Warwick Commission report on ‘The Way Forward’ for WTO

“ This ‘variable geometry’ solution would bring together a critical mass of countries with clear direct interests in the particular trade issue to be discussed.  Again, there would be no vote but consensus on the issue would be reached by that critical mass of countries avoiding tactical vetoes from nations with little or no real interest in the issue at hand.”(University of Warwick)

Considered purely from the perspective of decision-making, this recommendation seems to make no difference to actual practice. All consensus agreements reached in WTO are already based on ‘critical mass’. Many of these agreements have both tepid supporters and some actual opponents. But no Member found itself opposed to any existing agreement at the time of the agreement to the extent that it refused to join the general consensus. I can think of only one or two occasions (India at Doha) when a dissenter managed to hold up a decision that had “critical mass” support. Most Members know—as does anyone who has worked on a committee—that you must ‘roll with the punches’ (boxing metaphor) or ‘allow some to go through to the keeper’ (cricket metaphor) or … whatever other metaphor you choose for ‘living to fight another day’ (metaphor of marriage?).

The Commission, however, has in mind ‘critical mass’ agreements, not just procedures for reaching agreements. In other words, plurilateral agreements within the precincts of the WTO like the Information Technology Agreement or even like the Tokyo Round “Codes”. As they say, there’s nothing especially radical or even new in this idea of a variable geometry but the Commission argues the idea has new benefits.

The Commission’s report, unfortunately, does not explicitly detail either the benefits or dis-benefits of this proposal. By implication the Commission seems to consider the proposal is a way to ‘move forward’ past the difficult tangles that have arisen from the variety of interests, capacities, priorities and, in some cases, protectionism that have slowed the monolithic Doha Round to a near halt. But the report does not give any examples of ‘critical mass’ agreement that might accelerate the current talks. They acknowledge that there are some, for-the-moment-potential plurilateral market access agreements in NAMA. But where else?

The Commission briefly considers one disadvantage of bringing plurilateral ‘Codes’ back into the mix; a mixed multilateral-plurilateral approach might reduce the opportunity for making broad reciprocal bargains among Members. But they don’t seem to consider some of the other objections. For example, a return to a variable geometrywould probably might exacerbate the problem of lack of transparency and ‘legitimacy’ that the developing countries complained of in Seattle. Also, the real purpose of the WTO’s Single Undertaking is to bind the most autonomous members (the major industrialized countries at the time of the Uruguay Round ‘single undertaking’ decision) to all of the obligations of the Agreements since they show a tendency to treat them à la carte. How would the proposed ‘critical mass’ agreements avoid this problem?

Although they do not explore the practical consequences of its ‘critical mass’ idea in their report, the Commission proposes several ‘criteria’ for such agreements (p. 31). For example, the Commission stipulates that

That the rights acquired by the signatories to a [‘critical mass’] agreement shall be extended to all Members [of WTO] on a non-discriminatory basis, with the obligations falling only on signatories

I can’t see any of the ‘autonomous’ members of WTO signing up to an agreement in which they give all-comers rights without obligations while bearing the obligations themselves. This is just implausible.

Update: on reflection, I was wrong here. This statement would be true only of plurilateral agreements (such as the Tokyo Round ‘Codes’) that were not designed to take trade coverage into account. The Commission’s criterion is plausible for ‘critical mass’ agreements that encompass a sufficient proportion of trade. The Information Technology Agreement is, of course, just such a ‘critical mass’ agreement. It was designed to enter into effect when the number of signatories accounted for 90 percent world trade. At this point, the signatories could afford to extend MFN (unreciprocated) benefits to those still outside the agreement. The membership of the ITA now covers approximately 97 percent of world trade in IT products.

There is much that I agree with in the Commission’s report. It covers a lot of ground in a professional analysis and offers a lot of sensible conclusions. My reaction from my first reading, however, was disappointment that that there is not more straightforward consideration of, on re-reading, however, is that I wish they had further pursued the discussion of some of their recommendations for change.

For example, the Commissioners stress the importance of more meaningful concessions for developing countries. They urge that

… efforts be redoubled to design clear, concrete Special and Differential Treatment provisions based on solid analysis of development needs and cognisant of the reality that differing needs among developing countries call for differentiated measures.

No argument. But they don’t say what these ‘concrete’ provisions might be or how this differentiation will avoid a return to the sterile debates about discriminatory ‘graduation’ that marked earlier attempts to build a multilateral agreement on a better design for S&D.

They recommend that financial compensation be adopted as remedies in dispute—an idea already implemented in several regional trade agreements (that the Commission deprecates):

… the Commission recommends that WTO Members consider accepting an obligation to provide cash compensation to aggrieved parties where compliance or trade-related compensation is not forthcoming.

Again, I wish the Commissioners had further developed this idea in their report: why has it not taken root in WTO before this (can you imagine the USA ‘compensating’ Antigua over the on-line gambling ban? Or Brazil for the cotton ‘step-2’ program?).

The Commissioners join the chorus deploring the impact of preferential trade agreements (PTAs) on the fabric of the multilateral system, but their suggested remedy the mitigation measure they suggest is a pledge by the major industrialized Members of WTO not to reach PTAs among themselves. I’m not sure there’s much danger of that happening. But what about the proposed EC-India PTA? Does that fall under, or outside, this prohibition?

The Commission concludes their report with a recommendation for a “process of reflection” for WTO Members, led by the Director General, to “consider the challenges and opportunities facing the multilateral system and to draw up a plan of action to address them.”

It’s hard not to read this as a recommendation to gaze, skeptically, at one’s own navel! Not what I would have thought the WTO really needed to ‘move forward’. I was too harsh on the Commission in that remark. But I would be astonished if a discursive process (reflection, debate) among sovereigns, who for the present find it difficult to identify the same breadth of common interest that the GATT/WTO Members formerly identified, led to useful results in a potentially complex domain such as regime-design. We’ve had discouraging examples of this sort of thing before in WTO: the fruitless debates on ‘implementation’ issues between 1995 and 1999, for example. I certainly agree that there should be further analysis along the lines begun by the Warwick Commission. But in the end it’s ‘leadership’—a mixture of incentives and coercion (to be ‘hard-bitten’ about it)—that will bring about regime-change.

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