Dec 01, 2015 - 9:00am

What Should the WTO Be When It Grows Up?


Senior Vice President for International Policy

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Photo credit: Patrick T. Fallon/Bloomberg

The World Trade Organization (WTO) will celebrate its 21st anniversary on New Year’s Day. So when top trade officials from around the globe gather in Nairobi on December 15-18 for their biennial Ministerial Conference, they may want to ask: What do the WTO’s Member States want it to be when it grows up?

In fairness, the WTO deserves better than this undignified question. It is perhaps the most successful multilateral organization: Its rules inform national policy at home and abroad, and its dispute settlement system commands global respect.

Indeed, the U.S. business community needs the WTO today as much as ever. The global rules-based trading system it embodies has benefited the entire world. Eight successful multilateral negotiating rounds have helped increase world trade from $58 billion in 1948 to $23.8 trillion in 2014. This is a 40-fold increase in real terms.

While this rising tide of commerce has brought gains for developed countries, its most dramatic benefits have accrued to developing nations. As recently as 1993, 1.9 billion people — nearly half the world’s men, women, and children — lived in absolute poverty.

Since then poverty totals have been falling fast. The most recent estimates issued by the World Bank find the number of people in absolute poverty this year will fall to 700 million people or 9.6% of the world’s population.

While no single factor explains these income gains, the rise in international commerce has by all accounts played a major role. The economic growth that trade helps fuel contributes to educating the young, building essential infrastructure, strengthening the institutions of governance, and combating measles, malaria and other preventable illnesses. In the post-war era, these efforts have helped developing countries add two decades to life expectancy and cut the mortality rate of children under age five by 50%.

In recent years, the long impasse in the Doha Development Agenda negotiations led many to call into question the WTO’s role as a forum for market-opening trade negotiations. In this context, it is difficult to exaggerate the importance of recent successes achieved by the WTO.

READ MORE: Go here to learn more about the successes: the Trade Facilitation Agreement, the Information Technology Agreement, and the Environmental Goods Agreement.

It’s useful to talk about these successes and good works in progress before we raise the Doha Development Agenda. Many in the U.S. business and agriculture communities haven’t seen the Doha Round as a going concern since negotiations ground to a halt in July 2008.

But it isn’t just because the Round has stalled. There is an argument to be made that many of the goals of the Doha Round have been or will be reached by other means.

In a 2009 research paper, the Peterson Institute for International Economics estimated the trade facilitation element in a completed Doha Round would add almost four times as much to global economic output as the Round’s agricultural and non-agricultural market access portions — even though the latter were seen as the meat of the deal.

In addition, there is great promise in the Trade in Services Agreement (TISA) negotiations now underway in Geneva — not within the WTO but among a coalition of more than 50 interested countries. The U.S. business community is keenly interested in the TISA, but the fact remains that the WTO Members most interested in services trade liberalization will no longer be looking to the Doha Round to advance their interests.

So, with regard to trade facilitation and services, WTO members are actually in the process of harvesting the potential gains of the Doha Round by other means.

It is difficult to say whether the Nairobi Ministerial can deliver on other Doha priorities, such as a prohibition on agricultural export subsidies, but the fundamental dynamics remain very difficult. The U.S. business community supports the view of U.S. Ambassador to the WTO Michael Punke that the United States cannot be the only country that makes meaningful commitments to cut tariffs or subsidies while other major trading nations do little or nothing.

However, the record of surprising success in Geneva in the past few years offers important lessons.

The WTO continues to grow. It now includes 161 Member States, and Kazakhstan, Liberia, and Afghanistan will complete their accession in time to participate in Nairobi. Its reach is nearly universal.

Further, in an organization that operates by consensus, pathways toward trade liberalization have been found on trade facilitation, IT and environmental goods, and services.

Can this success be replicated in other sectors? The U.S. Chamber has been a strong proponent of new trade disciplines in such areas as digital trade, regulatory coherence and cooperation, and state-owned enterprises. These issues are being tackled in the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).

Can the WTO take on any of these? It’s difficult to say. But some may be worth exploring.

Nairobi is a moment of truth. If we’ve accomplished all we can under the Doha mandate, WTO members should say so, and bring the curtain down on it. Then we can consider a new agenda for the rapidly evolving global economy.

WTO Members should build on its recent success to foster economic growth, the rule of law, and new trade opportunities in the decades ahead. If they do, it can have a bright and busy future — with benefits to be shared around the world.

About the Author

About the Author

Senior Vice President for International Policy

Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy.