WTO: Where are we heading?

WTO: Where are we heading?

Indonesia’s deputy Permanent Representative to the World Trade Organization (WTO), Ambassador Iman Pambagyo, penned an op-ed in the Jakarta Post on 27 May 2015, entitled “WTO: Where are we heading?” The question posed was essentially rhetorical. The Ambassador did not need an answer. He in fact provided the answer to his own question in the body of the article. The question was therefore posed for maximum effect. As a former WTO Permanent Representative, I can sense much frustration written in the question. Moreover, I also sense the desperation of one who continuously finds no solace in this multilateral organization despite all overtures at reforming it. In my humble view, WTO may be beyond repair.

WTO has always prided itself as a member-driven organization. It created its ‘Green Room’ as a means of getting representative views on all issues including its membership. It got to a point, however, where the majority of members: essentially from the developing countries, the least developed countries and small vulnerable states who were the small and marginal global traders, felt that the Green Room was being dominated by the large trading nations. Those being dominated have to await invitations, where logistically possible and convenient, to enter this hallowed ground. Pragmatism has thus been abused for sectional interests.

According to Ambassador Pambagyo, this malpractice continues in Geneva and has worsened. The Green Room has been reduced to the ‘so-called G5-Plus countries’ – comprising the US, the EU, China, India, Brazil, Australia and Japan. The Director-General chairs the restricted meetings. This aberration is further tainted by the fact that the meetings underway in Geneva are convened behind closed doors. The rest of the membership is not allowed in. There is no transparency. Their representatives in Geneva do not even share in any media releases from the closed meetings. They have to get their news through outside means, e.g. through the Washington Trade Daily or the Third World Network’s journal SUNS.

But there is more shenanigan going on in the privacy of the G5-Plus surrounding. According to Ambassador Pambagyo, the developed G5 members are placing increased pressure on the two emerging global traders: China and India, to lower their ambition on market-liberalization of agricultural and industrial goods. For if this can be lowered, then the flexibility being sought by developing countries can then be commensurately aligned at a lower level. This, the G5 members reckon, would still afford policy space for them to continue their domestic subsidization and exportation of subsidized agricultural products. These subsidized exports invariably play havoc to the production and marketing efforts of developing countries that are still trying to develop their primary industries to their full potential in order to integrate fully into the global economy. The ever-resourceful developed country negotiators are justifying their actions as the need for a ‘recalibrated’ approach (the US) or for a ‘simplified’ approach (the EU). All this is done in the name of concluding the Doha Round of trade talks (DDA) that were originally aimed at creating an even playing field for the majority of WTO members – the developing and least developed countries including the small vulnerable economies.

In any FTA negotiations, trading power, if not moderated with a sense of justice and compassion, will continue to corrupt.

What is happening however, is abuse of trading power by the large trading nations; or the exercise of ‘power politics of negotiations’, as Professor Jane Kelsey puts it in her book: “Serving Whose Interests?” It is nothing new in the context of the WTO. These large global traders are corrupting the multilateral trading system and the WTO specifically. And that is not surprising. “Power corrupts”, as US statesman, Adlai E Stevenson stated in 1963.

And where is the WTO heading? A corrupted system will not survive. The ‘death of multilateralism’ has already been coined. This directly relates to the convolution surrounding the DDA and WTO’s seemingly inability to conclude these talks. From another perspective, Gordon Wong, wrote in ‘The Beginning of World Trade Disorganization’ in January this year. He put this down to the relative decline of US power and its reducing influence and ability in underwriting this multilateral system.

In the light of what is happening in the WTO, greater clarity is now emerging as to the true motives of some of the big players and of the respective slogans they love to bamboozle the general membership of the organization and the world at large with. Before Wong’s paper, Dr Jason Hickel had written in ‘Free Trade and the Death of Democracy’ that “It turns out that ‘free trade’ has very little to do with meaningful human freedom, and rather a lot to do with corporate freedom – the freedom of corporations to extract and exploit without hindrance.”

With the death of multilateralism, observers are seeing an increased growth in plurilateralism and regionalism, e.g. TTIP, TPP, TISA, RCEP etc. This is being touted as a natural response in this process of fracture. However, the ‘power politics of negotiations’ still pervades. As such, we see new expressions of trading power politics. The latest which is creating a buzz around the globe is the Investor-State Dispute Settlement (ISDS), under which corporations can take governments to court for any government action that leads to reduction in the profitability of any commodity being marketed by these corporations. Closer to home, PACER Plus may not see the likes of the ISDS provision, however, there is every likelihood that there will be telltales of ‘power politics of negotiations’ in the final legal text (including omissions from the text); a constant reminder that in any FTA negotiations, trading powers, if not moderated with a sense of justice and compassion, will continue to corrupt.

