South African Instit

ute of Inte

rnat

iona

l Affa

irs

African perspectives. Global insights.

Economic Diplomacy Programme

O C C A S I O N A L P A P E R N O 1 1 8

The Way Forward for the WTO: Reforming the Decision-Making Process

J u l y 2 0 1 2

M e m o r y D u b e

A b o u t S A I I A

The South African Institute of International Affairs (SAIIA) has a long and proud record

as South Africa’s premier research institute on international issues. It is an independent,

non-government think-tank whose key strategic objectives are to make effective input into

public policy, and to encourage wider and more informed debate on international affairs

with particular emphasis on African issues and concerns. It is both a centre for research

excellence and a home for stimulating public engagement. SAIIA’s occasional papers

present topical, incisive analyses, offering a variety of perspectives on key policy issues in

Africa and beyond. Core public policy research themes covered by SAIIA include good

governance and democracy; economic policymaking; international security and peace;

and new global challenges such as food security, global governance reform and the

environment. Please consult our website www.saiia.org.za for further information about

SAIIA’s work.

A b o u t t h e e C o N o M I C D I P L o M A C Y P r o g r A M M e

SAIIA’s Economic Diplomacy (EDIP) Programme focuses on the position of Africa in the

global economy, primarily at regional, but also at continental and multilateral levels. Trade

and investment policies are critical for addressing the development challenges of Africa

and achieving sustainable economic growth for the region.

EDIP’s work is broadly divided into three streams. (1) Research on global economic

governance in order to understand the broader impact on the region and identifying options

for Africa in its participation in the international financial system. (2) Issues analysis to unpack

key multilateral (World Trade Organisation), regional and bilateral trade negotiations. It also

considers unilateral trade policy issues lying outside of the reciprocal trade negotiations arena

as well as the implications of regional economic integration in Southern Africa and beyond.

(3) Exploration of linkages between traditional trade policy debates and other sustainable

development issues, such as climate change, investment, energy and food security.

SAIIA gratefully acknowledges the Swedish International Development Cooperation

Agency, the Danish International Development Agency, and the Foreign and Commonwealth

Office through the British High Commission in South Africa, which generously support the

EDIP Programme.

Programme head: Catherine Grant, catherine.grant@saiia.org.za

© SAIIA July 2012

All rights are reserved. No part of this publication may be reproduced or utilised in any form by any

means, electronic or mechanical, including photocopying and recording, or by any information or

storage and retrieval system, without permission in writing from the publisher. Opinions expressed are

the responsibility of the individual authors and not of SAIIA.

Please note that all currencies are in US$ unless otherwise indicated.

A b S t r A C t

The World Trade Organization is in a state of flux. This stems largely from the Doha Round

impasse and the failure of the main protagonists to reach agreement. However, it is

also the effect of a changing global political economy. With the rise of the emerging

economies, decisions reached before at the World Trade Organization are not so easy

to make anymore. Following the global economic crisis, the US finds itself in a sustained

economic slump and, amid domestic crises, unable to lead the multilateral trading system

as it has always done. With no credible successor in sight, the Doha Round remains in

limbo and, with it, the multilateral trading system. The new world order, however imprecise,

renders the current decision-making system obsolete. The number of protagonists has

increased and the issues have become more complicated. It has grown increasingly

difficult to reach decisions at the World Trade Organization, particularly with respect to the

negotiating rounds. Even the Uruguay Round took nearly a decade to complete, which

suggests a stagnant and outdated decision-making system in serious need of a revamp.

The increasing popularity of regional and bilateral trading agreements, and with these the

continued erosion of the rules underpinning the multilateral trading system, is indicative of

the World Trade Organization members’ frustrations with the latter. Nonetheless, through its

functions the World Trade Organization makes a significant contribution to global peace,

security and development – and failure of the system is not desirable. Changes cannot

be implemented in the midst of a negotiating round, albeit at an impasse. However, post-

Doha, a review of the decision-making system should be prioritised in order to ensure an

efficient and, hopefully, a more transparent and inclusive decision-making mechanism.

A b o u t t h e A u t h o r

Memory Dube is a senior researcher in the Economic Diplomacy Programme at the South

African Institute of International Affairs, working on the global economic governance

project. The project considers economic governance as broadly defined, looking at key

institutions and groupings such as the G20, BRICS, G7/8, IBSA, the World Bank, and the IMF.

Her areas of research interest include trade policy reform, WTO policy, regional economic

integration, and trade and sustainable development. She holds an LLB (cum laude) from

the University of Fort Hare and an LLM (cum laude) in International Trade and Investment

Law from the University of Pretoria.

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A b b r e v I A t I o N S A N D A C r o N Y M S

CG18 ConsultativeGroupofEighteen

GATS GeneralAgreementonTradeinServices

GATT GeneralAgreementonTariffsandTrade

IMF InternationalMonetaryFund

LDC least-developedcountry

MFN most-favourednation

PTA PreferentialTradeAgreement

QUAD US,EU,JapanandCanada

SDT specialanddifferentialtreatment

TBT TechnicalBarrierstoTrade

TRIPS TradeRelatedAspectsofIntellectualPropertyRights

UNCTAD UnitedNationsConferenceonTradeandDevelopment

UNSC UnitedNationsSecurityCouncil

WEF WorldEconomicForum

WTO WorldTradeOrganization

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I N t r o D u C t I o N

Confidenceinthemultilateraltradingsystemisatanall-timelow.TheDohaRound

impassecontinuestoerodetheassurancethattheWorldTradeOrganization(WTO)

isableandcapableofcarryingoutitscoremandateofregulatinginternationaltrade.

Currentcommentaryisdefinedbypessimismandfatalism.1Keytotheapparentfailureof

theDohaDevelopmentAgendaisthefailureofthedecision-makingprocessattheWTO.

However,thiswouldseemtobeanunfairverdictonaninstitutionthathas,byandlarge,

beenthemostsuccessfulofallinternationalinstitutionssofar.Inaddition,thesystemis

theonlyoneintheworldinwhichallcountries,bigandsmall,havethesamepowerand

authority–althoughthismightbesaidtoexistintheoryonly,especiallyastheconsensus

hashistoricallyfounditsseatwiththeQUADcountries(US,EU,JapanandCanada).

Thatsaidthough,theWTOhasmanagedtogivethesmallercountriessomemeasureof

representationintheinstitution,andacertaindegreeofsayinissuesandprocesses.

The Doha Round impasse signals a crisis in the WTO and the need for broad

institutionalreforms.Hoekmanidentifiesthreedimensionsofthecallsforinstitutional

reformattheWTO:therulemakinganddecision-makingprocesses;themanagementof

day-to-dayactivities;andtheenforcementofnegotiatedcommitmentsandrules.2The

paperfocusesonlyontherule-makinganddecision-makingprocesses,especiallyasthey

arekeytotheinstitutionalreformintheotherdimensions.Decision-makingisahuge

issuebecauseitislinkedintrinsicallytothelegitimacyoftheinstitution.Inthewordsof

Cottier:3

Decision making processes serve and facilitate the attainment of legitimate outcomes

commensurate with the substantive goals of the organisation […] The authority and

legitimacyof the institutionrelies, inotherwords,onappropriate substance-structure

pairings.Withtheevolutionofsubstance,structuresandproceduresequallyneedtochange,

adaptandevolve.

ThequotationaptlysumsupthecurrentproblemwiththeWTO.Thereisagrowing

misalignmentbetweendecision-makingprocessesandthesubstantivecontentof the

WTO.ThattheDohaRoundisa‘development’roundisoneexample.Thisneedstobe

remediedandshouldbemadeapriorityoncetheDohaRoundisconcluded,although

suchaconclusionwouldbeunlikely,giventhelikelihoodthattherecannotbeanother

negotiatingroundagainunderthesamearchaicdecision-makingmechanisms.

ThepaperexplorestheprinciplesofconsensusaswellastheSingleUndertakingin

theWTO,andinvestigateswhethertheseprinciplesarestillapplicableintoday’sWTO.

Thisinvolvesananalysisofhowtheseprinciplesareapplied;theeffectsonthebroader

membershipof theWTO;acomparisonof thedecision-makingmechanismsapplied

duringtheGeneralAgreementonTariffsandTrade(GATT)years;andaninterrogationof

thevariousoptionsthathavebeenputforwardeitherasalternativestothetwoprinciples

oroptionsforimprovingtheprinciples.

ThepaperbeginswithanoverviewofthecurrentchallengesfacingtheWTO,andhow

theserelatetotheshortcomingsorotherwiseofthecurrentdecision-makingsysteminthe

WTO.Itfollowswithananalysisofthedecision-makingprocessesasespousedinboththe

consensusandtheSingleUndertakingprinciples.Thepaperexploresthevariousoptions

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putforwardovertheyearsaspossiblesolutionstothechallengeofdecision-makingin

theWTO.Finally,itconcludeswithafewrecommendationsonthebestpossibleways

of tackling thequestionof institutional reform in theWTOfromadecision-making

perspective.

t h e e v o L u t I o N o F D e C I S I o N - M A K I N g : F r o M g A t t t o t h e C h A L L e N g e S o F t h e W t o

ComparisonsareoftenmadebetweentheWTOanditspredecessor,GATT.Theconsensus

isthatGATTwasgenerallysuccessful,bothinitsdecision-andrule-makingprocesses

andwithtradeliberalisation.Itisimportanttoidentifythedifferencesbetweenthetwo

institutionsandtodeterminewhytheWTOhasnotbeenassuccessfulasGATT.However,

althoughtheprevailingviewofGATTmaybethatofasuccessful institutionfroma

decision-makingperspective,theremaybearomanticismattachedtothis,whichcould

bemotivatedpartlybythefrustrationsbeingexperiencedwiththeWTO.

Asastartingpoint,GATT’sactivemembershipconsistedofwillingliberaliserswith

onlythreedominantplayers:theUS,theEUandJapan.4Thiswillingnesswasbasedon

anunderstandingoftheneedfortradeliberalisation,andthekeytothiswasreciprocity

andtheunderstandingthatcountrieshadtoreducetheirowntariffsiftheyweretoobtain

tariffconcessionsfromothercountries.5Thisfacilitatedthecalibrationofthepolitical

economyforcesineachofthecountriestowardsfurthertradeliberalisation.6Also,each

ofthedominanteconomiesintheGATTsystemwastoolargetofree-rideonthetariff

reductionsmadebytheothercountries,andhencereciprocityinthenegotiationswas

easiertoachieve.7Thattherewasonlyonesectorforthenegotiationofliberalisation,

namelymanufactures,ofcoursehelpedtomakenegotiationseveneasier.Inthediscourse

onagriculturaltrade,itisoftencitedhowtheagriculturalsectorwasasacredcowunder

GATT.Nonetheless,therestrictionofthescopeofnegotiationstomanufacturesmeant

that,becausethedominantplayersinthesystemwereallmajormanufactureswiththe

capacitytoexporttoeachother,liberalisationwasanopportunitytoachieveeconomies

ofscaleinthesectorandtoraiseefficiency.8Similarly,thebenefitsofliberalisationinthe

sectorwereevenacrosstheboard.

Continuoustradeliberalisationwasachievedthroughtradenegotiationrounds,the

processofwhichhasbeencarriedovertotheWTO,albeitbeingmoredifficulttoachieve

agreementnow.UnderGATT,provisionwasmadeforrulestoensurethatstatesdidnot

renegeon their tariff liberalisationcommitments.9Ofparticular importancewas the

principleof‘binding’tariffsandensuringthatpreviouslynegotiatedconcessionscould

notberenegotiated;andmakingprovisionforotherstatestoretaliateintheeventthat

astateelectedtogobackonitscommitments.10Itisimportanttostress,however,that

despitetherulesputinplacetoensureconsistencywithcommitmentsmade,GATTwas

notnecessarilyastrictlyrules-basedinstitution.Itwasdrivenmorebytheeconomicand

politicaldesire,particularlyaftertheSecondWorldWar,topreservethenegotiatedtariff

concessions.

