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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