Trade challenges for WTO members

Thursday, 2 May 2013 00:00 -     - {{hitsCtrl.values.hits}}

The latest report by the WTO is the report identifying the 21st century trade challenges that WTO members would face. The report, which was a result of an announcement at the conclusion of the WTO ministerial conference, was prepared by 12 members from the business sector and civil society. When launching the report, the Director General of the WTO stated that this report covers medium to long term challenges for the multilateral trading system and provides ‘food for thought’ for all stakeholders including WTO members.

The document deals with the state of trade and its contributions to growth and development, ‘transformational factors’ of the current global economy that have shaped trade and the panel’s recommendations for potential action.

The first chapter outlines why opening of trade can positively impact on welfare, growth and development in the context of concerns over issues of fairness, income distribution and social justice etc. although it cannot be the only policy to achieve inclusive growth. The chapter focuses on trade with regard to development, investment, job creation, sustainable development and their benefits and risks.

When launching the report in Geneva, the panel of experts who prepared the report commenting on their work noted that globalisation has changed the world and made it more robust in some ways and more fragile in others. Technology, which has been a major contributor to the rise of global value chains, and the greater role of emerging and developing economies were also noted.

Increase in preferential trade agreements also carries with it benefits and risks, as the report noted. According to the WTO, over 300 such agreements are currently in effect with more under negotiation. Risks include regulatory divergence and increase in costs. The panel also noted that keeping track of all these agreements is a challenge, particularly for SMEs.

Commenting on Non-Tariff Measures, the report notes that they are ‘increasingly associated with public policy objectives’ such as health, safety and environmental quality and that ‘the trade policy challenge’ in this context, is to ensure that NTMS do not unnecessarily truncate the benefits of trade.

On the subject of the current impasse in the WTO Doha Round, while the report does not make any specific recommendations, panellists noted that while the current difficulties which caused the situation remain, conclusion of the round remains a ‘political imperative’. Among the recommendations regarding the conclusion of the talks are that WTO members explore ways that preferential agreements and the principles underlying them could be brought into the multilateral trading system in some way which could eventually lead to ‘consolidation around binding rules in agreed policy areas’. For instance, the panel recommended ‘permitted departure’ be regulated and monitored.

The report also emphasises the need for increased transparency, particularly through greater domestic dialogue among interested parties, and more willingness on behalf of governments in advising trading partners in the development of policies and in providing policy data.

The report also calls for ‘fresh thinking’ with regard to the relationship between flexibility and reciprocity, referring specifically to the subject of special and differential treatment (S&DT) for developing countries. For instance, the panel outlines four guiding principles with regard to flexibility, such as making flexibilities time-specific and basing these on needs and capacity.

The need to strengthen the WTO secretariat to make it more proactive by submitting proposals to speed up negotiations is also mentioned.

The report concludes by outlining a four-pronged ‘convergence challenge’ that governments will have to face: Convergence among members, specifically regarding WTO negotiations; convergence of non-multilateral trade regimes with the multilateral system; convergence between trade and domestic policies; and convergence between trade and public policy non-tariff measures.

As a recent editorial in the Business Times of The Sunday Times pointed out, not many Sri Lankans will know about WTO as it doesn’t make headlines, but “this is one institution that ensures that trade flows across borders are equitable and just; is built on equality and consensus, no big bully or super power status”. As such, the report might help throw light on some new approaches to the talks to conclude the Doha Round.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)

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