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PauwelyndescribesGATTashavingbeenmoreofagentleman’sclubthanalegal

regime:11

Itsobjectivewastosettletradeproblems,nottocreateorclarifytradelaw.Flexibilityto

adapttoeconomicandpoliticalrealitiesprevailedoverthepredictabilityoftheruleoflaw.

TheGATTclubwasinspiredandrunbywhatbecameknownas“embeddedliberalism,”

thatis,acommonbeliefamongthetechnocraticelitesoftheoriginaltwenty-threeGATT

contractingparties–afterall,alimitedsetoflike-minded,capitalistcountries–thattrade

liberalisationincreaseswelfareandrequiresinternationalcoordinationanddiscipline,albeit

withsufficientroomleftfordomesticpoliticstoredistributeincomeandsustainthesafety

netsofthewelfarestateathome.

DevelopingcountrieswerealwayspartofGATTfromitsinception,andtheirnumber

grewconsistentlyovertheyears.TheirinterestintherunningofGATTwas,however,

lessenedthroughtheinstrumentofspecialanddifferentialtreatment(SDT).Thisenabled

developingcountriestoapplyprotectionisttradestrategies,suchastheuseofimport

substitutiontopromoteindustrialisation;exportsubsidiestopromoteexports;andthe

useoftradecontrolsforbalanceofpaymentpurposes.12TheSDTwasalsoaresponseto

theprevailingdevelopmentorthodoxyamongdevelopingcountriesatthetime,wherethe

import-substitutionindustrialisationmodelwasbeingactivelypursued.13Thedeveloped

countrieswerewillingtoacquiescetothisinordertosecurealliesagainstthespread

ofcommunism.14Hence,developingcountriesdidnotparticipateinthenegotiations

anddidnothavetoliberalisetheirowndomestictariffsbut,owingtothemost-favoured

nation(MFN)principle,couldaffordtofree-rideonliberalisationcommitmentsmadeby

thebiggercountries.ThiseffectivelyconsolidatedtheroleoftheQUADwithinGATTas

thedecision-makers,andenabledthemtomakedealsanddecisionsamongthemselves

throughbilateralagreementsandclosedmeetings.Baldwindescribesthisasthe‘don’tobey,

don’tobject’system,inwhichdevelopingcountrieswerecontenttohavethedeveloped

countriesmakeallthedecisionsprovidedtheywereallowedtoprotecttheireconomies

throughtheSDTtool.15Itisclearthatthesystemwasdesignedtoworkloosely,andit

seemedtoworkratherwell.Infact,inthecaseoftheUSandmanyothergovernments,

GATTwasonlyprovisionallyappliedfortheforty-sevenyearsitwasinexistence,without

havingbeenactuallyratified,butcountrieswerestillunable tobacktrackfromtheir

liberalisationcommitmentsbecauseofthethreatofretaliatoryaction.ThusGATTactually

operatedwithoutanyconstitutionalorinstitutionalfoundation.16Suchaset-upwouldnot

haveprevailedifarelativelybenignhegemon,ietheUS,didnotwishittobeso.

AstheGATTsystemdevelopedandgainedmanymorecountrymembersoverthe

years,itbecameadefactoworldtradeorganisation,albeitfragmentedbythemany‘codes’

thatcountrieswerenegotiatingamongthemselves.17Whereasthefirstfivenegotiating

roundsunderGATThadfocusedsolelyonreducingtariffs,thesixthround,whichwas

theKennedyRound,venturedintoanti-dumpingissuesandtheseventhround,theTokyo

Round,venturedmoreextensivelyintonon-tariffissues.AttheTokyoRound,several

plurilateral‘codes’werenegotiated,coveringsuchissuesassubsidiesandcountervailing

measures; technical barriers to trade; import licensing procedures; government

procurement;customsvaluation;anti-dumping;bovinemeat;internationaldairy;and

tradeincivilaircraft.18AgreementswerealsonegotiatedonSDT,balanceofpayments,

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safeguardsanddisputesettlement.19Consequently,GATT,initsinitialformulationasa

‘gentlemen’sagreement’,couldnotcopewiththegrowingcomplexityofinternational

tradingrelations.20TheinstitutionalflawsofGATTbecameexposed,whichincludethe

following.21

• The‘provisional’applicationofGATT.

• TheinadequateamendingprovisionsoftheGATTtreaty,whereunanimitywasrequired

forsomeclausesandtwo-thirdsmajorityforothersand,eventhen,theamendments

wouldnotapplytocountriesthatrefusedtoacceptthem.

• Therelationshipofthese‘codes’totheGATTtreatyitselfwasalsocontested.

• TherelationshipoftheGATTtreatytodomesticlawinsomecountrieswasunclear.

• Issuesofaccessionandopt-outclausesinwhichsomecontractingpartiescouldopt

outofaGATTrelationshipwithotherparties.

It became clear that the world trading system was in need of a more formal and

institutionalised,rules-basedbody;andthattransformationofGATTwasinevitableif

thesystemwastoworkmoreeffectivelyandavoidunendingdisputes.Thiswasglaringly

evident in theUruguayRound,whichhasbeenrecordedas themostambitiousand

comprehensiveofallnegotiatingrounds.Theroundadoptednewagreementssuchasthe

GeneralAgreementonTradeinServices(GATS),TradeRelatedAspectsofIntellectual

PropertyRights(TRIPS),SanitaryandPhytosanitaryStandards,andTechnicalBarriersto

Trade(TBT).Someoftheseagreements,suchastheTBTAgreement(previouslyknown

asthe‘Standards’CodeintheTokyoRound)wereimprovementsfromtheTokyoRound

‘codes’.Disputesettlementwasstreamlinedandplurilateralagreementstransformedinto

multilateralagreementsapplicabletoallmembers.Mostimportantly,theUruguayRound

sawthetransformationofthethenmulti-speedGATTsystemintotheWTOasitisknown

today,aformallegalentitythatadministerstherules-basedmultilateraltradingsystem

basedontheprinciplesofreciprocityandnon-discrimination.

C h A L L e N g e S F A C I N g t h e W t o

LargelybecauseofthecurrentemphasisondevelopmentconcernsintheWTO,ithas

becomeeasytogeneraliseaboutthechallengesfacingtheWTOandtosimplyclassify

these as a developed versus developing country divide. This would be a simplistic

approach,especiallygiventheconflictinginterestswithinthesegroups.Atabroaderlevel,

however,mostoftheissuesdohavedevelopedversusdevelopingcountrydimensions,

ifnotfoundations.Baldwinidentifiesfourgeneraldevelopmentsintheglobaltrading

system,whichhavemadeitincreasinglydifficultfordecisionstobereachedattheWTO.22

• Theincreasedtechnicalcomplexityanddisruptivedomesticeconomiceffectsofthe

issuesbeingnegotiated.

• Theshiftinrelativebargainingpoweramongthenegotiatingparticipantsinfavourof

thedevelopingcountries.

• The proliferation of bilateral and regional free trade agreements in contrast to

multilateralagreements.

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• The increased emphasis on achieving ‘fairness’ rather than reciprocity in trade

liberalisation.

Broadened agenda with domestic regulatory implications

Cottier emphasises Baldwin’s first point by stressing that the progressive reduction

oftariffsovertheyears,bothmultilaterallyandunilaterally,hasseentheemphasisof

regulatoryworkbecomemorebiasedtowardsissuesrelatedtodomesticregulationand

ensuringaconduciveenvironmentforinvestment.23Heopines:24

Non-tariffbarriers addressed in theagreementsonTechnicalBarriers toTradeandon

Phyto and Phytosanitary Measures, standards on intellectual property in the TRIPS

Agreement,domesticsupportintheAgreementonAgriculture,disciplinesonsubsidiesin

theAgreementonSubsidiesandCountervailingDuties,domestic regulationinGATS,and

governmentprocurementallessentiallyserveasabenchmarkfordomesticlawoperating

withinthejurisdictionofMembers.MuchoftheworkinGATTsincetheTokyoRoundand

intheUruguayRoundhasbeenofalegislative,law-making,prescriptivenature.Future

negotiationsarelikelytoseetherealmofrule-makingreinforced.Cleardistinctionsbetween

negativeintegration(prescribinglimitstonationalsovereignty)andpositiveintegration

(prescribingwhatMembersareobligedtodo)havebeenblurred.Butthelatterisincreasing.

Thechallengesofclimatechange,workonvariouslinkageissuesbeyondtheenvironment,

inparticularhumanrights,thelinkagetoinvestmentprotection,intellectualpropertyand

theregulationofservices,inparticularfinancialservices,willfurtherenhancecomplexrule-

makingnegotiations.Thesenegotiationswillneedtotakeintoaccountelementspertaining

todifferentfields,combininggoods,servicesandintellectualpropertyalike.

Thequotation ishighlightedby thecontroversysurrounding theSingapore issues.25

Developingcountrieswereat the forefrontof thecampaignagainst the inclusionof

theSingapore issues in theWTOagenda,protesting the intrusion into thedomestic

policyspace.Anotherprominentissueisthatoftradeandclimatechange.Tradeand

competitivenessconcernsfeatureheavilyintheclimatechangenegotiations,particularly

regarding ‘carbon-leakage’,wheredevelopedcountriesworry that implementationof

carbon-reductionmeasuresmayresultintherelocationoftheirproductioncompanies

todevelopingcountrieswithlessstringentcarbon-controlmeasuresinplace.Theuseof

trade-policyremediesandmeasuresinthefightagainstclimatechangeisbeingmootedin

manycountries;andsuchtradebarriersascross-bordertax-adjustmentmeasures,private

standards(production-processmethods)and labellingarebeingconsideredbysome

developedcountries.Thisposesarealthreattothecountriesatthereceivingendofthese

policies,andhighlightstheongoingquestionofwhethertheWTOshouldalsoventure

intothisareaintermsofrule-makingorratherleaveitfortheUN Framework Convention on Climate Change toaddress.

On a different subject and with particular reference to the effects of the global

financialcrisis,Draperalludes to the tensionsgeneratedbythe impactofexchange-

ratemanagementontrade.26Althoughtheissueofexchange-rateregimesandfinancial

deleveragingbelongssquarelywithintherealmoftheInternationalMonetaryFund(IMF),

therearestillsignificantimpactsontheglobaltradingsystem.27Thequestion,again,is

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whethertheWTOwouldwanttoexpandintothatarenaaswell.Afterall,theexampleof

investmentandintellectualpropertyshowsthattheWTOisnotaversetobroadeningits

regulatoryreach.

However,thereareproblemsinherenttotheexpansionoftheWTO’sreachontrade-

relatedissues,particularlyastheyarenottariffs.Itisdifficulttoassessreciprocityinthe

negotiations,sincethereisnosimplemeasureofcomparisonacrosscountries.Domestic

stakeholdersmaybeaffectedadversely,asillustratedbythegovernmentprocurementcode

thattheUSsigneduptointheTokyoRound,whichthreatenedminoritygroupsintheUS

becausetheycouldnolongerreceivepreferentialtreatmentwhenbiddingforgovernment

contracts.28

Political activation of developing countries

Theshiftinrelativebargainingpoweramongthenegotiatingparticipantsinfavourof

thedevelopingcountriesisalsorelatedtodevelopmentsintheglobalpoliticaldiscourse

andtheglobalpoliticaleconomy.FromapurelyWTOperspective,partofthechallenge

stemsfromtheSingleUndertakingadoptedattheUruguayRound,whichrequiredthat

countriesparticipateinallagreements.ThisisinsharpcontrasttoGATT,whicheither

exemptedsomecountriesfromthetariffreductionnegotiationsthroughSDT29orgranted

somecountriestheluxuryofselectingwhichagreementstosignuptointheKennedyand

TokyoRounds.FollowingtheUruguayRound,developingcountriesbecamemoreactivein

decision-makingattheWTO.Thedistributionofpoliticalandeconomicpowerstillsplays

anintegralroleinshapingtheagendaoftradenegotiations,30andthepoliticalactivationof

thedevelopingcountrieshasupsettheapplecartofdecision-makingintheWTO.

Developingcountrieshavelearnttoorganiseandgalvaniseeachotherintointerest-

basedcoalitions,mainlybasedondefensiveinterestsanddesignedtogainbetteraccess

todevelopedcountries.31Thisisanobviousconsequenceofthesizeoftheirmarketsand

isalsoinlinewiththehistoryofSDTintheworldtradingsystem.Nonetheless,through

coalitionbuilding,developingcountrieshavemadethemselvesveryrelevanttodecision-

makingintheWTO.TheexperienceofSeattleandCancunfurtherillustratesthepolitical

powerthatdevelopingcountrieshavemanagedtoaccrueforthemselves.InCancun,

leadingdevelopingcountriesrefusedtonegotiatetheSingaporeissuesintheabsenceof

balancedconcessionsfromthedevelopedcountries,especiallyontheissueofagricultural

trade.32NolongercantheQUADsettheagendaormakedecisionsattheexclusionof

developingcountries,whichiswherepartofthechallengewithdecision-makingintoday’s

WTOstemsfrom.China’saccessiontotheWTOin2001signalledapermanentchangein

thepowerdynamicsoftheWTO.33

Chinaisoneofthenewtradepowersthathasriseninrecentyears,and,togetherwith

BrazilandIndiaamongothers,isreferredtoaptlyasan‘emergingeconomy’.34These

countrieshaveexperiencedsustainedgrowthovertheyearsandhaveevenmanagedto

emergefromtherecentglobaleconomiccrisiswithonlyminorbruisescomparedwith

themajordevelopedcountries,whichhaveexperiencedasustainedeconomicslump

todate.Thesecountrieshavegivenrisetothemultipolarworldthatiscurrentlybeing

experienced.TherecentaccessionofRussiatotheWTOisexpectedtofacilitateanother

shiftinthepowerdynamicsattheWTO.RussiaispartoftheBRICSgroupofcountries,

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togetherwithBrazil,China,IndiaandSouthAfrica.WithalltheBRICSintheWTO,it

isexpectedthattheQUADwillfaceitstoughestchallengeyet,and,fromexperience,the

decision-makingprocesswillbemademoredifficult.IndiaandBrazilhavealreadysetthe

precedentbyestablishingthemselvesas‘processdriversinmultilateralnegotiations’.35

However, a strong BRICS presence and coalition in the WTO is yet to be seen and

experienced.Thispointstoafundamentalshortcomingofthepoliticalandeconomic

powerthatdevelopingcountrieshavemanagedtoaccumulate:incoherentpositionsand

conflictinginterests.JustasGATTwasabletofunctioneffectivelybecauseofthesame

vestedinterestsoftheQUAD,despitetheirdivergenteconomicinterests,theemerging

powersposeachallengetotheQUADleadershipandhaveacripplingeffectontheWTO

becauseof theheterogeneousnatureof their interests,and indeedacrossdeveloping

countriesasawhole.36

Anotherviewofthedevelopingcountrydimensionisthatthetradeliberalisation

agendaisnowmostlyaboutdevelopingcountries.Therearethreecomponentstothis:

‘OECDliberalizationvis-à-visdevelopingcountries;developingcountryliberalizationvis-

à-vistheOECD;andintra-developingcountryliberalization.Toservicetheseprocesses,

developingcountriesmustthusbecentraltothenegotiatingorganisation.’37Thispartly

explainsthedevelopedcountryenthusiasmforthenegotiationofnon-tariffmeasures,

althoughthereisstillacasetobemadefortradeliberalisationindevelopedcountriesas

well.38Thishasfacilitatedinter-sectoralnegotiations,wherebyinexchangeforgranting

enhanceddevelopingcountryaccesstotheirmarkets,developedcountrieswantaccess

forservices,thedefenceofintellectualpropertyrights,andsecurityfortheirinvestments

indevelopingcountries.39

Regionalism versus multilateralism

The issueofwhetherbilateral and regional tradeagreements arebuildingblocksor

stumblingblocksof themultilateral tradingsystemhasbeendiscussedadnauseam.

However,itisstillpertinentinthediscourseontheapparentfailureofdecision-makingin

theWTO.BilateralandregionaltradeagreementsaresanctionedbyarticleXXIVofGATT

andexistasoneoftheexceptionstotheMFNprinciple.Thechallengetothemultilateral

tradingsystemliesinthemultiplicityoftheseregionaltradeagreementsunderminingthe

multilateraltradingsysteminthefollowingmanner.

• Regionaltradeagreementscreatevestedintereststhatmakeitmoredifficulttoattain

meaningfulmultilateralliberalisation.Forinstance,manydevelopingcountrieshave

beenhesitantinagreeingtoambitiousmultilateraltariffreductionsintheDohaRound

forfearofpreferenceerosion,asthetariffreductionscutintotheirpreferencesunder

theGeneralisedSystemofPreferences40orPreferentialTradeAgreements(PTAs).41

• Regionaltradeagreementsfocusmoreontheregulatoryissuesingoodsandservices

tradeand,becauseof theunreservedautonomyof theparties to suchPTAs, this

underminestransparencyandpredictabilityininternationaltradingrelations.42

• PTAsalsohavethenegativetrendofincludingnon-tradeobjectives,particularlywhen

itcomestoPTAsbasedonthepreferentialtreatmentofdevelopingcountriesandwhen

developingcountriesdonothavetomakereciprocalconcessionsinmarketaccess.43

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Themainworryisthatthesedemandscouldbeusedtoforcetheinclusionofsuch

non-tradeobjectivesintotheWTO,especiallyascountrieswouldbeimplementing

thematPTAlevelanyway.44

Inessence, thereare twomainconcernswhen itcomes to thechallengeofbilateral

andregionaltradeagreements.Thefirstisthatdevelopedcountriesmayresorttothese

agreementsinordertoobtainconcessionsfromweakercountriesonissuesthattheywould

otherwisenotbeabletointroducewithinthemultilateralframework.Thesecondconcern

isthattheemergingeconomiesarenotshowingmuchleadershipintermsofmultilateral

tradeliberalisationbutareprovingtobechampionsofregionaltradeagreements.45In

general,theproliferationofthesetradeagreementsisalsoseenasanindicationofthe

WTOmembers’fatiguewiththesystem,especiallyasitfailstoconcludetheDohaRound.

Asaresult,thereisanincreasingtrendtowardstheideaof‘multilateralisingregionalism’,46

eventhoughimplementationoftheideamightprovetobeascomplexasthetaskof

concludingtheDohaRound.

‘Fairness’ in trade liberalisation

ThischallengehasbeeninexistencefromtheearlydaysofGATTandisintrinsically

tiedtotheprincipleofSDTfordevelopingandleast-developedcountries(LDCs).Itis

drawnmainlyfromthedevelopmentconcernsofdevelopingcountriesandLDCs,an

issuethathasbecomemoretopicalwiththeDohaDevelopmentAgenda,particularlyas

theroundwasmeanttoaddressthedevelopmentconcernsofdevelopingcountriesand

equalbenefitsoftradeliberalisationforallmembercountriesoftheWTO.Developing

countriesrealisedsoonaftertheformationofGATTthatunfetteredtradeliberalisation

wasnotconducivetotheirdevelopment,andperpetuatedthetradepatternswherethey

remainedcommoditysuppliersandimportedvalue-addedproducts.Thisgaveriseto

requestsforchangesintheinternationaltradingsysteminfourmainareas:thecreation

oftradepreferencesfordevelopingcountries;non-reciprocalorlessthanfullreciprocity

intraderelationsbetweendevelopedanddevelopingcountries;flexibilityfordeveloping

countriesintheapplicationoftraderules;andthestabilisationofcommoditymarkets.47

ItledtotheformationofSDT,aprinciplethatwasdesignedtoaddresstheperceived

conflictbetweentradeliberalisationandsocio-economicdevelopment.48

CurrentlytheWTOhasmorethan155SDTprovisionsunderitsfold,whichform

the ‘development’ elementof theWTO.49However,oneof themajor complaintsby

developingcountrieshasbeenthatSDTasitcurrentlyexistsintheWTOisineffectual.

This isevident in the languageemployed in theprovisionsand the lackofeffective

sanctionsforfailuretoadheretotheprovisions.Thelanguagedoesnotdirectanyaction

andmerelyencouragesthegrantingofpreferencesbydevelopedcountriestodeveloping

ones.50Thesebest-endeavourclausesthataccompanymostoftheprovisionscannotbe

challengedlegallyattheWTO’sDisputeSettlementBody.PriortotheUruguayRound,

SDThadtwoprincipalcomponents:‘protectionofdevelopingcountrymarketsandaccess

todevelopedcountrymarkets’.51Post-Uruguay,theadoptionoftheSingleUndertaking,

whichinvolvesdevelopingmembersaccedingtoallGATT/WTOagreements,necessitated

theadditionofathirdelement;thatof‘delayedimplementation’oftheagreementsto

whichthedevelopingcountrieshadboundthemselves.Thiswasasaresultofthecapacity

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problemsthatdevelopingcountrieswouldfaceintryingtoimplementtheagreements.

ItmustbenotedherethatunderGATT,SDTwasmoreaboutexemptionsfromGATT

provisionsandnon-reciprocity.However,post-UruguaySDTwasmorecloselyidentified

withimplementation-relatedassistance,andmostcommonlymanifesteditselfthrough

longerimplementationperiodsofWTOagreementsfordevelopingcountriesandLDCs.

Nevertheless,suchSDTshavebeenidentifiedlargelyashavingbeenineffectual,andpart

oftheDohaRoundmentalitywastoredressthissituation.

Toensurethatdevelopingcountriesbenefit fromthe increasedopportunitiesand

obtain welfare gains from the multilateral trading system, paragraph 2 of the Doha

MinisterialDeclarationmakesreferencetoenhancedmarketaccess;balancedrules;and

well-targeted,sustainablyfinancedtechnicalassistanceandcapacity-buildingprogrammes

asbeingcritical.Paragraph50ofthedeclarationalsoprovidesthatallnegotiationsunder

theDohaRoundshalltakeaccountoftheSDTprinciplesembodiedinpartIVofGATT,the

EnablingClauseandallotherrelevantWTOprovisions.Thedeclarationalsoprovidesthat

themembersreaffirmthattheprovisionsforSDTareanintegralpartofWTOagreements.

Mostimportantly,‘allspecialanddifferentialtreatmentprovisionsshallbereviewedwith a

view to strengthening them and making them more precise, effective and operational[author’s

ownemphasis].’52Drawingfromthis,itisclearthatanyresolutionoftheDohaRoundwill

needtoinvolvesomedevelopmentelement,anddevelopingcountriesinsistonthis.The

outcomesofthisroundaresupposedtoreflectthedevelopmentaspirationsofdeveloping

countriesandserveasavehicletoattaineconomicgrowthanddevelopment.However

indiscriminately andoften theword ‘development’ isused, there existsno standard

definition.Wheredevelopingcountriescomplain thatagreementsandprovisionsgo

againsttheirdevelopmentinterests,thisisnotexplained.‘Itisyettobedeterminedhow

developmentprinciplescanbeappliedeffectivelyintheWTO,inlinewithcountries’

varieddefinitionsofdevelopment,andinamannerthatwouldbestsatisfyallmembers’

expectations’.53

t h e L e g I S L A t I v e F r A M e W o r K F o r D e C I S I o N - M A K I N g I N t h e W t o

Decision-making in theWTOcomprises therulesondecision-making itselfand the

process by which these rules are negotiated.54 The rules on decision-making were

establishedwiththeformationoftheWTO;itistheprocessbywhichtheserulesare

negotiatedthathasstalledandwhichisthesubjectofthispaper.Astherulesonhow

decisionsorevenrules55aremadehaveanimpactontheprocessofrule-making,they

requireabriefdiscussion.

