Future of the WTO: End of multilateralism?
Richard pronounces that "as a location for trade negotiation, the WTO is dead". Looking at the dismal trackrecord of the the past 7 years of negotiations, current political economy climate, the extent of disagreements among the key trading nations, and the urgency of policy priorities elsewhere, that may well be an accurate projection at least for the next five to ten years.
Even in the life after the financial crises, the structural problems undermining the WTO prevail, impeding states' ability to reach a consensus that is required for agreeing on any new commitments. Daniel refers to the variation in internal characteristics among the great powers as a primary reason for the deadlock. While the US and the EU have their differences, those differences are even sharper between the US and the EU on one hand and the emerging and the developing countries on the other. In addition, BRIC countries' composition of production and trade further ensures that they are not a coherent block and hence less likely to be able to lead a coherent coalition. All BRIC countries pursue export-driven growth but rely on very different industries in generating that growth. China exports primarily manufactured goods, India services and Brazil agricultural products. Russia's economy, if admitted to join the club, depends on natural resources. Thus, what is common among the emerging economies, is their willingness to counter-balance the US and EU created trade order rather than their shared preferences on the priorities of the trade agenda. We are therefore more likely to continue to see them exercise veto-power rather than set the agenda for any new trade rounds.
So have we come to the end of multilateralism?
What is troublesome about the stalemate in the WTO is that it gives us little faith in the future of multilateralism in general. The issues are no less controversial and the preferences even further apart when it comes to addressing energy crises or the climate change. If we cannot agree on modest cuts on agricultural subsidies or further liberalization on services, the prospects for a binding, ambitious climate change treaty begin to look dim.
States may still rescue the Doha Round by agreeing to a modest set of commitments in order to signal their continuing commitment to trade liberalization and multilateralism when both are widely seen to hang in balance. Nothing meaningful, not to mention anything approaching the achievements of the Uruguay round, is however likely to be accomplished anytime soon. However, as Richard and Greg both acknowledge, the WTO still acts as a constraint when states are responding to other political challenges, including bailing out their domestic industries. The trade regime also sets boundaries on states' attempts to tackle climate change through subsidies, various border measures and discriminatory tax regimes. WTO's dispute settlement system also ensures that the institution remains relevant even when the political process aimed at new commitments is deadlocked.
This keeps the WTO on the map for its possible later rivival -- even as a forum for negotiating new trade deals. However, those deals are likely to be plurilateral rather than truly multilateral. Alternatively, they will be multilateral with significant opt-outs. Greg's proposition for "critical mass" decision-making, for instance, seems only feasible with the right to opt out of an agreement that a state is not prepared to sign onto.
While my optimism is tempered, I am not prepared to predict that there will be no more trade deals within the WTO. But the dynamics that drive the process ensure that any WTO deal will look quite different from what was accomplished in the end of the Uruguay Round. That was a different era of multilateralism that we are unlikely to return to. The emerging powers have shown that we have turned the page. Who writes the next chapter, however, is more complicated to agree on.