Blog post
Does the WTO really have a future?
Published 4 October 2024
Something interesting is happening in Geneva. A subtle yet serious attempt to save the World Trade Organization (WTO) is underway. What is novel is that it might just work. It may pull the organisation back from the crosshairs of commercial geopolitics (or the edge of the abyss—choose your metaphor), create a sustainable base on which the organisation can build into the future, and reset thinking about the value of trade and trade regulation.
Success is far from assured. The WTO’s detractors—in Geneva, in national capitals, among civic society organisations—abound. Contemporary global politics doesn’t really appear to be as convivial as one would like to ensure deals get done. Post-pandemic economic recovery has been far from straightforward. And national politics in many countries oscillates too far from the centre ground.
But it’s worth a shot. Why? Because in 30 years the organisation has failed to oversee a far-reaching trade deal in goods or services. Its dispute settlement system continues to be hamstrung by a seven-year (and counting) standoff over the appointment of judges to the appellate body. Public support for trade in too many countries is waning. And the organisation’s most significant member, the United States, has largely withdrawn from active participation. Something needs to be done.
So, what’s going on? Four developments are worth pointing out. First, WTO members and trade pundits alike are coming around to the idea that negotiating in small groups is probably the only way to keep trade liberalisation going while also regulating aspects of economic activity for environmental and social good. It might seem odd that a (near) consensus on the use of what is known as “plurilaterals” has taken so long to emerge, but there are good reasons for the delay.
Plurilaterals were a source of frustration during the General Agreement on Tariffs and Trade (GATT) years because they were inherently exclusionary—that is, they didn’t bind all contracting parties. The result was that they acted as a brake on total welfare gains. Thus, a premium was placed on seeking agreement among all the contracting parties in what became known as a “single undertaking”. The truth is a single undertaking happened only once—in the Uruguay round—but it set a hallowed goal from which some WTO members (for good reason) have not wanted to deviate.
We have now moved beyond that. The idea of a single undertaking has been set aside, and plurilaterals have become the only functional way forward in agreeing trade deals. What is important here is not just that plurilaterals have gathered steam, but that key trade pundits are also advocating for them as pragmatic solutions to blockages previously posed.
The second development worth noting is that the absence of a functioning appellate body has not stopped trade disputes from being settled. What has happened instead is that members are taking fewer disputes to appeal, and they have sought out workarounds so that trade flows are not unnecessarily interrupted. This is noteworthy because it diverts attention away from the United States and the reasons why its domestic politics are unlikely to enable an unblocking of the appointment of appellate body judges anytime soon, and it preserves the functioning of the trading system.
Third, the current Director-General Ngozi Okonjo-Iweala and the Secretariat are making a real attempt to broaden debate about trade in a way that brings in many more voices while avoiding the divisiveness of old. For sure, the WTO is still too focused on member states in its public outreach activities and engagement with key issues remains at times a little one-dimensional, but the current focus on “inclusive trade” does add value, and it is light years away from earlier frankly tin-eared protestations that “trade works” and why it “matters to everyone”.
Fourth, and perhaps the development that is simultaneously the boldest and most humble, is the launch of the WTO Secretariat strategy. What is important here—as the DG made clear at the strategy’s launch—is that this is a programme of work for the ~640 people that work in and around the Centre William Rappard and not WTO members. And it is about time.
The secretariat has long been caught in the turbulence of trade politics. Yet, for all the demonstrations, hyperbole, and claims of existential crises, the people that keep the multilateral trading system’s lights on have seldom been the focus of valuing what they do and how the institution can be refined to deliver on its mandate.
Of course, none of this is perfect. It’s a bricolage of solutions to a truly wicked problem. Ideally all trade deals would be single undertakings, dispute resolution workarounds wouldn’t be needed, we would all know the benefits of trade, we would work collectively to address social and environmental externalities, and the WTO secretariat wouldn’t have had to work so hard to convince everyone that the organisation is worthwhile. But we don’t live in that world. Sometimes, perfect really is the enemy of the good.