The WTO

Crisis and the Governance of Global Trade

Rorden Wilkinson

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781136016707
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Rorden Wilkinson explores the factors behind the collapse of World Trade Organisation (WTO) ministerials – as in Seattle in 1999 and Cancun in 2003 – and asks why such events have not significantly disrupted the development of the multilateral trading system.

He argues that the political conflicts played out during such meetings, their occasional collapse and the reasons why such events have so far not proven detrimental to the development of the multilateral trading system can be explained by examining the way in which the institution was created and has developed through time.

In addition, this new text:

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• explores the development of the multilateral trading system from the creation of the General Agreement on Tariffs and Trade (GATT) in 1947 to the WTO's Hong Kong ministerial in December 2005

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• examines the way in which the interaction of member states has been structured by the institution's development

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• assesses the impact of institutional practices and procedures on the heightening of political tensions

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• and explains why WTO ministerials exhibit a propensity to collapse but why the breakdown of a meeting has so far not prevented the institution from moving forward

This book will be of interest to scholars and students of international politics, economics and law

1 The WTO, crisis and the governance of global trade

Since the collapse of the Seattle meeting a cottage industry has grown up around WTO ministerials. This industry has at its core a biennial contest among journalists, academics, practitioners, policymakers and the NGO community to predict the outcome of a meeting and bask in the glory of vindication should events go their way. The cycle of this industry is now well established. In the six months prior to a WTO ministerial, journalistic pieces – either op-eds by notable academics, (increasingly) NGO officials and past participants, or slightly longer pieces in weekly, fortnightly and monthly periodicals – begin to appear, arguing either that progress so far has been slow but there is room to be optimistic, or that the meeting is destined to collapse threatening the Organisation’s very survival and raising the spectre yet again of another Orwellian (but invariably unrealised) fragmentation of the world economy.

Four weeks before a meeting the commentary intensifies and the range of individuals and institutions professing to have a stake in the outcome multiplies exponentially. Each commentary marks out the issues perceived to be crucial citing the need to reconcile outstanding differences as key to the success of the meeting. In the days immediately prior to the meeting, leading newspapers in the developed world run opinion pieces by notable commentators while the print media in the global South either recycle excerpts from their northern counterparts, or else attempt to put a southern spin on the meeting’s unfolding. All nevertheless tend to recycle familiar ‘room to be optimistic/outcome uncertain/tensions remain/destined to collapse’ arguments peppered with pointers to the latest hot issue or source of tension; or else they remark on the contribution of a successfully concluded meeting to economic development in the global South, the predictability of public demonstrations, the relationship between trade and the environment, or the plight of vulnerable workers in the world’s periphery. In an effort to persuade readers of their various perspectives these pieces are complemented by the posting of innumerable ‘guides to’ WTO ministerials/free trade/the anti-globalisation movement/agriculture/ development/trade and environment, and US foreign policy on newspaper, periodical, NGO, think-tank and government websites.

As the meeting begins, a competition commences to be the first to break the story and become the source of reference. Myriad NGOs produce daily and sometimes half-daily ‘updates’ reporting the minutiae of the meeting, pointing out anything that might later be deemed to have been the authoritative first comment on the impending collapse of the meeting, or the deal-clinching bargain. In this information rush, the ‘official’ account of events (not, it has to be said, the WTO’s version, but more often than not an overview produced by the host nations’ organising committee) fights a losing battle, reporting yesterday’s and the day before’s events as if novel (though inevitably superseded) coupled with the odd picture of pensive delegates, NGO street theatre or agricultural production in a nameless land. As the meeting progresses the intensity of commentary increases, changing focus from accounts of substantive issues to who-said-what-to-whom and the various tactics deployed to generate a consensus. Rumours of armtwisting, through-the-night meetings, phone calls to capitals and frenzied work abound as the meeting nears an end.

