Bridges Africa attends WTO panel on Plurilateral Trade Agreements

14 May 2012

Last week, the WTO hosted an open panel to discuss the emergence of plurilateral trade agreements and their implications for the working framework of the WTO. Speakers included Roberto Azevedo, Brazilian Ambassador; Patrick Low, Chief Economist at the WTO; Xianhun Lu from the Chinese Mission; Gabrielle Marceau of the University of Geneva; and Kenneth Schagrin from the US mission.

The talks provoked more attention than anticipated, necessitating a change in venue to the WTO's Geneva headquarters. Speakers covered a lot of ground, beginning with an emphasis on the question of definition: what, according to the contrasting realms of law, politics, and economics, are Plurilateral Trade Agreements? It was quickly established that the legal perspective, in stressing the centrality of procedural consensus in decision-making, defines PTAs primarily as a deviation from one of the basic pillars of the multilateral system: the ‘Most Favoured Nation' principal, which ostensibly guarantees equal trade advantages to all WTO members. As a starting point for the debate, participants seemed to agree on the actual lack of a detailed definition.

Most speakers highlighted that the recent rise in PTAs - such as the Anti-Counterfeiting Trade Agreement and the Trans-Pacific Partnership - has its foundation in economics. With most nations being in no position to liberalise at the moment, the oxymoron of exclusion in integration is becoming the standard. Speakers could not, however, agree upon what exactly this proliferation of PTAs means for the multilateral system.

Before reaching any conclusions, the Brazilian Ambassador laid out the precise legal routes that a deviation from the need for consensus could take : the ‘grey area' of GATS article 2.2, the government procurement type measures as covered by GATT article 10.9, or the path of ‘heavy conditionality' associated with GATS article 5. Ultimately, he presented the surge in PTAs as "the result of the [liberalisation] impasse". "If there is no improving market access one way, some opt to do it another way". Brazil sought to remind the other parties that countries are always faced with the urge to liberalise only their competitive sectors, and will most-likely act accordingly if not bound by the MFN principle. The important priority for Brazil in this scenario is therefore to find a way to circumvent the elimination of trade-offs that occurs with the plurilateral route. Azevedo also spoke briefly on the polarizing issue of free-riding, warning "if you are expecting a consensus on a waiver I am not really optimistic".

The stance of Professor Marceau of the University of Geneva was largely in theoretical agreement with Brazil, though the issue of ‘consensus' became more so one of ‘consent'. Moving beyond the MFN principal, she gave significant attention to the WTO's "single undertaking" principle, which always legally implied that signing onto the WTO precisely meant binding oneself to all decisions made within it. This means that firstly all provisions must, in theory, be universally interpreted and agreed upon, and secondly, that that one party (or a few parties) cannot impose rights or obligations onto a third party who is not signatory to the (plurilateral) treaty in question. Patrick Lowe of the WTO accordingly asked "if these [PTAs] are done for strategic reasons, they can cause serious fractions within the multilateral trading system. Is it worth it?"

Xianhun Lu of the Chinese mission spoke from the angle of circumstance, opting not to get caught up in the theoretical arguments of definition. Lu did say that a purely legal approach is unhelpful, and that China views the matter strictly in relation to Doha and as a problem of timing. "We are simply looking at how it affects the DDA [...] it is breaking many other things including single undertaking" said Lu.

Kenneth Schagrin of the US mission was put on the defensive by fellow-speakers' negative assumptions regarding the effects on third parties. He argued that a plurilateral path could actually strengthen the multilateral system in the long run, which is important though difficult to operate within for the time being. He also stressed that the only alternative was to do nothing. On the other hand, PTAs like the approaching International Services Agreement (ISA) will attempt to actually consolidate and bring about standardization in place of bilateral exclusion. The ISA seeks to alleviate the lack of liberalisation in the service sectors. The US still opted to tread carefully with regards to the ISA, which it was emphasized has not yet been officially agreed upon either in terms of content or structure. "It must be remembered that the objective is to achieve a solid outcome for services, which have particularly been lagging with liberalisation" said Schagrin. The Americans did however take issue with the idea that participants of the ISA are somehow engaged in an unequal relationship, or in any way exemplify the domination of underdeveloped countries by developed countries.

Whilst no gigantic compromises were made between disagreeing parties, a thorough clarification of positions did take place. This could be incredibly helpful in the coming months as the seemingly unavoidable ‘pluralisation' of trade integration takes place.

ICTSD reporting

10 May 2012
Malawi's currency, the Kwacha, has dropped in value by about 50 percent following the new President's decision to break the peg with the dollar. Monday's decision saw the exchange rate with the...
16 May 2012
The European Commission has come under fire from African legislators and civil organisations for its pursuit of "unrealistic" EPA deadlines ( see TNI Vol 10 Number 7 ). The backlash follows the...