Asabasicpointofdeparture,decision-making in theWTO isdominatedby the

practiceofconsensus,whichfollowsonfromthepracticeofGATT.ArticleIX:1provides

that:‘TheWTOshallcontinuethepracticeofdecision-makingbyconsensusfollowed

under GATT 1947’. A simple majority shall constitute a quorum for the consensus

decision to be made.56 However, the same provision goes on to say that ‘except as

otherwiseprovided,whereadecisioncannotbearrivedatbyconsensus,thematterat

issueshallbearrivedatbyvoting.’Underthesamearticle,authoritativeinterpretations57

oftheWTOagreementrequireathree-quartersvote,withtheadditionalrequirementthat

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therebearecommendationbytherespectivecouncilswheretheinterpretationrelatesto

GATT,multilateralagreementsontradeingoods,theGATSandtheTRIPSAgreement.58

SuchinterpretationsarebindingandmayalsoaffecttherightsandobligationofWTO

members.59TheRulesofProcedurehavemoredetailedprovisionsonhowthevoting

shouldbeconducted.Thusconsensusistheprimarymethodandvotingthesecondary

method,toberesortedtointheeventofthefailureofconsensus.60Onlyonceinthe

historyof theWTOhas votingbeen resorted to,withEcuador’s accession in1995;

otherwise,alldecisionshavebeenarrivedatthroughconsensus.61

Incertaininstancesaswell,themajorityvotedoesnotapplyandalldecisionshave

tobemadebyconsensus.ThisincludesthedecisionsmadebytheDisputeSettlement

Body,62waiversinrespectoftheextensionoftransitionperiodsfortheimplementationof

WTOagreements,63anddecisionsontheadditionofnewplurilateralagreementstoannex

4oftheWTOAgreement.64TheamendmentoftheWTOAgreementhasitsownunique

setofprocedures.Where,ingeneral,internationallawdoesnotrequiretheconsentof

allpartiestoatreatyinordertopassanamendment,withtheobviousrequirementthat

partieswhicharenotpartytotheamendmentarenotboundbyit,articleXoftheWTO

Agreementprovidesforamoreonerousprocess.65ArticleX:1readsasfollows:66

AnymemberoftheWTOmayinitiateaproposaltoamendtheprovisionsofthisagreement

or the Multilateral Trade Agreements in Annex 1 by submitting such proposal to the

MinisterialConference.TheCouncilslistedinparagraph5ofArticleIVmayalsosubmit

to theMinisterialConferenceproposals toamend theprovisionsof thecorresponding

MultilateralTradeAgreementsinAnnex1,thefunctioningofwhichtheyoversee.Unlessthe

MinisterialConferencedecidesonalongerperiod,foraperiodof90daysaftertheproposal

hasbeen tabled formallyat theMinisterialConferenceanydecisionby theMinisterial

Conferencetosubmittheproposedamendmenttothemembersforacceptanceshallbe

takenbyconsensus.[…]Ifconsensusisreached,theMinisterialConferenceshallforthwith

submittheproposedamendmenttotheMembersforacceptance.Exceptasprovidedin

paragraphs2,5and6,theprovisionsofparagraph3shallapplytotheproposedamendment,

unlesstheMinisterialConferencedecidesbyathree-fourthsmajoritythattheprovisionsof

paragraph4shallapply.

Two-thirdsofthemembersmustagreetotheproposalforittobeadoptedandbecome

effective.Theamendmentiseffectiveforallmembers,butonlyif itdoesnotmodify

members’substantiverightsandobligations.Intheinstanceinwhichtheamendment

doesintrudeonmembers’substantiverightsandobligationsandsuchmembershave

notacceptedtheamendment,theMinisterialConferencemaydecidebyathree-quarters

majority that suchmemberswithdrawfromtheWTOorremainamemberwith the

consentoftheMinisterialConference.67

However,whenitcomestoamendmentsofthecornerstoneprinciplesofthetrading

system–suchasthemost-favouredtreatmentprinciple,68bindingoftariffs,69andarticles

IXandXoftheWTOAgreement(thelegislativeframeworkgoverningdecision-making)

–thenunanimousconsentisrequired.70ThismeansthateverymemberoftheWTOhas

toassenttowhateverchangesoramendmentsarebeingproposedinrelationtothese

provisions.

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Table 1: Decision-making in the WTO

Decision-making rule Type of issue

Unanimity Amendments concerning general principles such as non-discrimination.

three-quarters majority Interpretation of the provisions of the wtO and waivers of wtO disciplines for members.

two-thirds majority Amendments to the wtO relating to issues other than general principles; accession.

Consensus where not otherwise specified.

Source:HoekmanB&MKostecki,The Political Economy of the World Trading System: The WTO and

Beyond.Oxford:OxfordUniversityPress,2001.

ArticlesIIandIIIoftheWTOAgreementmakeprovisionsfordecisionssuchasnewrules,

amendmentsandnewagreementstobenegotiatedatanytimeWTOmemberssowish.

However,theWTOhasadoptedandcarriedonwiththeGATTcultureofmultilateral

traderounds,althoughtheyarebroaderthantheGATTrounds,whichwere,forthemost

part,concentratedontariffs.Despite theabove framework, thekeydecision-making

mechanismemployedbytheWTOisthatofconsensusand,asnoted,votinghasbeen

usedonlyonceinthehistoryoftheWTO,andeventhenitwasinthecaseofanaccession.

Hence,discussionontheefficacyofWTOdecision-makingismostlyinthecontextof

negotiationrounds.Tiedtothenegotiatingroundsanddecision-makingistheSingle

UndertakingprinciplethatwasadoptedintheUruguayRound.

The Single Undertaking

TheSingleUndertakingistakentomeanthat ‘virtuallyeveryitemofthenegotiation

ispartofawholeandindivisiblepackageandcannotbeagreedseparately.’71Withthe

establishmentoftheWTO,theSingleUndertakingalsomeantthatcountrieswanting

tobecomemembersof theWTOhad toaccept theentireagreementpackage in the

Uruguay Round as well as the associated obligations without exception.72 The idea

behind theSingleUndertaking is to enable trade-offs through issue linkages and to

facilitate negotiating leverage where it might otherwise not exist.73 Issue linkages

facilitatetradenegotiationsthroughensuringthatcountriescanofferconcessionsontheir

defensiveinterestsinexchangeforreciprocalconcessionsfromnegotiatingpartnerson

theiroffensiveinterests,thuskeepingtheenthusiasmfortradenegotiationsandtrade

liberalisationgoing.74WithouttheSingleUndertaking,tradeissueswouldbenegotiatedin

silos;andcountrieswithonlydefensiveinterestswouldhavenomotivationtonegotiate.

Withissuelinkages,thereisalwaystheguarantee,atleastintheory,ofgettingconcessions

onoffensiveinterestsinotherareas,therebyenablingnegotiations.

SpeakingspecificallytotheUruguayRoundandthesuccessoftheSingleUndertaking,

oneanalystpronouncedasfollows:75

Thisunprecedentedlycomprehensiveroundstrategydid,intheend,workdespitemany

misgivingsthroughoutthenegotiationsthatitwastooambitiousandcomplicated.There

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wasaweakeningofthedraftagreementforsomeissues,particularlyinthefinalphaseofthe

negotiations,butthiswastobeexpected.[…]Incontrast,itisdoubtfulthatsuchpolitically

sensitiveissuesasagriculture,textilesandintellectualpropertyrights,tonameonlyafew,

couldhavebeennegotiatedwithcomparableresultonanindividualbasis.

Mostdevelopingcountrieswould,however,argueagainstthesuccessoftheUruguay

Round and the Single Undertaking. For them, the Single Undertaking forced them

tosignuptoagreements inareas inwhich theyhadnocapacity to implement their

obligations.Thiswasdoneunderpromiseoftechnicalassistance,capacitybuildingand

otheradjustmenttoolstoenablethemtoimplementtheseagreements,butdeveloping

countriesarenotsatisfiedwiththelevelofassistancegivensofar.TheSingleUndertaking

fellshortofrecognisingthattherewasnoparityamongthecountriessigninguptothe

UruguayRoundagreements.76SomehavedescribedtheSingleUndertakingfordeveloping

countriesashavingbeenachoicebetweenalossofallmarketaccessormarketaccesswith

onerousobligations–andtherewasonlyonechoicethere.77Baldwinisoftheopinionthat

negotiationsonintellectualpropertyrights,antidumpingandcountervailingdutyrules,

tradeinservicesandforeigndirectinvestmenthaveonlyservedtodemonstratehowthe

complextechnicalnatureofthenegotiationsmakesforuninformeddecision-makingin

manysmallcountriesandLDCs.78Itonlymakessensethereforethatdevelopingcountries

wouldregretsigninguptosomeoftheUruguayRoundagreements.

Whatthismeansfordecision-making,anddrawingfromtheexperienceofdeveloping

countriesintheUruguayRound,isthattheSingleUndertakingmakesitimpossibleto

reachagreementbecausecountriesareatdifferentlevelsofeconomicdevelopmentand,

concomitantly,havedifferingimplementationcapacities.Withtheconcernsaroundthe

implementationofSDTpost-UruguayRound,truetotheadageof‘oncebitten,twiceshy’,

itwillbedifficulttogetdevelopingcountriestosignuptotheDohaRounduntilthey

aresatisfiedthatthedevelopmentmandatehasbeenexecutedsufficiently.Someofthe

countriesarestillstruggling,nearlytwodecadesaftertheUruguayRound,toimplement

someoftheagreements.ThiscallsforarevisionoftheSingleUndertaking,whichwill

otherwiseposea threat todecision-makingandprogress in theWTO.For instance,

paragraph47oftheDohaMinisterialDeclarationprovidesthat:79

theconduct,conclusionandentryintoforceoftheoutcomeofthenegotiationsshallbe

treatedaspartsofasingleundertaking.However, agreements reached at an early stage may be

implemented on a provisional or definitive basis.[author’sownemphasis]

Thisprovisionallowsforanearlyharvest80inthenegotiationsbutthisrequiresunanimous

consentandsuchconsenthassofarbeenabsent.81Agoodexamplewouldbetheissueof

anearlyharvestforLDCsthatwaspuntedintherun-uptotheeighthWTOMinisterial

ConferenceinGenevain2011.However,despitetheapparentsupportoftheideabyall

memberstates,thisdidnotmaterialise.WiththeDohaRoundstillbeingnegotiatedas

partofaSingleUndertaking,LDCsloseoutalongwithallothercountries.Theworldstill

sitsandwaitsforaresolutiontotheDohaimpasse.TheSingleUndertakingistherefore

intrinsicallylinkedtotheConsensusPrinciplebecausetheissuelinkagesandthebundling

ofagreementsrequiretheparticipationofallparties.82

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The Consensus Principle

Inpractice,consensusisdeemedtoexistifnomemberpresentatthetimethedecisionis

madeformallyobjectstothedecision.83ConsensusattheWTOthereforedoesnotimply

unanimityamongtheparties.Itdoesnotmatterthatsomemembersmightnotbepresent

orhavechosentoabstainfromthedecision-making.Asdiscussed,theconsensuspractice

follows theGATTpractice,which involvesnegotiationsandconsultations toensure

agreementbeforevoting.84Thisslowsdowntheprocessofdecision-makingaseffortsare

madetobringdissentingcountriesonboard.85TheConsensusPrinciplemeansthatany

countryintheWTOiscapableofblockingdecisionsbymerelyregisteringitsdissentand

hasbeenusedonoccasionwhereacountry’sinterestswouldbeadverselyaffectedbysuch

adecision.Thisposesaproblem.Inordertopreventaveto,thedecisionsusuallyarrived

atareofthe‘lowestcommondenominator’,designedtoensureacquiescencebyall.86The

systemensuresthemaintenanceofthestatusquo,aspotentiallyunpopulardecisions

wouldneverbefloated.ThismeansthattheWTOisincapableofdeliveringondemands

forrule-makingandalsorunstheriskofpotentialcrisisandparalysis,withtheWTO

losingrelevanceonimportanttradeissues.87Nonetheless,consensusisalsotheleveller,

atleastintheory,althoughthisignoresthevariouspressuresthatsmallercountriesmay

besubjectedtoandthepossibilityoftheirbeingunabletosustainaveto.88Inaddition:89

Anecessaryconditionforconsensustohavethepurportedbenefitsisthatthereisinformed

participation. In practice, small countries confront serious information and resource

constraintsthatimpedeeffectiveparticipation.Thiscanhavecosts,bothinanopportunity

forgonesense,andinadirectsenseifcountriesagree(ordonotobject)toinitiativesthat

haveadverseconsequencesforthem.

