Sleepless beyond Seattle?

"The future ain't what it used to be". That's how the US baseball player and off-the-cuff philosopher, "Yogi" Berra, once described the changing times. Today, it could just as well have been a trade negotiator's reflection coming away from the meetings in Seattle.

The areas of disagreement going into ministerial summit were alarmingly wide. In some respects, this may seem paradoxical. Because, on the one hand, trade negotiators have never had better tools at their disposal. The WTO is an established and tested institution. There was no recourse to protectionism in the wake of the Asian crisis. There was even a pre-cooked menu for negotiations on agriculture and services, as well as for review of a number of other agreements. And progress has been made on the forward-looking work programme established in Singapore 1996.

So, why then all the hesitation and divergence? There is no easy answer, but part of the problem lies in a lack of collective leadership and determination. The US abdication from its traditional engineering role in global trade negotiations has certainly contributed to this. In addition, other OECD governments have gone on the retreat somewhat, often as a response to some of the negative public reactions against the WTO, now widely and mistakenly portrayed as the dark and evil instrument of globalisation. Developing countries, on their side, are deeply suspicious of proposals for "greening" or "bluing" the WTO, seeing such moves as nothing more than veiled attempts to raise new trade barriers. Instead, they are calling for a new deal to tear down traditional barriers to their exports and for help to implement the agreements reached in the past.

It is high time that governments regained the initiative and their long-term vision. It is their responsibility to look after the broader interests of society and not to fall prey to the interests of specific pressure groups. There is a need to inject all stakeholders in our societies with a renewed sense of confidence in the trading system, which includes defending the credibility of the WTO. A difficult task, perhaps, but it has to be taken on.

There are good arguments why reducing barriers to market access should remain at the core of the next round when it eventually gets under way. It is classical ground where the WTO and its predecessor, GATT, have proved their efficiency. The WTO’s experience will help to achieve the substantive results so badly needed by the developing world. Different countries may have different levels ambition about where they want the substantive negotiations to go, particularly in agriculture, but there is no major reason why the trade barriers area should become a stumbling block in the months and years ahead.

The market access negotiations will be crucial to rebuilding confidence, be it in agriculture, textiles or industrial tariffs. Here, the OECD countries should lead by concrete example, to show that we mean serious business and that the sensitive areas will not be left by the wayside. Everything on the table, in other words.

Looking at the implementation of WTO agreements may be a necessary compromise for promoting consensus on the broader trade round. But this should be approached with care. After all, the Uruguay Round agreements were the result of painstaking negotiations, much of which was devoted to the interests of developing countries. Reopening the substance of one or other agreement carries no guarantee for developing countries that the new outcome will be an improvement on the original – indeed, it could be worse. But the implementation problems should not be dismissed for all that. The agenda should provide time to examine specific implementation issues and draw appropriate conclusions, including to help out with implementation in a way that is tailored as much as possible to individual country needs.

Rules and opportunities

A third crucial dimension of the future trade agenda is the development of rules. Here, there is a host of sometimes strongly conflicting interests. While it is often argued that the rules area should stand above the usual give-and-take considerations of trade negotiations, political realities often speak a different language. Whether or not issues such as investment and competition will eventually make it onto the talks agenda will influence the stance some countries take on more traditional market access issues.

It is very much a question of the long-term credibility and viability of the multilateral trading system. To stay relevant, the rules of the system must keep pace with the changing world economy, including the rapid proliferation of regional trade agreements, and contribute to sustainable development in the broadest sense.

To pursue trade policy through litigation and dispute settlement as an alternative to conscious elaboration of the rules of the game is not a sustainable option. The more such dispute settlement reaches into sensitive domestic regulations with imprecise or inadequate ground rules in the WTO, the greater the risk of alienating not only public opinion, but the policy-makers themselves.

The writing is on the wall. New trade talks are needed more than ever to start filling the credibility gaps. As long as the outcome of the process is better trade opportunities, not new trade restrictions, then that credibility can be restored. Take the example of trade and labour. Unless there can be clear assurances that the purpose of raising this issue in the WTO is not to promote trade restrictions, but to work towards better working conditions, that the instruments to proceed will be positive inducements, not threats of new constraints, then there is really not much hope of making progress with the WTO as an active partner.

The stakes are high, so high that outright failure is not a political option. One should never underestimate the dynamic power of big trade talks, as the Uruguay Round showed. Can we wait another ten years to move the world trading system forward? Probably not. Globalisation will continue apace, regardless of Seattle. Ministers should do all they can to launch a Millennium Round worthy of the name. And if they put the interests of the economically weaker countries high on agenda, the outcome could be positive for us all.

* Arne Rodin is Head of the Department for International Trade, Swedish Ministry for Foreign Affairs and Chairman of the OECD Trade Committee

©OECD Observer No 219, December 1999 

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

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