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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