Inessencetherefore,capacitytosustainavetoislinkeddirectlytoeconomicstatus,and

shareandimportanceinworldtrade,andisthussometimeslikenedtoweightedvoting.90

Weightedvotingasusedinothermultilateralinstitutionsreliesheavilyonsuchthresholds

aseconomicstatus,withvotingsharesallocatedinaccordancewithacountry’swealth.

AlthoughvotingisprovidedforunderarticleIXoftheWTOAgreement,intheevent

ofafailureofconsensus,itisnotconsideredarealoptionforpoliticaleconomyreasons.

Agoodexampleofthefailureofaone-country,one-votesystemistheUnitedNations

ConferenceonTradeandDevelopment(UNCTAD).91Sinceitsformation,UNCTADhas

operatedontheequalvotesystem.However,probablyowingtotherootsofitsformation

asaresponsetodevelopingcountryconcernsinGATT,mostofthedecisionstakenare

biasedinfavourofdevelopingcountriesandseektocreateobligationsfordeveloped

countriestowardsdevelopingcountries.Needlesstosay,mostofthesedecisions,ifnotall,

haveneverbeenimplementedandaresimplyignoredbydevelopedcountries.

Thereareadvantagestodecision-makingbyconsensus.92

• Adecisionbasedonconsensuswillenjoybroadsupportandimplementationissecured

owingtotheco-operationofboththepowerfulstakeholdersaswellastheminorities.

• Consensus is thebest of all theotherdecision-makingoptions andprocesses as

developed countries fear being outvoted while developing countries fear being

presentedwithfaitsaccomplis.93

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DevelopingcountrieshavebecomeincreasinglyactiveintheWTO,bothasaresultof

theSingleUndertakingprinciple,whichbroadenedthedomesticreachoftheWTO,as

wellasthebindingoftariffs.Thishasledtodecision-makingbyconsensusbecominga

verycontentiousissue,particularlysincetheSeattleMinisterialmeeting,whendeveloped

countriesweretryingtogettheSingaporeissuesontothenegotiatingagenda.Itcouldbe

saidthatthesystemofdecision-makingbyconsensusonlyworkedinthepre-Uruguay

Roundyears.Post-Uruguay,theinstitutionalchallengestotheWTOhavemadeiteven

moredifficulttoachieveconsensus,particularlybecausethedecision-makingprocess

usedtobeexclusive.Previously,consultationsandnegotiationstowardsconsensuswere

alwaysaimedatthemajorpowers,asitwastheirvetothatwasreallyaconcern,and

anydecisionmadetotheexclusionofthemajorpowerswasanon-starter.Presently,a

continuationofthecurrentsystemposesathreattothelegitimacyandrelevanceofthe

WTO.Itisimportanttonotethattheproblemliesnotintheinstrumentofconsensus

indecision-making,butratherintheprocessofreachingconsensus,whichhasevolved

beyondrecognitionovertheyears.

Whereasinformalconsultationshaveprovedveryeffectiveinsteeringtheorganisation

toadecisioninthepast,theyhavenowbecomeasourceofcontroversyfortwoparticular

reasons.These are the SingleUndertaking,whichmakes agreementsbindingon all

members;andthegrowthinthenumberofactiveparticipants,particularlyofdeveloping

countries,andtheirdemandforactiveparticipationinthedecision-makingprocess.94

Continuing with the same practices in informal consultations creates a ‘democratic

deficit’.95 The one particular informal consultation process that has come under

considerablecriticismovertheyearsisthe ‘GreenRoom’consultations.GreenRoom

consultationsarepartofaconsultativeprocessthatwasdevelopedintheTokyoand

UruguayRounds,inwhichthe‘principals’inthenegotiationswouldnegotiateissuesuntil

reachingacompromise.96Formerly,theQUADwasalwaysrepresentedintheGreenRoom

process.Now,however,thesystemaccommodatesthelikesofIndia,Brazil,China,South

Africa,AustraliaandvariousrepresentativesofsuchgroupingsastheLDCs.Nevertheless,

theprocessisstillnotinclusiveofallmembers.

TheGreenRoomconsultationsaretraditionallyamechanismdesignedtoreducethe

numberofactiveparticipantsintheWTOdeliberations,thuscreatingscopeforprogress

andfordecisionstobereached.97TheriseoftheemergingeconomieshasmadetheGreen

Roomconsultationsmorerepresentativeofdevelopingcountriesastheyarenowpartof

suchconsultations.However,thegeo-politicalshiftintheworldhasincreaseddemands

forincreasedrepresentationofdevelopingcountriesbeyondthe‘emergingeconomies’and

otherselectedsmallercountries.

TherehavebeensomechangestotheGreenRoomprocessespost-Seattlethatare

worthmentioning,aswellassomeassociatedproblems.98Membersarenowinformed

ofallscheduledinformalmeetingsaswellasthelistofinvitedcountries,anduninvited

countrieswithanationalinterestinthematteralsohavetheoptionoftakingpart.Minutes

ofsomeoftheinformalmeetingsarecirculatedtonon-attendees.Itisalwaysemphasised

thattheseinformalmeetingsaremerelyforbuildingconsensusandarenotfordecision-

making.CertainlytherehasbeenaconcertedefforttoremovethestigmaofGreenRoom

meetingsasexclusive, informal,small-groupmeetings.However,threeproblemsstill

remainwiththeseparticularimprovementsandtheGreenRoomoperations.Firstly,many

developingcountriesarestillnotabletoattendthemeetingsowingtoalackofresources

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andlimitedrepresentationintheWTO.Informalmeetingstendtobeadhoc,thusleaving

littletimeforpreparationandresourceallocation.Despitetheprotestationsaboutthe

roleoftheseinformalmeetings,theirresultsareoftenpresentedtotherestoftheWTO

membershiponlyinthefinalstagesofthediscussions.Thislimitstherightofdeveloping

countriestoobject,asitdoesnotgivethemenoughtimetostudytheprovisionsandthe

introductionofthefindingsofthesemeetingsatsuchalatestage,whichmakesitdifficult

forthedevelopingcountriestoenteraformalobjection.

Secondly,thesemeetingsalsoallowtheChairpersonorDirectorGeneral,whatever

thecasemaybe,tobebroker,mediatorandfacilitatorofthenegotiations.TheChair

decidesontheagenda,thecountriestoinviteandthefrequencyofthemeetings;and

thesedecisionshaveanimpactontheinclusionorexclusionoftheuninvitedcountries

andtheirinterests.99Itwouldhelpifsomeofthesepositionswereheldbypeoplefrom

developingcountriesbut,althougheffortsarebeingmadetoensureequalrepresentation

ofbothdevelopedanddevelopingcountriesinWTOleadershippositions,thebalanceis

currentlyskewedandLDCsareoftenexcludedowingtoresourceimplicationsanyway.100

Finally,thetraditional‘clublike’natureoftheseinformalmeetingshasresultedin

plentyofinformalprotocolsofinteractionandacertainculturethatisexclusionaryin

itseffectondevelopingcountries,whichmakes theGreenRoomprocessevenmore

inaccessible. Also, as opposed to official interactions, there are no official support

services,suchastranslation,whichmakesitdifficultfornon-English-speakingdeveloping

countriesandLDCstoparticipateeffectively.101

Proposals and options for reform

Theproposalsforreformcanalsobeunderstoodwithinthecontextofthecurrentfour

maintenetsofdecision-makingintheWTO:102

• TheWTOisaone-memberone-voteorganisationtherebyallowingequalstatustoall

membersirrespectiveoftheirtradesharesoreconomicsize.

• TheWTOisamember-drivenorganisation.

• Consensusbaseddecisionmakingisthede-factonormintheWTO.

• TheWTOreliesonanelaboratenetworkofinformalprocessestogettoaconsensus.

Thesetenetsarethebasicframeworkfordecision-makingintheWTO,anditishighly

unlikelythatcountrieswouldfavouraradicaldeparturefromtheseprinciples.Many

reformproposalsfortheWTOhavebeenproposedbyvariousacademicsandNGOs.

Thispaperfocusesononlythreeofthese,namelydecisionsthroughvotingorweighted

voting;decisionsthroughaWTOexecutivecommittee;andcriticalmassapproachor

plurilaterals.

It is interesting tonote thatdeveloping countries inparticular are verykeenon

the retentionofconsensus indecision-making,despite its current inefficienciesand

marginalisingeffect,becausetheybelievethistobetheironlymeansofensuringthat

their voices are heard. This is mostly a practical consideration and is based on the

understandingthatthevotingsystemwouldneverworkinthecontextof theWTO.

Consensus‘allowsapoliticallyviablenegotiatingprocessofgiveandtaketoemerge.’103

Consensusisalsoregardedbydevelopingcountriesasanassuranceagainstdecisionsthat

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aredisadvantageoustotheirinterests.104Assuch,theyareinfavourofoptionsthatlook

atstrengtheningtheconsensusrule,suchasthosesuggestedbytheSutherlandReport.

TheSutherlandReportrecommendedthatanymemberconsideringblockingameasure

shoulddeclareinwriting,withreasonsincluded,thatthematterisoneofvitalinterest

tothemember.Ismailsupportsthisapproachandemphasisesthatitwillhelptoprevent

majorpowersfromblockingdecisionsfornon-traderelatedreasons.105However,itis

unclearhowthisapproachwouldhelpwiththevariousotherproblemsassociatedwith

consensusdecision-making.Itcertainlydoesnotstopsmallercountriesfromrefraining

fromblockingameasurebecauseofaidandotherconsiderationstheygetfromdeveloped

countries.Nonetheless,inallpracticalterms,astheexampleofUNCTADshows,the

currentsystemofconsensuswouldbefavourabletovotingifanyprogressistobemade.If

thecurrentsystemofconsensusisdroppedinfavourofvoting,itislikelythatalldecisions

wouldbeinfavourofdevelopingcountries,astheyformthemajorityintheWTOand,

withoutthesupportofthesuperpowers,thesystemwouldberenderedredundant.

Voting and weighted voting

Votingisprovidedforinthelegislativeframeworkasafall-backoption.However,as

discussedithasonlybeenusedonceintheWTO’shistory.Developingcountries,despite

beinginthemajorityandthusabletousethevotingsystemasameansofgettingtheir

way,haveneverrequestedthe initiationofvotingprocedures toarriveatadecision.

