Trading system challenges
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Regional trade agreements: challenges and opportunities
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Notify me. Thank you We will contact you when this item is next available to order. Others still link it to the global financial crisis and recent domestic difficulties in the EU and the US which have prevented those countries from fully exercising a leadership role in WTO negotiations. All these factors are relevant, but critics are increasingly pointing to a more fundamental flaw in the system, which relates to the way in which negotiations are conducted. Some observers have therefore argued that thorough reform of the system is needed to overcome the current paralysis.
In fact some experts argue that the WTO has served as a model governance system at the international level, predominantly because of its automatic and enforceable dispute settlement system.
Moreover, through its set of rules and disciplines, it is argued, the WTO has also been successful in preventing protectionist tendencies during economic crisis. The objectives behind those proposals and the pace of proposed reforms have been equally diverse, going from incremental improvements to radical changes in the way the institution functions. While some proposals have been introduced by governments, others have been put forward by academia, research institutes, civil society and other international organisations.
Reforms — or incremental changes — have happened on a number of fronts, including at the management level, in external transparency, public participation in dispute settlement proceedings or in the way in which negotiations are conducted Deere-Birbeck and Monagle, There are, however, diverging views on the desirability and impact of these changes and on whether they go far enough. Consensus is not interpreted as requiring unanimity; however, 3 if no present member state objects, consensus is assumed.
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The single undertaking, on the other hand, requires that all areas are negotiated and adopted by all parties at the same time. With the secretariat assuming an almost marginal role and the consensus principle on the basis of sovereign equality permeating all areas and functions of the organisation, the dominance of contracting parties is its main characteristic. The consensus principle is important for developing countries as, in theory, it guarantees that every member can veto any decisions, irrespective of its political or economic power.
The single undertaking, on the other hand, has supported developing countries on numerous occasions, for instance when a group of Latin American members halted the establishment of the WTO until certain concessions of vital interest to developing countries had been made Croome, In practice, wealthier nations can hold trade talks hostage more easily than poorer ones, because of the fact that they are better able to withstand political pressure to join a consensus even against great opposition Steinberg, ; Cottier and Elsig, ; Low, The consensus principle is thus less about the actual consensual adoption of a final decision than about the process of consensus-building Ismail and Vickers, The largest trading nations therefore bear particular responsibility for helping countries to reach agreement by guiding the process of consensus-building and facilitating an atmosphere of compromise.
It is […] disturbing that critics of the consensus principle raise efficiency concerns only when smaller developing countries and larger emerging economies e. This is particularly true for the current round, where negotiators do not seek to establish linkages systematically with a view to achieving long-term benefits, but focus instead on achieving short-term gains for tactical reasons Rodriguez Mendoza and Wilke, The introduction of linkages prevents certain areas from moving ahead independent of progress in others.
As a result, even small deals cannot be reached, as new proposals prompt further linkages. Some experts also suggest taking into account country size or population, arguing that this would ensure power is shared fairly among developed, emerging and other developing countries Cottier and Takenoshita, ; Elsig, However, experience with weighted voting approaches in the International Monetary Fund IMF and World Bank show that the approach can easily manifest real power asymmetries rather than overcoming imbalances Warwick Commission, The alternative, a simple majority vote, could be difficult to introduce as it would undermine the currently powerful position of developed countries by enabling groups of smaller countries to overrule them.
Experience in the United Nations UN General Assembly indicates that many countries would systematically oppose the introduction of a simple majority vote Anghie, Plurilateral agreements, for example, have already been used in the past. Here, the participation of all WTO members is not required in order to strike a deal and interested members are free to join the negotiation or not.
Several experts have suggested reviving and enhancing this approach Consultative Board, ; Elsig, Supporters argue that the inclusion of import share in the threshold would ensure that critical mass agreements could not be misused by exporters to harmonise their export systems to the detriment of importers — an issue they consider to be of increasing importance as, for instance, high-technology producing countries face shortages in needed raw materials that are extracted in only a handful of countries ICTSD, d.
Proposed thresholds range from 75 to 90 per cent. Proponents argue that the threshold could further be coupled with the requirement to include at least a minimum number of countries. If constructed in a sensitive way, supporters suggest, this second requirement could ensure the legitimacy of a particular critical mass rather than only its efficiency. As the WTO moves towards addressing a greater array of trade-related policies, such a critical mass concept might be inappropriate. Small countries, for instance, may not have a particular export or import trade share in a certain sector and are thus not indispensable for a critical mass, yet they would be critically affected by any new rules — be this on agriculture commodities or new regulation on services trade.
Each negotiation is thus also about shaping global policy and law trends. Current plurilateral WTO agreements where no critical mass was required only apply among the members that have signed them. To meet this concern, alternative proposals suggest extending the rights and benefits deriving from critical mass agreements on an MFN basis to all WTO members Warwick Commission, First, assuming that a given sector was irrelevant for a particular country at the time when a critical mass negotiation was concluded, it remains unclear how the country could be induced to join the agreement if the benefits already apply on an MFN basis.
Also, it is unclear whether a country would be required to join the existing agreement or whether there would be an option to renegotiate the terms Harbinson, If no changes were allowed, powerful groups could now conclude agreements that become relevant for developing countries only at a later stage, thus indirectly imposing their terms and conditions.
Instead, if implemented in their simplest form, both concepts risk excluding smaller countries and exacerbating power asymmetries. Also, none of the proposed reforms would be likely to resolve the current deadlock in the Doha round which results, to a large extent, from political differences rather than weak procedural rules. The same stakeholders fear that strengthening the secretariat could create a strong institution following its own internal agenda. Proponents agree that this could only be guaranteed if member states were to ensure a constant participation and oversight.
