First, there is a growing attraction for a different WTO model – one in which groups of members form “clubs” or “coalitions of the willing” on issues that are then attached to the WTO system. It would no longer be necessary to reach complete consensus among the entire membership as a precondition for having a WTO agreement.
This is a complex area, not least because there would clearly be potential for fragmentation of the system, undermining the basic WTO principle of non-discrimination. Proponents think this would nevertheless be manageable if appropriate safeguards were incorporated. They believe it would be preferable to the current consensus-based system, which provides too much opportunity for blocking tactics and taking issues hostage, resulting in paralysis.
There is an element of “back to the future” here because a system along these lines existed in various “codes” adopted as a result of the Tokyo Round (1973-79). The operation of the codes was unsatisfactory however and resulted in the Uruguay Round’s “single undertaking” (meaning that all members subscribe to all agreements) and the creation of the WTO in 1995. The Tokyo Round codes could thus be seen either as an aberration or a forerunner to a fully multilateral system.
A second straw in the wind is a report issued in February by the Center for Strategic & International Studies (CSIS) entitled “Toward a New Global Trade Framework”. The report emanates from an august cast of US trade-policy thought leaders under the banner of the CSIS Trade Commission on Affirming American Leadership.
The report proposes the establishment of a “trade compact” among like-minded developed market economies to commit to a more ambitious approach to trade rules. The exact nature of the compact is not stated but it is clearly seen as a competitor to the WTO and could evolve into a new organization.
There is yet no sign that this report has traction with US President Joe Biden’s administration – which currently seems to prefer engagement with existing multilateral institutions – but it is out there and being talked about.
These two examples illustrate that the foundations of the WTO, taken for granted for the last 25 years, may be shifting. The director-general very rightly applied an often-used meme when she recently said that “if the WTO did not exist, we would have to invent it”. It might be added that, since the WTO already exists, it now needs to reinvent itself.
The WTO, however, only a forum; it is not in itself an actor. As the next ministerial conference approaches, member governments individually and collectively face many choices and will bear responsibility for the outcome. A good result would be one in which significant progress is made in a few key areas – in particular, agreements to curb harmful fisheries subsidies and on the trade response to the pandemic – and members outline a clear roadmap to tackle outstanding issues in a meaningful manner. That would go some way to safeguarding the future of a truly global trading system.