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In
less than ten months — at their Ministerial Meeting in Cancún —
WTO Members will be asked to give a major push to conclude the latest
round of global trade negotiations by January 2005. Success is not
guaranteed. Uncertainty in the world economy, combined with growing
international tension, has overshadowed the new Round and weakened the
cause of multilateral cooperation. Yet this is precisely why the WTO's
success is so vital.
Signs
of global economic weakness are not hard to find. America's recovery
has slowed. Japan risks slipping back into recession. Europe is
proving that it is not immune to a global downturn. Meanwhile a
widening circle of emerging economies — Argentina, Brazil, Turkey
— face the threat of financial instability. During the last major
financial crisis — in 1997 and 1998 — the world trading system
provided an essential bulwark against a broader global downturn.
Failure to show progress in Cancún will be perceived as a set back
for the Round — so soon after its launch last year — further
shaking confidence in an already uncertain international economic
system. Concerns would mount that the new global economy — untested
in hard times — was more fragile than previously thought.
Failure
in Cancún could send an equally damaging signal to the developing
world. In recent years more and more developing countries have turned
to open trade — and the WTO — as key to growth, development, and
poverty eradication. They have been convinced of the need for stronger
multilateral rules, not weaker ones. More trade liberalization, not
less. An effective WTO, not an impotent one. Developing countries
agreed to the launch of new negotiations last November on the promise
that it would lead to opening markets, reducing subsidies, and
liberalizing technology — all issues of major importance to the
developing world. An absence of significant progress before Cancún
risks turning the idea of a “Development Round” into a hollow
slogan. It could reinforce perceptions, widespread in certain
quarters, that the industrialized world has lost its stomach for free
trade.
Lack
of progress in Cancún also carries broader systemic risks. The WTO is
in the spotlight as never before. Its expanded rules, broader
membership, and binding dispute mechanism means that the WTO is seen
as increasingly central to managing international economic relations.
But this also means the costs of failure are higher — with
ramifications that can be felt more widely. The inability to advance a
new WTO agenda in Cancún could damage the credibility of the
organization. Fresh doubts would be raised about the WTO's suitability
as a forum for future negotiations. With the risk of continued
deadlocked, and diminished prospect of advancement on the multilateral
front, the pressure to turn to regional and bilateral deals could
prove irresistible.
This
is not a hypothetical danger. There are over 170 regional trading
arrangements in existence today — 90 of them formed in the past six
years — and a further 70 are under discussion. Virtually all the
Americas, Europe and Africa are now involved in a regional grouping of
one sort or another. China has just announced its plan to join ASEAN,
and India has signalled that it may not be far behind. Each week
seemingly brings word of a new or expanded arrangement.
Let
me be clear. Regional trade agreements can be a good thing, as the
European Union itself has spectacularly demonstrated over the past
forty years. Creating a single regional market can increase economic
efficiency. Regional trade agreements, in tandem with multilateral
liberalization, can also help countries — particularly developing
countries — build on their comparative advantages, sharpen the
efficiency of their industries, and act as a springboard to
integration into the world economy. They can also help focus and
strengthen their political commitment to an open economy.
Regionalism
can be a powerful compliment to the multilateral system, but it cannot
be a substitute. The multilateral trading system was created after the
Second World War precisely to prevent the dominance of rival trading
blocks. The resurgence of regionalism today risks signalling a failure
of global economic cooperation and a weakening of support for
multilateralism. It threatens the primacy of the WTO, and foreshadows
a world of greater fragmentation, conflict, and marginalization,
particularly of the weakest and poorest countries.
Anyone
who believes that a set back in Cancún would not carry significant
costs for the multilateral system need only recall the fall-out from
the collapse of talks in Seattle in 1999. Negotiating deadlock,
deteriorating trade relations, mutual suspicion and recriminations —
all contributed to a weakening of confidence in the WTO from which the
system has still not fully recovered.
Ten
months remain before the Cancún Ministerial, some two years before
the Round is scheduled to conclude. The temptation for governments to
try to put off difficult decisions or issues is an understandable one.
It must be resisted. Decisions made in the coming months will provide
an important indication of the prospects for meaningful progress in
Cancún and will lay the necessary groundwork for concluding the Doha
Round on time.