With the close of play comes a barrage of commentary, most of which tries to turn what-was-originally-said-but-wasn’t-quite-right into how-it-could-be-read-as-if-it-were, and identifies the meeting’s principal victors and villains as well as the heroes and vanquished. This is followed by a second round of op-eds – increasingly including commentaries from national trade negotiators – offering their opinion of the meeting’s outcome. In the immediate aftermath, national parliaments and other governmental and trans-governmental agencies solicit reports designed to examine the reasons for the collapse of the meeting or the impact of an agreement reached. NGOs pronounce various degrees of victory or impending doom. As the media spotlight begins to turn elsewhere the frenzy slowly fades into a background noise comprising a steady flow of academic articles trying to catch up on the commentary and add their particular slant to the debate, interviews in weekly periodicals with key protagonists in the trade and NGO community, a trickle of pieces offering various proposals for reforming the WTO and the steady reporting of all things trade in specialist newsletters.

For all the useful information generated by its activities, this cottage industry has come to shape understandings of the collapse of WTO ministerial meetings in a way that obscures both the causes and consequences of these events. While the collapse of two of the WTO’s first six ministerial meetings inevitably made them newsworthy and diverted much-needed attention towards the politics of international trade, the Seattle and Cancún meetings are understood more in terms of the images they produced and the events that unfolded in compressed moments in time, than for their location within and significance for multilateral trade regulation.¹ Conceptions of the collapse of the Seattle meeting tend to focus on the demonstrations that disrupted the meeting and, to a lesser extent, the fracture that emerged between developing countries and their industrial counterparts over the extension of the trade agenda, rather than on the ministerial’s contribution to shaping the further development of multilateral trade regulation. Similarly, the breakdown of the Cancún meeting is widely perceived to be a moment wherein developing country coalitions were able to resist First World agendas, rather than a point within a wider process of adjustment necessary to take the trade agenda forward.

In shaping the way in which we have so far conceived of the collapse of WTO ministerials, a number of important issues have been left unresolved. For instance, the collapse of two of the WTO’s first six ministerial meetings has not significantly disrupted or derailed the liberalisation project as many scholarly and practitioner commentators had feared; nor has it resulted in a redistribution of power from industrial to developing states, or from political-economic élites to self-appointed representatives of the global many, as more radically minded scholars and members of the NGO community had suggested. If anything, multilateral trade regulation is stronger and more robust than it has been at any time since the negotiation of the GATT in 1947; and the way in which it structures the relations of its member states remains firmly intact. Seattle did not prevent the launch of a new trade round; it merely delayed the launch until the next ministerial meeting (in Doha in 2001). Moreover, the political settlement reached to enable a new negotiating round to commence did not promise to correct the sharp inequities and asymmetries in the WTO’s legal framework or the way in which that framework is deployed as a means of liberalising trade; nor did it result in a fundamental overhaul of the WTO’s operating procedures or the way in which negotiations are conducted, rendering them either more open to developing world participation or to third party scrutiny. Likewise, the collapse of the Cancún meeting did not result in a fundamental revision of the content of the Doha Development Agenda (DDA) but merely some minor fettling. The much-touted resurgence in Third World power resulting from the actions of the Group of 20 (G20), Group of 33 (G33) and Group of 90 (G90) has not significantly altered the balance of power among WTO members. And little progress has been made on the intractable problem of agriculture; yet the round will inevitably be concluded, further deepening and widening multilateral trade regulation.

The failure of the outcomes projected by many analyses of the Seattle and Cancún meetings to materialise suggests that a more nuanced understanding of the causes and consequences of the collapse of ministerial meetings is necessary. Moreover, given that the breakdown of the Seattle and Cancún meetings has not significantly disrupted the development of multilateral trade regulation (indeed, it may actually have helped drive it forward, as the following analysis shows), a better understanding of the role that these moments of crisis play in multilateral trade regulation needs to be advanced. These are the aims of this book.

The argument

The book’s underlying premise is that much of the commentary on the breakdown of WTO ministerials has failed to see beyond the events that unfolded in those compressed moments in time to the root causes of heightened political contestation and a meeting’s collapse. The book seeks to move beyond the politics of the moment to explain not only why WTO ministerials collapse (and continue to exude a propensity to do so), but also why such instances have not disrupted the development of multilateral trade regulation, and why significant changes have not been made to redress those asymmetries in the institution’s legal framework, the manner of its deployment, and the practices and procedures employed in its operation that have underpinned the onset of heightened political contestation.

