Wednesday, January 23, 2013

De-democratize the WTO - Is it the right step?

A lot has been written about the failure of the Doha round of multilateral negotiations. Reasons have been attributed and solutions have been offered including abandoning the single undertaking principle and concluding agreements that are low hanging fruit, including a Trade Facilitation Agreement.Developments of bilateralism and plurilateral agreements have also cast a shadow on the growth of the institution of multilateralism and the WTO.

What are the reasons for this decline of multilateral trade governance? Arvind Subramanian in this piece titled "De-democratising the WTO" in the Business Standard has argued that too much of democracy has been detrimental to the growth of the WTO. Small countries have an equal voice similar to large trading powers int he WTO. The norm is consensus and any small country can stall a big reform, even if it is in a minority. This, he feels, is undermining the effectiveness of the WTO and keeping the major trading powers (like the U.S., EU, Japan) less involved in the WTO. The lack of interest is epitomized by the growing regional trade agreements these countries are attempting to enter into as well as an absence of WTO DG contenders from these countries.
"Over time, the WTO has become an institution where smaller and poorer countries have acquired a stake. This transformation may seem a welcome sign of legitimacy. But it has gone too far. For it future effectiveness, indeed survival, the WTO needs to be de-democratized, with the large countries asserting themselves."
The solution offered is that the veto should be taken away and the consensus principle modified wherein large trading powers can negotiate themselves while "offering assurances to the smaller countries that they would receive the benefits of such negotiations and spared any undue burdens". Over the years, literature in relation to the WTO has been about how the WTO needs to be democratized and developing and least developed countries need to engage with the system more effectively. This piece reverses the debate by arguing that there is too much democracy in the WTO that is killing the institution. Should the WTO be less democratic and reflect the opinions, interests and negotiating priorities of the larger trading partners? Would it fade into oblivion if it did not? Do the realities of trading relations demand a more nuanced understanding of trade governance that recognizes inherent inequities in the system? Many developing countries argued that the conclusion of the Uruguay round of negotiations was done without their complete understanding and involvement. WIll de-democratization take us back to the "green rooms" of the WTO where mega deals were apparently struck and everyone was asked to follow? Will de-democratization lead to the beginning of the process of "de-legimization" of the WTO? On the other hand, how does one ensure that the multilateral, rule-based system is engaged with by both the major trading powers and smaller trading nations? The task is cut out for the next WTO chief to grapple with this conundrum.

1 comment:

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