The rebirth of the WTO

When Saudi Arabia became a member of the World Trade Organization a decade ago, the Doha round of trade talks was still fresh and full of hope. Launched in the Qatari capital in 2001, the idea was to reduce trade barriers across the world and revise and simplify trade rules. It was a highly ambitious agenda, which ultimately became entangled in the sheer complexity of its goals. Fourteen years on, the WTO meeting in Nairobi has decided to abandon the whole exercise. It was not simply that the challenge of finding a consensus on such an extensive range of issues proved too much; in the end, it has been recognized that the world has moved on in the last 14 years. China has moved from “Developing” status to become the world’s second largest economy while India’s own economic transformation, though less dramatic, has already been profound. If the Modi government can deliver on its reform promises, it is likely to be startling. But even as they decided to ditch the stalled Doha round, the 164 WTO member states agreed to a ban on agricultural export subsidies and finalized the liberalization of the trade in IT products. The organization is now embarked on a whole raft of similar initiatives, all of which are characterized by their relatively limited scope. This makes them inherently more achievable. The inevitable horse-trading that surrounds the formulation and ultimate agreement of new trade rules in specific areas is altogether more manageable. The Doha round was inspired by the hopes for the new millennium and the belief that with increasing globalization, international market forces had to be unleashed. That, anyway, was the formal text. The reality was that even the United States, which likes to believe that it epitomizes free markets, sought to protect its own interests. This understandably gave rise to suspicions in the developing world that the North Americans and Europeans were seeking to use the trade negotiations as a way to preserve their economic dominance by rebuilding the world trading order on their terms. The global financial crisis and the recession-inducing tax-payer bailouts of 2008 onwards also served to take governments’ eyes of the once-glittering prize of a successful comprehensive Doha deal. Instead there has been a growth in regional trade deals such as the 12-state Trans-Pacific Partnership which sees Japan and the US, but not China, in an arrangement that is likely to have far-reaching and beneficial consequences for all parties. Had the Middle East not been plunged into conflict post 9/11, a similar powerful trade bloc in the Arab world might now have been in operation, mirroring the progress of the GCC states. The take-home message from the experience of the Doha round is that such a revolutionary deal was always doomed. Had the WTO stuck to its former evolutionary approach, egging member states towards clearly attainable targets, 14 years of frustrating bargaining effort might have been avoided and many millions of valuable bureaucratic hours been diverted more productively. Indeed, there was a point, as the seemingly interminable negotiations dragged on, when legitimate questions were raised as to the future of the WTO itself.  Had the organization collapsed in rancor and recrimination, a new era of self-defeating protectionism might have returned. As it is, the WTO has sloughed off its battered Doha round skin and, in the words of one delegate in Nairobi, “been reborn”.