Contents. Challenges Facing the World Trade Organization. II. Revisiting Residual Protection Rules on Regionalism. Regionalism and the WTO: Should the Rules Be Changed? III. Environment and Social Issues. International Labor Standards and World Trade: Friends or Foes? IV. Political Support for Trade Liberalization. Despite a record-breaking per cent increase in world merchandise exports, the effects of the financial crisis and global recession are still hampering faster.
Efforts on strengthening the secretariat would thus focus primarily on increased political support by member states rather than a budgetary increase or a mandate extension as advocated by others. The idea behind this is to redirect but not replace the preponderant role of member states, i. This process provides a critical opportunity to reflect on the most pressing challenges facing the organisation.
If candidates were to take a strong position while countries provided them with clear indications on what is expected over the coming term, directors would receive a strong mandate to lead and guide even in critical times Deere-Birbeck and Monagle, , A second point of entry could be the regular Ministerial Conferences.
If members used the meetings to reflect on the standing of the WTO, the way forward and the actions expected in the coming years, the secretariat could guide the organisation accordingly over the coming months. In fact Ministerial Conferences were originally meant to provide for such a forum.
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Only with the launch of the Doha Round they have turned into pure negotiation gatherings. Numerous developing countries have consistently criticised this development. But some critics argue that these ideas have gone nowhere because they have had no process to feed into. Currently only one set of proposals is being discussed in a formalised manner at the WTO, namely those related to dispute settlement WTO, b.
Formally it proceeds outside of the Doha Round and is not part of the single undertaking. In practice, however, the review is used as a trade-off opportunity in the Doha Round which has prevented any conclusion over the last 14 years. To allow for a proper debate, other reform proposals will also need to be addressed in a formalised process at the WTO. Such a process would probably need to involve and engage trade ministers themselves to generate sufficient credibility and political traction. Ideally, the process should be co-chaired and co-owned by a developing and a developed country trade minister.
Enforcing such an objective and non-concession-based discussion could be easier if various reform proposals were debated in a joint forum with a common objective and a single plan of action. Moreover, a joint process would facilitate the coordination of different reforms ensuring that the executive, legislative and judicial branches of the WTO do not develop in opposite directions but are mutually supportive.
In the years running up to the Doha ministerial conference, developing country governments expressed growing concern that they were ill-equipped to implement the Uruguay Round agreements, that the provisions of these agreements undermined domestic food security, or — as in the case of the Agreement on Trade-Related Aspects of Intellectual Property Rights TRIPS — that they had signed on to texts which affected their food security without fully understanding the practical and legal implications that might result. However, it has also generated new tensions, not least between countries with large trade surpluses and those with growing trade deficits. These trends are likely to affect both the size and composition of global demand in years ahead. In the eyes of its critics, the WTO lacks legitimacy, accountability and transparency. Related Papers. The idea behind this is to redirect but not replace the preponderant role of member states, i.
During the preparatory process and under the leadership of India, 18 developed and developing countries had proposed to address the need for an institutional reform in a formalised and long-term manner. These missed opportunities further aggravate the dilemma of the WTO as political guidance becomes hampered at the very first stage Deere-Birbeck, If the secretariat assumed a more active role in preparing ministerial conferences and guiding towards processes as those called upon by the country coalition, initial opposition might be overcome.
The EU Emissions Trading Scheme – Issues and Challenges
As a formal forum for discussing reform proposals continues to be missing, this could be the first step towards reform. However, the difficulty the WTO has experienced in bringing its troubled Doha Round talks to a successful conclusion is arguably hampering its ability to respond and adapt meaningfully to new public policy challenges. While calls for greater policy coherence have often come from the governments that constitute the membership of the global trade body, they have also come from civil society groups, the media and even from other intergovernmental agencies concerned with the relationship between trade and public policy objectives.
Combined with increased investment in agriculture, international trade mighthelp offset future climate-induced production decreases in certain regions, ensuring that local populations can purchase food that may be unavailable in sufficient quantities through domestic production.
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These included provisions dealing with export prohibitions and restrictions article 12 , subsidies for public stockholding for food security purposes Annex 2, para. However, while food security is also related to numerous other aspects of the agreement, such as subsidy reform or market access considerations, it is not explicitly mentioned anywhere else in the text. The decision has since been widely criticised by developing countries, who have argued that loopholes in the text prevent them from requiring developed countries and the international financial institutions to implement its provisions.
In the years running up to the Doha ministerial conference, developing country governments expressed growing concern that they were ill-equipped to implement the Uruguay Round agreements, that the provisions of these agreements undermined domestic food security, or — as in the case of the Agreement on Trade-Related Aspects of Intellectual Property Rights TRIPS — that they had signed on to texts which affected their food security without fully understanding the practical and legal implications that might result. Measures to reform developed country subsidies and tariffs were also included as part of the same proposal.
Such indicators included, for example, the share of local income spent on a particular product, employment by product, productivity levels, rates of self-sufficiency, or the contribution of a product to local nutrition. Based on this country-specific analysis the tariffs of the selected products would then qualify for gentler reduction under the Doha Round, or would even be exempt from any cuts. The G, however, encountered opposition to their proposals from developed countries seeking greater access to developing country markets, such as the US, but also from exporting developing countries, such as Argentina, Paraguay and Uruguay.
The Importance of the WTO for the Multilateral Trading System
It is also symptomatic of how the discussion evolved over time in the trade body from a fairly narrow understanding of food security to a highly complex and differentiated approach based on indicators. Some are doing deals for defensive reasons, to prevent their exporters losing market share to competitors which benefit from lower tariffs in FTAs.
Bilateral and regional trade arrangements are not new: the European Union, the biggest, dates back to The WTO, which lacks effective powers to police FTAs, estimates almost half of world trade now occurs between countries belonging to them.