant that cooperation in each aspect of policy making was necessary for progress in other areas". The World Bank and the International Monetary Fund were singled out for this task, and indeed over the past ten years greater coherence has been achieved.

But with the expanded agenda of the WTO, it is now important to seek coherence with the operations of the specialised agencies of the United Nations. With ten years of experience to draw on, now is the time to do just this.