Theprovisionforvotingunderthelegislativeframeworkaloneshouldlimittheriskof

consensus,leadingtoaparalysisofdecision-making.Countriesarereluctanttoemploy

theirrighttovetodecisionsandtherebypreventconsensusfrombeingsecured,owingto

thethreatofisolationandapotentialcrisis.Thusvotingasadecision-makingmechanism

intheWTOreallyonlyjustexistsonpaper.106

Itgoeswithoutsayingthatifvotingweretoeverbecomearealpossibility,developed

countrieswouldrejectaone-country,one-votesystem.Decisionswouldneedtobemade

onboththeallocationofvotesaswellasonthethresholdstobeused.Thesedecisions

wouldneedtotakeintoconsiderationpoliticalequity,equalityanddemocracy.107The

systemwouldsomehowhavetobefairandresponsivetotheneedsofallcountrieswhile

ensuringthatnocountryismarginalised.

Thisraisesthepossibilityofweightedvoting.Seeingas‘sovereignpowerdoesnot

sufficientlyrespondtoexistingpowerrelations’,andthisiscertainlytrueoftheWTO,

votingrightswouldthusneedtobeconstructedinsuchawaythatmembers’relative

importanceinworldtradehastobereflectedintheirvotingrights.108Thisisthevoting

systemthatisappliedintheBrettonWoodsInstitutions.109Votingrightscanbeallocated

usingtradeshares,grossdomesticproduct,dependenceuponforeigntradeandpopulation

size.110Whatthismeansisthatgiventhecurrentglobalpoliticalandeconomicdynamics,

therewillexistsomekindof‘G20’withintheWTO,makingdecisionsonbehalfofthe

entiremembership.Weightedvotingcouldservetocementthekindofmarginalisation

inthedecision-makingprocessesintheWTOexperiencedbysomedevelopingcountries

outsidethe ‘emergingeconomies’of,interalia,China,India,BrazilandSouthAfrica.

Weightedvotingwouldthusnotbesupportedbyalldevelopingcountries.Thevoting

option,however, isdismissed inmostWTOquartersowing toan inherentaversion

ofit.ExperienceoftheIMFandtheWorldBankshowsthatdevelopingcountriesare

t h E w AY f O R w A R D f O R t h E w t O

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S A I I A O C C A S I O N A L P A P E R N U M B E R 118

disgruntledwiththeallocationofvotingrightsinthosesystems.Giventheshiftsinthe

globalpoliticaleconomy,weightedvotingshouldbeconsideredwithcaution.Lowopines

that‘aformalizedsystemofvotingisalongwayoffasapracticaltoolfordecision-making

intheWTO.’111

A WTO Executive Committee

Asamember-drivenorganisation,theWTOdoesnothaveaformalexecutivecommittee

liketheIMFortheWorldBank.Theissueofadecision-makingexecutivecommitteeis

asvolatileastheissueofweightedvoting,especiallyasdevelopingcountriesareraising

theirdispleasurewiththeconstitutionofthisexecutivecouncilandtheirrepresentation

intheBrettonWoodsInstitutions.Itishardtoimaginethedevelopingcountriesaccepting

suchanarrangementinthereformoptionoftheWTO.Nonetheless, it isoneofthe

mostcommonlydiscussedoptions.InhisdiscussionofreformproposalsfortheWTO,

Hoekmanspeaksoftwoproposedmodelsforanexecutivecommittee:onestructuredthe

samewayastheIMForWorldBankexecutivecommittees;andanotherstructuredto

‘identifycompromisepositionsinnegotiations,suggestsolutionswhenWTOCouncils

failtoachieveconsensus,engageinstrategicthinkingandhelptosetprioritiestofurther

themandateoftheorganisation’,whilethemembershipstillcontinuestouseconsensus

fordecision-making.112

Regardingthefirstmodel,Cottiercontendsitwouldbepossibletoestablishsuchan

executivecommittee.Membershipwouldbebasedonconsiderationsofsize,geography

andlevelofdevelopment;andwouldoperateonarotatingbasiswithmembershipfixed

foranumberofyears.Themajorpowerswouldobtainautomaticmembership,ofcourse,

andtheexecutivecommitteewould‘ensurethatallpertinentinterestsandregionshavea

voiceindecisionmaking’.113ThesecondmodelissupportedbyEhlermannandEhring,

whostatethatsuchacommitteecouldfacilitatedecision-makingintheWTOataless

formallevel.114Thisiscritical,asdevelopingcountriesarelikelytobewaryofaformalised

institution,particularlybecausealthoughtheywouldhavetoberepresented,developed

countrieswouldmostlikelyallgetaseatinsuchacommittee.However,iftheexecutive

committeeweretobecomprisedofasmallergroupofcountries,thiswouldmakebullying

tacticsmucheasier.Inaneraofbilateralandregionalagreements,representativecountries

wouldmostlikelyfindthemselvesputtingtheirowninterestsfirstshouldtheseevercome

intoconflictwithregionalinterests.

The formation of an executive committee has found favour among some WTO

members,notably theEuropeanCommission,which in2003 circulated a reflection

papercallingforthecreationofan ‘advisorygroup’ thatwouldassist theWTOwith

negotiatingoptions.115ThiswouldnotbeanewconceptfortheWTO,asGATThad,

forsometime,a ‘ConsultativeGroupofEighteen’(CG18),whichwasestablishedin

1975onatemporarybasisandthenmadepermanentin1979.116Membershiptothe

CG18wasbasedoneconomicweightandregionalrepresentation,withtherestofthe

membershipparticipatingasobservers,asalternatesorbyinvitation.Thegrouponlymet

afewtimesandwassuspendedin1989,whichdoesnotlendmuchcredencetotheidea

ofanexecutivecommitteeor,initsadaptiveform,anadvisorygroup.

TheSutherlandReport recommends thecreationofa ‘consultativebody’without

executiveornegotiatingpowerstoprovidebothpoliticalguidancetothenegotiators

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E C O N O M I C D I P L O M A C Y P R O G R A M M E

andapoliticaleconomiccontexttotradenegotiations.Thisbodywouldhavealimited

membershipofabout30,withthemajortradingpowershavingapermanentseatand

therestoftheseatsbeingrotated.Acombinationofmeetingfrequencyandparticipation

wouldallowfor inclusivityof theprocess.117However,giventhedebatesaroundthe

reformoftheUnitedNationsSecurityCouncil(UNSC),havingareplicaoftheUNSC

attheWTOwouldnotbesuchagoodidea.Therearecurrentlycallsfortherevisionof

thecompositionofthefivepermanentmembers(China,France,Russia,UK,US)ofthe

UNSC,particularlyinlightoftheirvetopower.UNSCpermanentmembershipisbased

onthepost-SecondWorldWarpoliticalpowerdynamicsintheworld.Thesedynamics

havechangeddrasticallyovertheyearsandsomecountriesintheUNSCnolongerhave

thesamepoliticalandeconomicclout.Thisalsoappliestotheregionalrepresentation

intheUNSC,especiallyconsideringthelackofAfricanrepresentationinthepermanent

membership.OnewouldexpecttheQUADtoformpartofsucha‘consultativebody’,but

theQUADasitwasoriginallyconstitutedisnolongerabigfactorintheWTO.Havinga

permanentseatdoesnotallowforsuchshiftsincountries’politicalandeconomicweight

and,asotherpowerfulstakeholdersemerge,theQUADcouldbeleftoutofthecoreofthe

decision-makingsystem.

Ultimately,thefailureoftheideaofanexecutivecommittee,eveninthedilutedform

inwhichitexisted,withnodecision-makingpowers,makesiteasiertodismissthisreform

proposal.Itisunlikelythatcountrieswillbuyintoitanytimesoon.Fourreasonshave

beenputforwardastowhytheestablishmentofsuchabodywouldnotbeapprovedby

members.118

• ThenatureofWTOlegislation,i.e.itsbindingnatureanditsintrusivepotential,means

thatfewcountrieswouldbewillingtoacceptrecommendationsofaconsensusof

anadvisoryinter-statebody,especiallyiftheissueunderdiscussionisoneinwhich

substantialdifferencesexist;

• Apermanent/semi-permanentbodymayhaveworkedpartiallywhenthemandate

ofGATTwasrestrictedtogoods,buttodayinterestsofcountriesdiffersignificantly

acrossissueareasthatarecoveredbytheWTO.Itseemssimplistictoexpectthat

manycountrieswouldfindtheirinterestsadequatelyrepresentedaccordingtoregional

groupingsineachissuearea;

• Evenmembersthatgainaplaceonsuchaboardmightnothavetheresourcesorthe

willtonegotiateinallthedifferentareasthatapermanentbodywoulddemand;

• Creationofanadvisoryboardwouldformalisetheexclusionofalargenumberof

membersfromprocessconsultations.

Plurilaterals

Mostcommentaryhasdwelledonplurilateralsasbeingthemostpracticalapproachto

reformingtheWTOdecision-makingsystem.TheWTOmakesprovisionforplurilateral

agreements inAnnex4,but theconsensusrequirementmakes itdifficult toaddany

newagreementstotheannex.Plurilateralsareagreementsthatarelimitedtoonlythose

countriesthathavesigneduptotheagreements.Therightsandobligationsunderthose

agreementsareonlyaccruabletothatspecificsetofmembers(therightsaccruingfromthe

agreementcan,however,beextendedtonon-members)andarenotbindingonthebroad

t h E w AY f O R w A R D f O R t h E w t O

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S A I I A O C C A S I O N A L P A P E R N U M B E R 118

WTOmembership.Thisisasopposedtomultilateralagreements,whicharebindingon

allmembers.

In considering why the WTO should consider the alternative of plurilateral

agreements,Drapercontendsthatcertainfactorsimplyaconvergencetowardsreduced

ambitionintheWTOnegotiations,asevidencedbytheDohaimpasse.Theseinclude

thestructuraladjustmentoftheglobaleconomicandpoliticalgeography;thegrowing

disillusionwithunilateraleconomicliberalisationmainlyduetotheglobaleconomic

crisis;aswellasthevacationoftheleadershiproleoftheUSintheWTO.119Assuch,if

thisimpasseremainsunresolvedthentheWTOmayloseitsrelevanceasmajortrading

powersbypassitbecauseofitslackofeffectiveness.120Intheabsenceofconsensusinthe

Dohanegotiations,plurilateralagreementsmayactuallybethenextbestsolutiontosave

theWTOfromredundancy.

Asdiscussed,theWTOhasahistorywiththeplurilateralsapproachasthepredecessor

totheSingleUndertakingsystem.Plurilateralshavealsobeencelebratedasthevariable

geometry approach and would assist with moving trade liberalisation forward and

preventingdevelopingcountriesfromundertakingonerousobligationsthattheystruggle

toimplementundertheSingleUndertaking.121Also,consideringthatthecurrentsystem

ofconsensushasbeenlikenedtoweightedvotingand,becausethedecisionsliewithina

smallminorityofcountrieswiththemajorityshareinworldtrade,thesystemdoesnot

deviatemuchfromoperatinglikeaWTOexecutivecommittee.Forthesamereasonsthat

theconsensusdecisionisinaquandary,theweightedvotingandexecutivecommittee

systemswouldnotworkintheWTOcontext.

