Eminent call-girls

Aaargh! Yet anoth­er knee-jerk call in the Finan­cial Times for “wise” men (and women) to guide WTO out of it’s slough.

Third, in lieu of the WTO min­is­te­r­i­al, a group of emi­nent peo­ple should be appoint­ed with the task find­ing a way out of the cur­rent dol­drums and out­lin­ing future cours­es of action. The head of the group should prefer­ably be from one of the emerg­ing economies: Ernesto Zedil­lo, the for­mer Mex­i­can pres­i­dent, Mari Panges­tu, the Indone­sian trade min­is­ter, and Ujal Singh Bha­tia, India’s for­mer ambas­sador to the WTO, are among the names that come to mind.

Extract from End the cha­rade in talks on glob­al trade — FT.com

Enough! Experts, emi­nences (and oth­er “call girls”) have had an impact on the course of the mul­ti­lat­er­al trade sys­tem in the long-dis­tant past (the Leutweil­er review in 1985 was prob­a­bly the last real­ly influ­en­tial review) when the mem­ber­ship was small­er and the active mem­ber­ship had coher­ent pol­i­cy goals.

But the last cou­ple of high-pro­file efforts— the 2005 Suther­land Report (I reviewed it here) and the 2007 War­wick Com­mis­sion report (reviewed here)—proved more effec­tive in dress­ing up ideas than bring­ing about change. Analysis—or even ex-cathe­dra advice—is not what WTO is miss­ing. The WTO’s own Annu­al Report under the edi­tor­ship of Chief Econ­o­mist Patrick Low has been an excel­lent resource and there is nev­er a short­age of Bish­ops around WTO’s tables….

What’s miss­ing in WTO is the incen­tive to col­lab­o­rate on new trade agree­ments. Will that ever come back? Per­haps. But here are three rea­sons for skep­ti­cism on that score. First, WTO (and before that, GATT) nego­ti­a­tions have prob­a­bly nev­er been the main, or even the modal, frame­work for trade lib­er­al­i­sa­tion; uni­lat­er­al lib­er­al­i­sa­tion is much more typ­i­cal. World bor­der bar­ri­ers on mer­chan­dise trade (applied, not “bound”) are now on aver­age below dou­ble-dig­its; so the rec­i­p­ro­cal nego­ti­a­tion of bar­ri­er cuts holds less attrac­tion, espe­cial­ly when lib­er­al­iza­tion-by-agree­ment is com­pli­cat­ed by con­tract and tim­ing and sequences for mar­ket-open­ing that may not real­ly work.

Sec­ond, the cur­ren­cy of WTO trade nego­ti­a­tions may have lost much of its attrac­tion (cause or effect? Not clear).

Third, the pol­i­cy dis­tance between the largest trad­ing economies (emerg­ing and OECD) is now so great that the most prospec­tive forms of agree­ment are dis­crim­i­na­to­ry (FTAs, “Crit­i­cal Mass” agree­ments), based on a rever­sal of WTO’s fun­da­men­tal prin­ci­ple.

Of course, the WTO has impor­tant func­tions oth­er than fos­ter­ing trade nego­ti­a­tion: dis­pute set­tle­ment chief among them.

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