By drawing from a body of literature concerned with how and why institutions emerge and change, the book shows that the political contestation underpinning the collapse of WTO ministerials results from the way in which multilateral trade regulation was created and has developed through time. It argues that multilateral trade regulation has come to shape the interaction of participating states in such a way that contestation over the shape and direction of the trade agenda is an inevitable feature of contemporary trade politics. This contestation is the result not just of the use of political bargains as the means by which liberalisation is pursued, but also because of an acutely asymmetrical institutional evolution that has privileged the liberalisation of those sectors of greatest advantage to the economic interests of the institution’s founding members and principal states while at the same time protecting those of economic and political sensitivity to that leading number (precisely those that are of economic interest to the institution’s less significant largely developing country and least developed participants). The book also argues that meaningful alterations to the asymmetries in the WTO’s legal framework have not been forthcoming precisely because they require the giving of concessions for those received. This has the effect of trading a modicum of corrective action for the creation of further economic opportunities. As the balance of exchange has always resided with the institution’s most dominant members, this has, in turn, contributed at least to the perpetuation of asymmetry, and at most to its amplification. It is this asymmetry in economic opportunity and the persistence of practices and procedures that concentrate decision-making power in the hands of the dominant trading powers which has given rise to heightened political contestation and which has imbued ministerial meetings with a propensity to collapse.

However, the book also argues that, rather than significantly disrupting the development of multilateral trade regulation or resulting in its substantive alteration, those moments wherein political contestation has reached a peak and a ministerial meeting has collapsed have all, without exception, been followed by a period of reflection that has enabled the trade agenda to be taken forward. These periods have facilitated the institution’s further development because of a shared belief in, and commitment to, the centrality of trade to economic growth and development among the participating states; the absence of a competing institution in which trade objectives might also be realised; a widespread acknowledgement that multilateral liberalisation promises far greater gains and is much less costly than regional or bilateral mechanisms; the persistence of a global configuration of power which is not fundamentally different from that which existed at the institution’s creation, and a fear of a resurgence of protectionism and a return to the insularity of the inter-war years should the process of trade liberalisation be allowed to stall. That said, while the argument shows that collapse is not a fatal feature of multilateral trade regulation and that it has a progressive function in that it is often the precursor to further agreement, the breakdown of a ministerial meeting is nevertheless a spectacular reminder of the system’s historical structural flaws and the manner in which it continues to disproportionately serve the interests of the dominant powers rather than those of the poorest and weakest members. In this way, collapse has an important symbolic, as well as procedural, function.

The remainder of this chapter sets the foundations for the development of the argument. It begins by exploring the existing scholarly literature on the collapse of WTO ministerials. In so doing, it reveals that while the literature comprises much that is of value, in large measure it misdiagnoses – and, as a result, fails to fully explain – the causes of the breakdown of these meetings and the consequences of their collapse. Thereafter the chapter sets out a series of conceptual markers that help make sense of the analysis which follows. These markers map out an understanding of institutions and institutional development that helps better understand patterns of trade politics. This section does not, however, engage in an involved discussion of institutional theory in all its variants. This is not the place (see, among others, Keohane, 1989, 2002; North, 1990; Steinmo et al., 1992; Ruggie, 1993b; Thelen, 1999; Murphy, 2005). It is merely intended to be an aid to understanding. Once this is complete the chapter sets out how the book unfolds in the development of its argument.