In
Geneva the negotiating groups, councils and committees are up and
running. The point has been reached where we need to move from
discussion of procedure to discussion on substance. Three issues —
on public health, special treatment for developing countries, and the
implementation of existing WTO rules — require decisions within a
month. Other deadlines for substantive work on agriculture, services,
market access, and the dispute settlement system are approaching this
spring. In Cancún itself, important decisions will need to be taken
on the launch of negotiations in investment, competition policy, trade
facilitation, and transparency in government procurement.
Above
all we need to make steady progress across all areas of the
negotiating agenda if the Doha Round is to move forward in a balanced
way. The logic of a broad and balanced agenda — a new round in fact
— is that it creates the necessary trade-offs and compromises so
that all countries have a shared interest in advancing negotiations.
There is no other way to bring all 144 governments that make up the
WTO on board. No better way to prevent the further marginalization of
many developing countries through the weakening of the multilateral
system. No other way to ensure that WTO rules keep pace with the
technological and economic changes that are driving globalization.
No
one expects this to be easy. This Round is not only the most ambitious
multilateral trade negotiation ever undertaken but also the most
wide-ranging. It spans issues as diverse as investment, agriculture,
heath and the environment. It encompasses over 140 economies,
including new powerhouses like China. The WTO's ambition in the Round
is in fact an accurate reflection of the diversity of its membership,
the breadth of their interests, and the complexity of globalization
itself.
This
complexity presents governments — and the WTO itself — with the
tremendous challenge of weaving all of these disparate threads
together into a shared undertaking under a unified system of rules.
But
it is a challenge that cannot — or should not — be avoided. A
successful liberalization round could contribute as much as $2.8
billion to global growth. And the gains would be proportionately
higher for developing countries – by one estimate 1.5 billion,
easily dwarfing what developing countries receive in overseas aid, and
many times what poor countries have so far been granted in debt
relief. Trade is not the only thing that developing countries need if
they are to grow faster, but without trade their prospects are
certainly much worse.
The
fact remains that the multilateral trading system — for all its
imperfections — is indispensable to managing the global economy we
have created. It gives even the smallest and poorest countries greater
leverage and security than they would ever have outside the system. It
is a system which replaces the role of ‘power’ in international
trade relations with the rule of ‘law’. Together with an expanding
web of other global institutions and agreements, the WTO reflects the
emergence of a new, but still fragile, international order. From trade
to the environment, human rights to war crimes, the world is moving
towards rules, not power, persuasion, not coercion — a world of
mutual respect, rights, and freedoms.
The
question before governments in Cancún is not whether progress is
desirable, but whether they can find the collective will to make it
happen. The WTO is only as strong or as weak as its Members want it to
be. It works when governments find common cause. When they resist
closer cooperation, it falls into disrepair.
The
key to the WTO is a willingness on the part of governments to find
common cause through a international rules and shared interests. It is
a system whose core purpose — from its inception in the aftermath of
at the end of the Second World War — was the avoidance of global
conflict and the promotion of peace. Peace through rules, peace
through international cooperation, and peace though widening circles
of prosperity.
What
is at stake in Cancún? It goes beyond trade. It is about working to
build a stronger global economy, reducing instability and uncertainty.
It is about linking societies, as well as economies, closer together,
and integrating billions in the developing world into the global
economy. Perhaps above all it is about advancing a new approach to
international relations based on rules, not power — rules to help
manage the powerful forces of globalization for everyone's benefit,
the weak as well as the strong.
We
have a choice: We can stay the course, take meaningful steps towards
concluding a successful Round, and lead by example. Or we can allow
the trading system to drift. We can abdicate shared leadership, and in
doing so try to cope with globalization separately and on our own —
through unilateral actions or regional options. Approaches which will
make finding common answers to global problems all the harder.
John
Maynard Keynes once observed that it is easy enough to identify a
crisis when it is upon us. The difficult thing was to put in place
policies that can head off a crisis before it happens and when
conditions appeared calm. Are we entering the calm before the storm?
No one can know. What is certain is that the failure to make progress
in the WTO in the coming months will leave the world a more insecure
and uncertain place. |