TheWarwickCommissionalsoproposesthattheWTOconsidertheuseof‘critical

mass’122decision-makingin lightof theparalysisofdecision-makingcurrentlybeing

experienced.123 Tariff liberalisation is still very relevant; indeed one of the most

contentiousissuescurrentlyintheDohaRoundistariffreductionintheNon-Agricultural

MarketAccessnegotiations and in the sectoralnegotiations.However, theWarwick

Commissionidentifiestheplurilateralsapproachasbeingthemostpromisingapproach

toimprovedecision-makingfornewtopicsintheWTO.124Theseareagreementsthatwill

applyprimarilyamongthesignatoriesratherthanamongthewidermembershipofthe

WTO.Thebiggestfear,whichprobablymotivatedthedevelopingcountries’dissension

againstplurilaterals,isthatagreementswillbenegotiatedonexactlythesameissuesthat

developingcountriesaretryingtokeepoutofthenegotiatingtable,egtheSingapore

issues.Thisisavalidconcern,however,inreality,tradeliberalisationisaconstantthread

thatrunsthroughtheWTO.Althoughtherearestillsomesectorsthataremassively

protectedinsomecountries,withallthemultilateralandunilateralliberalisationsince

theGATTdays,countriesareexperiencingaliberalisationfatigue.Twoorthreedecades

downtheline,thedebatewillnolongerbeabouttariffliberalisationbutratheraboutthe

newgenerationissues.

Also,iftheplurilateralsareallowedtogoahead,thereisthefearthatthebarmightbe

settoohighfordevelopingcountriestoreachandthen,inthesamefashionaswiththe

TokyoCodes,theseplurilateralagreementsarethenmultilateralised.Theseareconcerns

thatshouldbetakenintoconsiderationastheplurilateralapproachtodecision-making

isbeingcrafted.

Afewrecommendationshavebeenmadeonthecriteriaandprocedurestobeadopted

withregardtoplurilateralsshouldmembersdecidetoadoptthisapproach.TheWarwick

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E C O N O M I C D I P L O M A C Y P R O G R A M M E

Commissionalthoughitmakesreferencetoavariablegeometryapproachto‘criticalmass’

agreements,hasmadethefollowingrecommendations.125

• Theexistingrightsandobligationsunderthecurrentsystemneedtobeprotectedand

theexpansionintonewregulatoryareasthroughplurilateralsshouldbeofsuchnature

toprovideapositiveglobalwelfarebenefit;

• Thedisciplinesshouldbebindingandjusticiable;

• TheMFNprincipleshouldbeappliedtosuchagreementsbuttheobligationsshould

onlyfallonthesignatories;

• Thereshouldbemeansofaddressinganyadversedistributionalbenefitsarisingfrom

suchplurilateralagreementsforanyaffectedcountries;

• Thereshouldbeprovisionfortechnicalsupport,capacitybuildingandinfrastructure

supportfordevelopingcountrieswishingtoparticipateinsuchagreements;

• Members that are not part of the agreement from the onset should have the

‘unchallengeableandunqualifiedright’tojointheagreementatanytimeandonterms

nomoreonerousthantheinitialsignatories.

AdditionalrecommendationsfromtheWorldEconomicForum(WEF)includethat:126

• Membershipmustbevoluntary;

• Thesubjectoftheplurilateralisacoretraderelatedissue;

• The issue under negotiation should enjoy substantial support from the WTO’s

membership;and,

• The‘subsidiarity’principleshouldapplyinordertominimisetheintrusionof‘club

rules’onnationalautonomy.

The question of whether to extend the preferences flowing from the plurilateral

agreements tonon-signatories as recommendedby theWarwickCommission could

beregardedasabitcontroversialasitmightpromotefree-riders.However,theWEF

recommendsthattheissuesconsideredforplurilateralagreementshouldgenerallyenjoy

supportfromtheWTO.Inotherwords,ratherthanhavetheentireWTOmembership

signuptoanagreementonacertaintradeissueandthenapplySDTtosmallerdeveloping

countriesandLDCs,thesecountrieswillbeexemptedcompletelyfromsigningupto

theseagreementsforlackofcapacity.Anotherwayofprotectingthenon-signatoriesis

tomakesurethatallthemembersparticipateinthenegotiationoftheseagreementsto

ensurethatcountriesdonotlatersignuptoobligationsthattheyhadnosayincreating.

Ofcourse,thisisbasedonthecountriesnegotiatingingoodfaith.Theunderstanding

thatdevelopingcountriesandLDCsdonothavetosignupattheinitialstageshould

encouragenegotiationsaimedatensuringsoundagreementsthatcaterfortheinterests

ofbothdevelopedanddevelopingcountries,especiallyastheywillbenegotiatingwith

theunderstandingthatatsomepoint,whentheyhavecapacity,theywillsignup.This

iswheretherecommendationbytheWarwickCommissionaswellasbytheWEFon

technicalsupportcomesin.Inthatparticularregard,waysofstrengtheningtheAidfor

Tradeinitiativeshouldbelookedat.

Withregardtodevelopedcountryagendasbeingthesubjectoftheseplurilaterals,

giventheriseofdevelopingcountryinfluenceintheWTOandthechangesinglobal

t h E w AY f O R w A R D f O R t h E w t O

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S A I I A O C C A S I O N A L P A P E R N U M B E R 118

economics,maybeit is timethatdevelopingcountriesbecamemoreproactive inthe

WTOratherthanreactive.Theycouldlaunchtheirownplurilateralnegotiations,which

couldworktoservetheissuelinkagesthatthesystemcurrentlygetsthroughtheSingle

Undertaking.

Who will reform the WTO?

Ofcourse,inorderforanyreformofthedecision-makingsystemintheWTOtotake

place,thereneedstobeunanimousagreementfromalltheWTOmembers.Membersare

currentlydividedontheissueofreformintheWTObut–justasallcontentiousdecisions

havebeenmadeintheWTObecausetherewasstrongleadership–leadershipintheWTO

isalsocentraltothekeyreformnecessaryfortheinstitutiontoprogressfromDohaand

someoftheotherchallengesitfaces.

Although the US and the EU remain indispensable to any reform process, it is

imperativethattheemergingeconomiesbebroughtintothefoldaswell.Thesecountries

–Brazil, India,China andnowRussia – and to a significant extent SouthAfrica as

well,willplayapivotalroleinbringingotherdevelopingcountriestothetableandin

convincingthemthatreformofthedecision-makingmechanismandparticularlymoving

totheplurilateralsystemiscriticaltothefuturerelevanceoftheWTO.Speakinginthe

contextofaDoharesolution,DraperandDubeidentifyanewgroupintheWTOthatis

representativeofthepowerdynamicsandthechangedglobalpoliticallandscape,which

couldbekeyinpushingforchange–the‘G11’.127ThisgroupwouldconstitutetheUS,the

EU,Canada,Australia,Japan,Brazil,China,India,Argentina,SouthAfricaandMauritius.

ThisisthesamegroupthatcouldpotentiallyreformtheWTOonceitresolvestheDoha

Round,iftheycanrealiseandharnesstheirpower.Thecompositionofthisgroupcould

changeeasily,however,withsomecountriesfallingoffandothersjoining.

C o N C L u S I o N

TheWTOwascreatedfollowingtherealisationthatGATTcouldnotsupportthenew

structureandagreementsthatwerebeingdecidedintheUruguayRound.Thechange

fromGATTtotheWTOwasnecessitatedbyinstitutionalchallengesbroughtaboutby

anexpandedWTOagendaandtheSingleUndertaking.Itisimportanttorecognisethat

onceagain,theWTOfindsitselfatajunctureinwhichachangetoitsdecision-making

mechanismsisnecessary,asthecurrentsystemisnotsustainable.ThefailureofDoha,and

inthiscase,non-resolutionoftheimpasseforyearsonend,willhavethesameeffectasa

failedround,andwillpreventtheinstitutionfromgoingforwardandanynewdiscussions

fromtakingplace.Developingcountrieswillcertainlynotallowanynewdiscussionsto

takeplaceinthewakeofafailuretorealisethe‘development’round.TheWTOtherefore

findsitselfinacrisisofbothrelevance,and,ifitlacksrelevance,oflegitimacy–andthis

needstoberesolved.Theinstitutionneedstoprovethatitiscapableofrespondingto

globalchangesandchallenges,atbothapoliticaleconomyandanagendalevel.

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E C O N O M I C D I P L O M A C Y P R O G R A M M E

e N D N o t e S

1 BaldwinR,‘SourcesoftheWTO’swoes:Decisionmaking’simpossibletrinity’,VoxEU.org,7

June2010a,http://www.voxeu.org/index.php?q=node/5141.

2 Hoekman B, ‘Proposals for WTO Reform: A synthesis and assessment’, Policy Research

WorkingPaper,5525.Washington,DC:WorldBank,http://www-wds.worldbank.org/servlet/

WDSContentServer/WDSP/IB/2011/01/10/000158349_20110110095113/Rendered/PDF/

WPS5525.pdf.

3 CottierT,‘AtwotierapproachtoWTOdecisionmaking’,NCCRTradeRegulationWorking

Paper, 2009/06, http://phase1.nccr-trade.org/images/stories/publications/IP2/upload.

Institutional%20reform%20WTO%20ed_1_0209.pdf.

4 Collier P, Why the WTO Is Deadlocked and What Can Be Done About It, Department of

Economics,OxfordUniversity,June2005,http://users.ox.ac.uk/~econpco/research/pdfs/WTO-

deadlock.pdf.

5 Baldwin R, Understanding the GATT’s Wins and the WTO’s Woes, Centre for Economic

PolicyResearch,Policy Insight,49, June2010b,http://www.cepr.org/pubs/PolicyInsights/

PolicyInsight49.pdf.

6 Ibid.

7 CollierP,op. cit.

8 Ibid.

9 PartIofGATTprovidedfornegotiatedreciprocaltradeliberalisation,whilePartIIservedto

supportthesenegotiatedconcessionsthroughstandardtradepolicyrules,suchasthenational

treatmentprincipleandprohibitionsonquantitativerestrictions.Thisworkedtoensurethat

tradepolicyinstrumentscouldnotbeusedtocircumventanytariffliberalisationcommitments

made(PauwelynJ,‘Thetransformationofworldtrade’,Michigan Law Review,104,1,2005,pp.

2–69).

10 BaldwinR,June2010b,op. cit.

11 PauwelynJ,op. cit.

12 MichalapoulosC,‘TheRoleofSpecialandDifferentialTreatmentforDevelopingCountriesin

GATTandtheWorldTradeOrganisation’,2000WorldBankPolicyResearchWorkingPaper,

2388 3, http://siteresources.worldbank.org/INTARD/825826-1111405593654/20432097/

TradeanddevelopmentintheGATTandWTO.pdf.

13 DraperP&NKhumalo,SmokeandMirrors?Sub-SaharanAfrica’sNegotiatingPositioninthe

DohaDevelopmentAgendathroughthePrismofSpecialandDifferentialTreatment,Trade

PolicyBriefing,2.Johannesburg:SAIIA(SouthAfricanInstituteofInternationalAffairs),2003.

14 Ibid.

15 BaldwinR,2010b,op. cit.

16 PauwelynJ,op. cit.

17 HoekmanBM&MMKostecki,The Political Economy of the World Trading System: The WTO

and Beyond.NewYork:OxfordUniversityPress,2ndedition,2001.

18 Lester S et al., World Trade Law: Text, Materials and Commentary. UnitedKingdom:Hart

Publishing,2008.

19 Ibid.

20 LesterSet al., op. cit.

21 JacksonJH, ‘GATTand the futureof international trade institutions’,Brooklyn Journal of

International Law, 8,11,1992,asreferencedinLesterSet al., World Trade Law: Text, Materials

t h E w AY f O R w A R D f O R t h E w t O

27

S A I I A O C C A S I O N A L P A P E R N U M B E R 118

and Commentary. UnitedKingdom:HartPublishing,2008.

22 Baldwin RE, ‘Failure of the WTO Ministerial Conference at Cancun: Reasons and

remedies’,29,2006,The World Economy, http://onlinelibrary.wiley.com/doi/10.1111/j.1467-

9701.2006.00815.x/pdf. Although the classification of the challenges that have made

decision-makingintheWTOmoredifficultisagreedwith,thecorrespondinginterpretationof

thechallengesisnotnecessarilythesameacrossallfouridentifiedchallenges.