Existing wisdom

Much of the existing scholarly and practitioner literature on the collapse of WTO ministerials identifies tensions between developed and developing countries, the significance of the issues at stake, disagreements among the leading industrial states (Annan, 2001: 19; Sampson, 2001: 9; Sutherland et al., 2001: 87) and the inadequacy of existing procedures for conducting negotiations as important factors in the breakdown of the Seattle and Cancún meetings. Few beyond the politics of the moment (and even then beyond Seattle) emphasise the role of public demonstrations. As Chakravarthi Raghavan put it in the wake of Seattle:

The week-long street protests and demonstrations ... and the way the conference ended in shambles, led to a perception among the unwary that the protests and demonstrations had derailed the process and that the [NGOs] were a broad, organized movement, and posed the greatest threat to the ‘rules-based’ trading system protecting the weaker countries. Nothing ... could be further from reality. The Seattle meeting failed because of substantive differences among the major trading nations, and between them and the developing nations, and the refusal of the large majority of the membership to be pushed around.

(Raghavan, 2000: 495–496; also Moore, 2003: 111)

Jeffrey Schott’s analysis (2000) of the causes of the collapse of the Seattle meeting is indicative of much of the scholarly literature. He suggests that substantive disagreements among member states over the proposed content of a new trade round (what was to be the ‘millennium’ round) were the principal causes of the Seattle collapse. Much of this disagreement brought developed and developing countries into conflict over how to address trade in industrial goods, agriculture and services as well as the expansion in the WTO’s agenda. Of particular note were the tensions that unfolded over the labour standards issue, though trade and the environment was also a significant source of conflict. Schott also notes that differences of opinion among the quad (the US, EU, Japan and Canada) on the level of reduction in agricultural subsidies, peak tariffs and anti-dumping, the incorporation of investment and competition policy in a new round, and exemptions for ‘cultural industries’ were also significant factors in the collapse of the meeting; and he suggests a portion of blame lies with the Clinton administration’s mishandling of the politics and organisation of the meeting as well as its failure to nurture a consensus ahead of the meeting (Schott, 2000: 7; also Arai, 2000: 62). Schott further suggests (with co-author Jayashree Watal) that policy differences among the WTO membership could have been bridged had the ‘WTO’s decision making process [understood as the ‘process by which member governments resolve issues concerning the conduct of trade negotiations’] not broken down’ (Schott and Watal, 2000: 283). He cites the difficulty of building a consensus among a significantly expanded membership under the constraints placed on negotiations by the principle of a single undertaking (where all parties agree to be bound by all aspects of an agreement) as the primary problem; and he also identifies the persistence of the GATT practice of attempting to forge consensus through small numbers of self-selected members meeting to decide on divisive issues (the so-called ‘green room’ process)² as a contributing factor (Schott and Watal, 2000: 283–286).

Two problems present themselves in accounts such as these. First, the events that unfolded in the run-up to and during the Seattle meeting tend to be divorced from the wider development of multilateral trade regulation. While they offer a useful sense of the degree of political contestation during the meeting, they are nevertheless taken out of context. The result is that the events themselves are viewed to be more significant than they actually are, while the root causes of the collapse remain obscured. A second problem is that accounts such as these tend to underplay the role of the institution and its attendant procedures, practices and ways of operating in a meeting’s collapse. While mention is made of institutional anomalies such as the quality of preparation and the manner of the meeting’s organisation, these accounts do not fully appreciate the way in which the interaction of WTO members has been and is shaped by the institution.

Jagdish Bhagwati offers a slightly different account. Like many others, Bhagwati attributes the collapse of the Seattle meeting to a combination of factors of which the holding of a ministerial in the US in the run-up to a presidential election, the paralysis caused by and hostility generated towards the demonstrations that accompanied the meeting, the failure to build a consensus among the membership on the proposed content of a new trade round prior to the meeting, and President Clinton’s ill-advised attempts to make domestic political capital out of the conference figure prominently (Bhagwati, 1999; 2001). However, he also suggests that the level of political conte...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of tables
• Preface and acknowledgements
• List of abbreviations
• 1 The WTO, crisis and the governance of global trade
• 2 Forging multilateral trade regulation: the post-war settlement and the rise of the GATT
• 3 Establishing asymmetry: liberalising trade under the GATT
• 4 Fashioning the WTO: formalising multilateral trade regulation
• 5 Perpetuating asymmetry: the collapse of ministerial meetings and the Doha Development Agenda
• 6 Conclusion
• Notes
• Bibliography
• Index