The trade and development debate in the WTO: The need for change

18 April 2016
The Tenth WTO Ministerial Conference has created new and exciting possibilities for trade-led growth and poverty reduction. How can we ensure that members of the trade and development community—particularly the smallest, poorest, and most vulnerable WTO members—are fully engaged in the post-Nairobi agenda? How can the development discussions in the WTO deliver tangible, valuable results in exchange for the investment made in them?


It’s time to re-evaluate the development discussions in the WTO and the ways in which the Geneva trade community supports the smallest, poorest, and most vulnerable countries on the multilateral stage.

Part of this re-evaluation entails the honest, long-overdue recognition that the WTO debate on development must change. This debate isn’t brave, it's not big, and it’s not thoughtfully tackling the real issues. The post-Nairobi phase of reflection provides an opportunity for the entire Geneva community to take a fresh, critical look at the WTO architecture. The foundations of that architecture cannot and should not be exempt from scrutiny, especially where development is concerned.

Our primary goal should be to ensure that resources are used effectively, deliver value for money, and create pro-development impacts. Geneva is the only place outside of their own capital where many WTO members have spent years investing human and financial resources in trade. The tight-knit community that has grown around the WTO is a wonderful and unique asset.

Yet for many of the smallest, least developed and most vulnerable members (who are, after all, the core constituency of the trade and development community), maintaining a presence in Geneva is extremely costly. If the development architecture of the WTO is intended to be a platform on which their needs are placed front and centre, post-Nairobi discussions should be contemplating whether that architecture is providing tangible, valuable results in exchange for the resources it consumes.

We must begin by asking three fundamental questions.
 

Three questions

First, are we pursuing a strategically defensible agenda? The general consensus is that the WTO adds true value by strengthening the global system of trade rules. However, the negotiations related to special and differential treatment have, thus far, focused almost exclusively on creating exemptions from those rules.

There is widespread recognition and understanding of the capacity constraints faced by our smallest and most vulnerable WTO members. The best corrective measure is supply-side capacity building, carefully directed at the public and private stakeholders that engage in trade. Through the UK’s support to initiatives here in Genevafor example, the Enhanced Integrated Framework, the Trade Advocacy Fund, the International Trade Centre, and the International Centre for Trade and Sustainable Developmentand our regional and bilateral programmes, we have taken a leading role in ensuring a level playing field.

Time-bound exemptions are an essential part of special treatment, but they cannot be the exclusive focus. An open, rules-based multilateral trading system underpins the 2030 Sustainable Development Goals. Under the right circumstances and with the right support, trade rules are good for development. We need a negotiating agenda that reflects that positive vision.

Second, are we targeting the right markets? All too often, the geographical focus of development negotiations remains stuck in 2001, when barriers and practices in traditional developed country markets were the overriding concern. This approach however is out of sync with the post-Doha reality, in which the closest and most promising market for a least developed country (LDC) – as well as the most troublesome trade barrier or measure  may very well lie in another developing country.

Both the role and the profile of emerging markets and their regional groupings have changed dramatically since the end of the Uruguay Round. The potential scope and estimated benefits from South-South trade are extensive. We should support our core constituency, right here in Geneva, to harvest these gains from trade.

Third, here in Geneva, are we adding real value to the core issues of trade and development?The multilateral system is based on the assumption that there are problems that can only be solved at the global level. Yet the development discussions in the WTO are not focused on multilateral issues.

Instead, we talk about bilateral issues, such as preferential rules of origin, duty-free and quota-free market access, and capacity-building through aid-for-trade. This focus is indeed justified, as these are the trade challenges our core constituency faces on a daily basis. There is value in the WTO’s traditional approach to these issues: Ministerial Decisions or Declarations, even when not fully binding, can exert a certain level of peer pressure on members, and provide a political tailwind when a beneficiary lobbies its donors or preference-granting partners for better access or additional aid.

Nevertheless, preferential market access, rules of origin, and aid flows are governed by separate processes, strategy documents and programming cycles, which are driven by their own individual political and economic logic with little guidance from our discussions in Geneva. This fundamentally bilateral structure is critical to ensuring that countries feel ownership of their aid for trade programmes, that resources remain stable and that aid is targeted at the sectors with the greatest need.

This brings us to the question of how we in Geneva can be most effective. By definition, preferential issues are not multilateral issues. Apart from avoiding name and shame, preference-granting countries have little incentive to trade off development-friendly concessions amongst each other, thus undercutting the rationale for 162 members negotiating under a single roof. How can we preserve the integrity of our bilateral discussions on core trade barriers, while ensuring that—at the multilateral level—we are not simply engaged in an expensive monitoring exercise?
 

Engaging in the real trade agenda in Geneva

All too often, the negotiations in Geneva that have the potential to unleash economic growth, open markets, create jobs, and reduce poverty seem to occur in a parallel reality. The broad consensus is that the plurilateral agreements[1] (within and outside of the WTO), the discussions on agriculture, accessions, monitoring, and dispute settlement are the active, trade-creating agenda in Geneva. Yet all too often, this agenda does not involve the smallest, poorest, and most vulnerable members.

Post-Nairobi, there is a genuine risk of this isolation growing over time. If trade discussions in Geneva move towards more flexible approaches and newer, non-Doha issues—particularly those with real development potential, such as the digital economy—how can we ensure that our core constituency is not left behind?

The answer lies in crafting a specific, practical, forward-looking agenda. The post-Nairobi narrative on trade and development cannot be based on outright rejection, indifference, or calls for exemptions and flexibilities, reflexive responses which are often grounded in fear of the unknown or simple force of habit. The answer is not isolation, but rather engagement.

Roberto Azevêdo, the Director-General of the WTO, has asked the organisation's members to move from the abstract to the specific. Within the development community, this implies moving away from ideological discussions, and instead crunching hard numbers, and asking specific questions.

Which countries could reap developmental benefits from engaging in new approaches and issues? Which countries could be placed in jeopardy? What impact would the elimination of subsidies and support mechanisms (at home and abroad) have on exports and rural poverty?

What are the risks for specific countries, rather than the broad negotiating groups which have been an intrinsic part of the old Doha architecture, yet whose internal interests may differ widely with regard to a given issue or sector? How can regional integration—the tangible trading reality for most small countries in the WTO—be reconciled with the variable landscape of the post-Nairobi world?

Most importantly, what trade outcomes can spark genuine domestic reform in the smallest and poorest countries, linking their enterprises to global value chains and catalysing trade-led poverty reduction?

At this early stage, all we can do is ask the right questions, knowing that no single country or institution has all the answers. The Tenth Ministerial Conference has created new and exciting possibilities for trade-led growth and poverty reduction. As the post-Nairobi conversation gathers momentum, both inside and outside the halls of the WTO, let’s ensure the trade and development community stands ready to seize the opportunity.

Author: Sacha Peter Silva is Senior Trade for Development Policy Advisor at the UK Mission in Geneva.

This article is the author’s personal point of view and does not represent the official view of the UK Government.

[1] These include the Environmental Goods Agreement, the Information Technology Agreement, the Trade in Services Agreement, and the Government Procurement Agreement.

 
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