Bean-counting and bad faith

The trea­cle-like pace of the WTO nego­ti­a­tions prompts many aca­d­e­m­ic com­men­ta­tors to rush the OpEd pages with claims of sys­temic faults or ath­er­o­scle­ro­sis. It’s unde­ni­able that the WTO, like the UN, faces a bean counter’s night­mare: a mem­ber­ship whose size defeats easy deci­sion-mak­ing, a vast range of rules, and nego­ti­a­tions that have almost frac­tal com­plex­i­ty. But the sys­tem can cope if appro­pri­ate­ly tasked. What fails more fre­quent­ly than the sys­tem is the coher­ence of the enter­prise; test­ed to break­ing point by the cyn­i­cal defec­tion of the most pow­er­ful coun­tries from the spir­it, and even the spe­cif­ic rules, of the sys­tem.

Pas­cal Lamy—who is no mere accountant—has accu­rate­ly sum­ma­rized the bean counter’s view of the prob­lem:

When you’ve got 22 top­ics and 148 coun­tries, and with­in these 22 top­ics you have eight sub-top­ics and with­in these eight sub-top­ics three para­me­ters, the sta­tis­ti­cal odds that you will get some­where are nil. So you have to try and cut the thing up into bits.” (Finan­cial Times)

Put that way, it seems obvi­ous why there has been such tra­vail over the last year on the nego­ti­a­tions with so lit­tle to show for result. But, as Lamy knows well, not every part of the puz­zle is equal­ly hard to work out and few parts are inde­pen­dent of the oth­ers. There are keys that must be found in agri­cul­ture, ser­vices, devel­op­ment and imple­men­ta­tion issues that, once found, will change the com­plex­ion of nego­ti­a­tions rapid­ly (although it may still be an ugly com­plex­ion ).

The sys­tem is cop­ing rea­son­ably well with the search for these keys. I main­tain that when the his­to­ry of these nego­ti­a­tions is writ­ten, the Min­is­te­r­i­al meet­ing at Dalian and the meet­ings this past week in Paris that seem to have achieved some con­ver­gence of will (if not opin­ion) on the ser­vices negotiations—possibly based on a new met­ric of ser­vices lib­er­al­iza­tion bench­marks be count­ed as impor­tant steps. 

I will try to present an argu­ment in a sep­a­rate post (there isn’t room here) that these events rep­re­sent an adap­ta­tion of the sys­tem to the bean-count­ing prob­lem that needs to be remarked because it is a rea­son to be opti­mistic that the ever-more-press­ing needs for coop­er­a­tive man­age­ment of glob­al commons—now the chief role of WTO—can fea­si­bly be met by exist­ing insti­tu­tions.

The great­est ene­my of the sys­tem is not the sta­tis­tics of nego­ti­a­tion. It is the con­stant attack on its coher­ence by the world’s largest economies. Coher­ence, cred­i­bil­i­ty, con­fi­dence and com­mit­ment are essen­tial fac­tors in the suc­cess of the glob­al trad­ing sys­tem. With­out them it will fail because every mem­ber of the mul­ti­lat­er­al sys­tem must make an invest­ment in the nego­ti­a­tions (the ener­gy, time, trav­el of offi­cials, busi­ness advo­cates, ana­lysts) and in the imple­men­ta­tion of the agree­ments (domes­tic laws, admin­is­tra­tive struc­tures, salaries, data-man­age­ment, and some­times eco­nom­ic dis­lo­ca­tion) in order to secure a ‘slice’ of the ben­e­fits for itself and—because the open trad­ing sys­tem is a pub­lic good—to grow the size of the glob­al trade ‘pie’. Com­mon sense and his­tor­i­cal expe­ri­ence affirms that the incen­tive to invest in the pub­lic good—a rules-based glob­al trad­ing sys­tem—dis­ap­pears once the coher­ence or cred­i­bil­i­ty of the project is called into doubt.

Yet every week we hear news that the EU or USA is will­ing to do just that. No oth­er mem­bers have for so long or so per­sis­tent­ly avoid­ed their oblig­a­tions to com­ply with a rul­ing of the WTO Dis­putes Sys­tem (USA on FSC sub­si­dies, for exam­ple, or the EU on beef hor­mones or bananas). No oth­er mem­bers have so bla­tant­ly manip­u­lat­ed the sys­tem with their restric­tions on gar­ment imports from Chi­na once the for­mal quo­tas were final­ly elim­i­nat­ed. No oth­er mem­bers have so open­ly threat­ened to ignore the fun­da­men­tal rule against uni­lat­er­al trade retal­ia­to­ry mea­sures as these two have over mas­sive indus­tri­al sub­si­dies, on either side, to air­craft man­u­fac­ture.

It’s hard­ly a sur­prise then, although deplorable nonethe­less, that the EU has cyn­i­cal­ly decid­ed that it will cheat the rul­ing of the Dis­pute Set­tle­ment Body (DSU) of the WTO by dump­ing a moun­tain of sug­ar on world mar­kets using sub­si­dies whose ille­gal­i­ty have been con­firmed by the DSU in April, using the excuse that the arbi­trat­ed date for imple­ment­ing the DSU rul­ing will not be decid­ed until 28 Octo­ber. The Com­mis­sion fig­ures that’s suf­fi­cient time for it to dump ten times the amount of sug­ar that it ille­gal­ly dumped in 2003, clear­ing the decks for the adop­tion of pro­posed new sug­ar sup­port pol­i­cy.

The EU has always export­ed excess sug­ar, but the 1.9m tonne fig­ure is about 10 times the lev­el in 2003 and more than twice the amount in 2002. Although Euro­pean farm­ers do not receive direct export sub­si­dies for sug­ar sold in this way, the WTO pan­el ruled that they were in effect cross-sub­sidised and hence broke WTO agree­ments. (Finan­cial Times)

Who will have the con­fi­dence to invest in the main­te­nance of the mul­ti­lat­er­al rules-based sys­tem in the face of this sort of bad faith?

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