Responding to the Crisis at the WTO

Although the WTO agreements have boosted world trade and benefited some countries, they have fallen well short of the promise to reduce the gaps between the rich and poor, between the powerful and the weak, and between those who pursue immediate gain and those who fight for a fairer world. Indeed, the WTO—and trade liberalization more broadly—has come to be regarded as the vanguard of an economic paradigm about which there are increasing doubts. The orga nization is perceived by an important and highly vocal segment of society as a central part of the effort to impose the "Washington Consensus" on the rest of the world—an economic system based on a blind belief in the market and predicated on eliminating as many constraints on corporate opportunity as possible. Whereas WTO agreements are by and large unfairly accused of advancing an unpopular economic paradigm, that has not prevented the public perception of the WTO as the vanguard of this paradigm.18

The crisis at the WTO reflects both growing doubts about staying on a path that has failed to deliver on its promise and the growing insistence of the developing world that trade liberalization must not aggravate the development problems of poorer countries. The system is responding to this crisis with a broad debate on how to achieve better coherence among different policy areas and active analysis of how the system can deliver genuine development benefits, including the correction of past inequities. There is a clear sense that trade liberalization must not undermine progress toward broadly supported public policy goals such as poverty alleviation, a healthy environment, social justice, or human rights.

Since it has become clear that countries do not automatically benefit from trade openness, a major effort is under way to put in place the conditions that would make such openness a more positive experience. Since 1997 six intergovernmental agencies, including the WTO, have operated the Integrated Framework (IF) for Trade-Related Technical Assistance for Least Developed Countries, demonstrating growing cooperation among international institutions sharing an interest in a common theme. To date, the IF is active in 33 of the world's poorest countries, helping to integrate trade with national development plans and poverty reduction strategies, setting priorities for trade-related technical

New Approaches to Trade Governance assistance, and advising on governance reform to enhance participation in the world economy. This approach directly addresses one of the development-oriented goals in the WTO Preamble.19

More recently, the WTO has developed a work program on Aid for Trade. Targeting developing countries, particularly the least developed ones, this aims to help governments put in place the capacity and institutions needed to benefit from more open trade. Aid for Trade is seen by many developing countries as very much part of the "down payment" they expect if they are to sign up to any package emerging from the Doha Round.20

Efforts are also being made in the Doha negotiations to link a country's obligations to respect certain disciplines with its actual ability to do so. In the ongoing discussions about trade facilitation (the removal of administrative barriers to trade), countries will agree to take on the full set of obligations only if and when they have the necessary institutions and human capacity in place. Where they do not, they will receive technical assistance— perhaps through Aid for Trade programs.

The issue of how trade rules link with and affect other public policy goals is also debated in the WTO's Trade Policy Review Mechanism. This unit undertakes regular, independent studies of member countries' trade policies and the extent to which they respect the requirements of WTO membership.

This may not be enough. The world may need to develop a set of screens and tests on sustainable development, along with a mechanism to settle areas of apparent or real incompatibility. All new trade rules, and to some extent also existing ones, would be subjected to these to ensure that their impact on sustainable development was positive. A forum to seek positive resolution in the case of incompatibility would also be needed, probably sep arate from the formal dispute settlement mechanism. The Council for Environmental Cooperation set up under NAFTA was intended to do something like this, although it has never lived up to expectations.

Beyond the interagency level of cooperation on the Integrated Framework, there is a great deal of experimentation going on with forms of collaborative governance that go beyond strict government-to-government interaction. These involve public-private partnerships or public policy partnerships that gather concerned stakeholders in "accountability compacts." The Extractive Industries Transparency Initiative, the World Commission on Dams, and the Forest Stewardship Council are good examples of these.21

Despite the encouraging developments and proposals just described, some of the problems that have become evident go well beyond the multilateral trading system itself. The crisis of the WTO also reflects the growing malaise caused by the perception that global change—and particularly economic liberalization—has outrun the world's ability to govern for the general good of humanity. As it becomes increasingly clear that the dominant economic paradigm is making poverty, social injustice, and environmental degradation worse, the institutions that serve that paradigm come to be mistrusted.

Thus a cloud of uncertainty hovers over all attempts to push on further down that same road. The multilateral rounds of WTO negotiations and the additional concessions beyond WTO rules that powerful trading powers wrest from their partners through regional and bilateral free trade agreements or sectoral agreements of one kind or another all begin to look like "more of a bad thing." Progress is not progress if the world is heading in the wrong direction.

Yet correcting this, or finding an alternative, is made doubly difficult by the lack of an

New Approaches to Trade Governance agreement on the paradigm that might offer a broadly preferable alternative. Critics of the current system know that they want a reliable and functioning economy whose quantitative and qualitative growth offers steadily increasing opportunity. They want to correct the inequities that characterize today's world, reducing the gap between rich and poor countries and between rich and poor within countries and building respect for human rights and social justice. And they want to live within the limits imposed by Earth's ecosystems and natural resources. In short, they want to move toward sustainable development and would like the WTO and the other elements of the multilateral trading system to be a force in that direction. They want the WTO to consider the goal set out in its Preamble not as a statement of broad intention but an imperative, a benchmark against which it is judged and against which all proposals to expand its disciplines are evaluated.22

In terms of both the collapsing paradigm and the need for the trading system to serve a wider goal, the notion of sustainable development may well mark the way forward. Indeed, it may be the only acceptable way forward. The goal is there in the Preamble. The need to meet it is reinforced in the Doha mandate, and a space has been created in which itineraries toward the goal might be reviewed. All that is missing is the political will to occupy this space and the tools to make the sustainable development paradigm operational.

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