Whether it is disorganization or the death of democracy, the WTO is fracturing; and this is being internally-driven. To attribute what is happening here to the law of entropy may be far-fetched, however, it is the nearest to explaining the disorganization that Wong wrote about and the disorder that is emerging when power politics is exercised for the reaffirmation of the power divide that exists amongst the membership. Furthermore, such reaffirmation acts only as a license for those who wield power to arrogantly derogate from approved principles – in the area of domestic subsidies, for example, whilst disallowing this same opportunity to those without power but who desperately need these subsidies for their livelihood and for sustainable development.

Photo: ABC

This article was written by
Kaliopate Tavola

Kaliopate Tavola is a Fijian economist, politician and diplomat. He served as Fiji’s Minister for Foreign Affairs and prior to that as Ambassador to Belgium (also accredited to France, Portugal, Spain, Luxembourg and Greece, as well as to UNESCO and the WTO). He recently served as the first High Level Representative of the Melanesian Spearhead Group. He is a founding member of the PiPP board.

There are 2 comments for this article
  1. Barry Coates at 12:04 pm

    Thank you, Kaliopate Tavola for a thoughtful and typically well-argued article. It is a reminder of the need for reform of the WTO to fulfil its mandate to be a member-led forum for all nations, not only a small club of the more powerful nations, traditionally dominated by the US, EU and Japan, but now including India and China. As the article points out, the configuration may change but the abuse of power continues. It is difficult to see how the WTO as currently operating can be relevant in a world in which there is a new understanding of the nexus of trade, equitable development and environmental sustainability. I concur that “a corrupted system will not survive.”

    However, I do not agree with the chain of causality in the article. It is not the case that the death of multilateralism has resulted in a spate of plurilateral agreements, most notably the Trans-Pacific Partnership Agreement (TPP), the Trans-Atlantic Trade and Investment Partnership (TTIP) and, on a more limited scale, PACER Plus. Instead, it is the reverse. These regional agreements have been designed to marginalise and kill off the WTO. Once a network of plurilateral agreements are in place, the US and EU will have achieved their aim of entrenching corporate rights into international treaties, without having been required to tackle their distorted agricultural subsidies and other trade distortions. Then they will have no need of the WTO.

    So the appropriate response for WTO members is to refuse to sign these regional agreements that erode the rights that they have fought for and won in the WTO, and re-focus back on fundamental reform of the WTO into trade forum that is ‘fit for purpose’ for the 21st Century. Such as system would look very different that the one we have, but it is vastly preferable to abandoning multilateralism in favour of a system that reflects the interests of the US, EU and Japan (and Australia and New Zealand in the case of PACER Plus), and locks in rights for multinational corporations.

    Barry Coates, former Executive Director of Oxfam New Zealand and Green Party Aotearoa candidate.

    • Kaliopate Tavola at 8:55 am

      Bula vinaka Barry. Good to hear from you. I hear through the coconut wireless that Oxfam is finally setting up office in Suva.

      Thanks your comment. I read with interest your take on ‘the chain of causality’ You are closer to the arena of action than I am; and your take on the situation is the subtlety that is not so apparent from my vantage point. With the clarity that you have provided, it seems to me that causality per se is not so much the issue, but ‘motive’: more specifically, reactionary motive – because WTO is there and it is behaving the way it is, one wants to kill it off. And that may be true for the TPP and TTIP and the likes, but not necessarily so for the likes of EPA and PACER Plus. You have implied that in your comment as regards the latter.

      The EPA and PACER Plus negotiations are pivoted around the WTO provisions and principles – GATT Article XXIV etc. Furthermore, WTO even sanctioned the PACER Plus CTA to absent himself from Geneva to help out the FICs negotiate this FTA.

      ‘Killing off the WTO’ by those behind the new plurilateral agreements is thought-provoking. One would think that they want to kill off the Organization as is and not so much the multilateral idea behind it. And I suppose when people talk about the ‘death of multilateralism’, that is probably what they are talking about.

      Barry, I would certainly encourage this conversation. I suggest that we take full advantage of this medium.

      Kind regards. Kaliopate