WTO embraces the irresistible

WTO’s annu­al World Trade Report for 2011 sig­nals a turn­ing-point for the soon-to-be-Doha-less Orga­ni­za­tion. It attempts to pro­vide a ratio­nale for aban­don­ing WTO’s half-hos­tile stand-off with the more dynam­ic uni­verse of pref­er­en­tial trade agree­ments (PTAs) and for embrac­ing PTAs instead. Or, as the sub­ti­tle of the report puts it, in EU-ese, a ratio­nale for mov­ing “from co-exis­tence to coher­ence”.

The Report’s re-cast­ing of the WTOs agen­da goes like this:

  1. Show that the tar­iff pref­er­ences in the near­ly-300 PTAs are not that impor­tant and, indeed, aren’t being used much. 
  2. Despite the enor­mous growth of PTAs, only a small frac­tion — around 15% — of glob­al mer­chan­dise trade actu­al­ly receives pref­er­ences.  A major rea­son for this is that MFN tar­iffs are already quite low with more than half of glob­al mer­chan­dise trade hav­ing applied MFN rates of zero. In fact less than 2% of world trade is eli­gi­ble for pref­er­ence mar­gins above 10 per­cent­age  points.  ” Extract from Pas­cal Lamy—launch of WTO World Trade Report 2011
  3. Sug­gest that since PTAs don’t, after all, tread all over the WTO’s his­toric domain—the enforce­ment of non-dis­crim­i­na­to­ry tar­iff treat­ment— it may be time to take a more pos­i­tive view of them, dep­re­cat­ing old, tar­iff-focussed, “Viner­ian” con­cerns about the dan­gers of trade diversion
  4. Con­clude that the growth in the num­ber of pref­er­en­tial agree­ments (the “exten­sive mar­gin”) must there­fore be due to incen­tives that WTO, too, can embrace: facil­i­tat­ing inter­na­tion­al sup­ply-chains, for example
  5. Assert that growth at the inten­sive mar­gin of the pref­er­en­tial regime—the deep­en­ing of eco­nom­ic integration—is tak­ing place in pol­i­cy domains that the WTO has either reg­u­lat­ed or would like to pur­sue; for exam­ple, qual­i­fi­ca­tion and accred­i­ta­tion of ser­vices providers, or invest­ment and com­pe­ti­tion policies.
  6. Call these inten­sive-mar­gin growth trends by “embrace­able” names such as WTO+ (deep­en­ing in domains already includ­ed in WTO agree­ments) and WTO‑X (exten­sion to domains that the WTO would like to cover).
  7. Spec­u­late that the Orga­ni­za­tion might give-up try­ing to reg­u­late Mem­ber gov­ern­ments’ par­tic­i­pa­tion in PTAs (the “hard law” approach) and offer, instead, to coop­er­ate with Mem­ber gov­ern­ments’ observed inter­ests in eco­nom­ic inte­gra­tion through pref­er­en­tial agree­ments that include WTO+ or WTO‑X provisions
  8. Devise an agen­da for this coop­er­a­tion based on adding trans­paren­cy to the PTA regime (“soft law” approach) and devel­op­ing new WTO frame­works for non-dis­crim­i­na­to­ry “crit­i­cal mass” agree­ments that would allow WTO to inte­grate some of the WTO+ and WTO‑X ini­tia­tives that are now found only in the pref­er­en­tial regime.

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