23 CottierT,op. cit.

24 Ibid.

25 Singapore issues are the four issues prioritised at the Singapore Ministerial in 1996,

namelytradefacilitation,investment,competitionpolicy,andtransparencyingovernment

procurement.Thelatterthreewererejectedfornegotiationbydevelopingcountriesatthe2003

CancunMinisterial.TradefacilitationwasincludedinthemootedDohapackage.

26 DraperP,WhithertheMultilateralTradingSystem?Implicationsfor(South)Africa,Occasional

Paper,6.Johannesburg:SAIIA,2010.

27 Ibid.

28 BaldwinRE,op. cit. TheissueongovernmentprocurementresonateswiththeSouthAfrican

government’s reservations when it comes to the plurilateral agreement on Government

ProcurementintheWTO.Theassertionisthatsuchanagreementwouldhaveanegative

affectonthegovernment’sblackeconomicempowermentprogrammethatisdesignedtohelp

intransformingtheeconomy,whichisbiasedinfavouroftheminorityasaresultofahistorical

legacy.

29 Although,thesecountriescouldhavetakenpartinthenegotiationsiftheyhadwantedto

buttheyoptednottonegotiateduetotheprevailingimport-substitutionindustrialisation

developmentmodelorthodoxy.

30 BaldwinRE,op. cit.

31 BaldwinR,2010b, op. cit.

32 BaldwinRE,op. cit.

33 CottierT,op. cit.

34 Currently,however,thereisdebateabouttheexactstatusofthesecountries,withsomecritics

arguingthattheterm‘emerging’isamisnomerasthesecountrieshavealready‘emerged’.

35 TheWarwickCommission,The Multilateral Trade Regime: Which Way Forward? The Report of

the First Warwick Commission. Coventry:TheUniversityofWarwick,2007.

36 Forinstance,China’stradegrowthposesathreattootherdevelopingcountrieswithitscheap

industrialexportsandthismakestheirinterestsattheWTOcontradictory.Inagriculture,the

interestsoffood-exportingdevelopingcountries,suchasBrazilandArgentina,areinimicalto

thoseofnetfood-importingdevelopingcountries;andtheirpositionsonagriculturaltradeare

diametricallyopposed.SeeBaldwinR,2010b, op. cit.

37 CollierP,op. cit.

38 Itmustbenotedthatalthoughtherehasbeenanincreasedandoverwhelmingforayintonon-

tariffregulatoryissues,tradeliberalisationstillremainsthecoreoftheWTOagenda.Indeed,

someofthekeyissuesintheDohaRound,whoseresolutionmightfacilitatetheresolution

oftheentireround,revolvearoundtheconventionalissuesoftariffliberalisationandmarket

access:non-agriculturemarketaccessnegotiations(NAMA),agriculturaltradenegotiations,

negotiationsontraderemedies,AidforTrade,SDTandGraduationandtheGeneralSystem

ofPreferences(GSP),tomentionbutafew,seeCottierT,op. cit.Thiscorefocusontariff

reductionsandmarketaccessdespiteobservationsofaliberalisationfatigueintheWTO,

28

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E C O N O M I C D I P L O M A C Y P R O G R A M M E

whichmightalsobeattributedtotheslowpaceoftheDohaRoundalthoughthereareother,

morefundamentalreasons.

39 CollierP,op. cit.

40 ThisisaproductoftheUnitedNationsConferenceonTradeandDevelopment(UNCTAD),

whichadoptedtheGSPin1965,allowingdevelopedcountriestogranttradepreferencesto

developingcountriesoftheirchoice.ThisdeviatedfromtheallowancesofGATTarticleI,

whichonlyrecognisedandallowedtradepreferencesaccruingfromapastcolonialrelationship

betweenadevelopedcountryandadevelopingcountry.InordertoeffectuatetheGSP,itwas

grantedawaiverinrespectofarticleIbyGATTcontractingparties.SeeDubeM,The WTO

Non-Agricultural Market Access (NAMA) Negotiations and Developing Countries: In Pursuit of

the ‘Development Agenda’.LLMThesis,UniversityofPretoria,2010,http://www.chr.up.ac.za/

images/files/research/idlu/dissertations/2010/memory_dube.pdf.

41 SutherlandPet al.,The Future of the WTO: Addressing Institutional Challenges in the New

Millennium.ReportbytheConsultativeBoardtotheDirector-GeneralSupachaiPanitchpakdi.

Geneva:WorldTradeOrganisation,2004,http://www.ipu.org/splz-e/wto-symp05/future_WTO.

pdf.

42 Ibid.

43 UnderitsAfricaGrowthandOpportunityAct,whichpaveswayforapreferentialtrading

schemeinfavourofAfricancountries,theUSmakesdemandsofsub-Saharancountriesthat

includetheestablishmentofamarket-basedeconomy;theruleoflawandpoliticalpluralism;

economicpoliciestoreducepoverty;asystemtocombatcorruptionandbribery;protectionof

workers’rights;andeliminationofbarrierstotradeandinvestment.SeeGarayLJ&RCornejo,

‘Rulesoforiginandtradepreferences’inHoekmanBet al.(eds),Development, Trade and the

WTO: A Handbook. Washington:TheWorldBank,2002.

44 Ibid.

45 BaldwinR,2010b, op. cit.

46 Baldwin R & P Thornton, Multilateralising Regionalism. Ideas for a WTO Action Plan on

Regionalism. London: Centre for Economic Policy Research, 2008; Baldwin R & P Low,

Multilateralizing Regionalism. Challenges for the Global Trading System, NewYork:Cambridge

UniversityPress,2009.

47 MichalapoulosC,op. cit.

48 LichtenbaumP,‘“SpecialTreatment”versus“EqualParticipation”:Strikingabalanceinthe

Dohanegotiations’,American University International Law Review,17,2002,pp.1004–1032,

http://www.wcl.american.edu/journal/ilr/17/lichtenbaum.pdf.

49 InternationalCentreforTradeandSustainableDevelopment&InternationalInstitutefor

SustainableDevelopment,‘SpecialandDifferentialTreatment’,DohaRoundBriefingSeries,1,

13,2003,http://www.wto.org/english/forums_e/ngo_e/iisd_specdifftreatment_e.pdf.

50 LichtenbaumP,op. cit.

51 Ibid.

52 Paragraph50ofDohaMinisterialDeclaration.WT/MIN(01)/DEC/120November2001.

Ministerialdeclaration,adoptedon14November2001,http://www.wto.org/english/thewto_e/

minist_e/min01_e/mindecl_e.htm.

53 DubeM,op. cit.

54 StegerDP&NShpilkovskaya,‘InternalmanagementoftheWTO:Roomforimprovement’,in

DPSteger(ed.),Redesigning the World Trade Organisation for the Twenty-First Century.Ottawa:

CentreforInternationalGovernanceInnovation,2009.

t h E w AY f O R w A R D f O R t h E w t O

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55 EhlermannandEhringstatethat:‘Oneneedstodistinguishbetweenrulemakinganddecision

making,astheseexercisesaredifferentinnaturefromaconstitutionalpointofview.Theformal

rulesoftheWTOreflectthisdistinction,eventhoughitlargelydisappearsintheorganisation’s

practice.’SeeEhlermannCD&LEhring,‘Decision-makingintheWorldTradeOrganisation:

IstheconsensuspracticeoftheWorldTradeOrganisationadequateformaking,revisingand

implementingrulesoninternationaltrade?’,Journal of International Economic Law, 51,2005,

pp.51–75,http://jiel.oxfordjournals.org/content/8/1/51.full.pdf+html.Thispaper,however,

takesthepositionthatthelinesareblurred.Bothdecision-makingandrule-makingfacethe

sameconstraints,especiallygiventhatevendecisionsrelatingtorule-makingoramendments

aredifficulttoreachconsensusover,andhencerulescannotbemadeoramended.Thetwoare

thusinterchangeable,althoughthestandardreferenceforthispaperis‘decision-making’.

56 Rule16oftheRulesofProcedureforSessionsoftheMinisterialConferenceandMeetingsof

theGeneralCouncil.SeeStegerD&NShpilkovskaya,op. cit.

57 ThisisasdistinctfromtheinterpretationsperformedbypanelsandAppellateBodieswhen

clarifyingWTOrulesandasdefinedinarticle3.9oftheDisputeSettlementUnderstanding.

SeeEhlermannCD&LEhring,op. cit.

58 EhlermannCD&LEhring,ibid.;StegerD&NShpilkovskaya,op. cit.

59 LesterSet al., op. cit.

60 ArticleIX:2oftheWTOAgreement.StegerD&NShpilkovskaya,op. cit.

61 Ibid.

62 ArticleIX:1,footnote3oftheWTOAgreementandarticle2(4)oftheDisputeSettlement

Understanding.

63 ArticleIX:3,footnote4oftheWTOAgreement.

64 Ibid.

65 EhlermannCD&LEhring,op. cit.;StegerD&NShpilkovskaya,op. cit.

66 ArticleX:1oftheWTOAgreement.

67 ArticleXoftheWTOAgreement.

68 ArticleIofGATT1994.

69 ArticleIIofGATT1994.

70 ArticleX2oftheWTOAgreement.

71 WTO,‘Howthenegotiationsareorganized’,http://www.wto.org/english/tratop_e/dda_e/work_

organi_e.htm.

72 Ofcourse,therewereprovisionsmadefordevelopingcountriesthroughlongertransition

periodsandpromisesoftechnicalassistanceandotherimplementation-relatedassistance.

73 LowP,‘WTOdecisionmakingforthefuture’,StaffWorkingPaper,ERSD-2011-05.Geneva:

WTO, 2011, http://www.wto.org/english/res_e/reser_e/ersd201105_e.pdf; MacMillan E,

‘Dohadecisionmaking:ImplicationsoftheConsensusandSingleUndertakingPrinciples

for developing countries’, Commonwealth Trade Hot Topics, 71, 2010, http://www.

thecommonwealth.org/files/221610/FileName/THT71DohaDecision-Making.pdf.

74 MacMillanE,ibid.

75 PreegEH,Traders in a Brave New World, the Uruguay Round and the Future of the International

Trading System.Chicago:UniversityofChicagoPress,1995;asquotedinLevyPI,DoWe

NeedanUndertakerfortheSingleUndertaking?ConsideringtheAnglesofVariableGeometry,

YaleUniversity,PaperpreparedfortheCEPR/ECARES/WorldBankConferenceonTheWorld

TradingSystemPost-Seattle:InstitutionalDesign,GovernanceandOwnership,Brussels,14–15

July2000.

30

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E C O N O M I C D I P L O M A C Y P R O G R A M M E

76 Oxfam,Institutional Reform of the WTO,OxfamGBDiscussionPaper.Oxford:Oxfam,2000,

http://policy-practice.oxfam.org.uk/publications/institutional-reform-of-the-wto-112433.

77 HudecR, ‘GATTand theDevelopingCountries’,Columbia Business Law Review,1,1992,

pp.67–77.

78 BaldwinR,2010b, op. cit.

79 Paragraph47ofDohaMinisterialDeclaration.WT/MIN(01)/DEC/120November2001.

Ministerialdeclaration,adoptedon14November2001,http://www.wto.org/english/thewto_e/

minist_e/min01_e/mindecl_e.htm.

80 Normally,duringWTOnegotiationsnothingisagreeduntileverythingisagreed.However,

an‘earlyharvest’allowsforissuesthathavebeenagreedonbyallmemberstostartbeing

implementedevenwhilenegotiationsarestillongoingonotherissues.

81 MacMillanE,op. cit.

82 Ibid.

83 LesterSet al.,op. cit.

84 HoekmanB&MMKostecki,op. cit.

85 LesterSet al., op. cit.

86 Ibid.

87 EhlermannCD&LEhring,op. cit.

88 KhumaloN,LookingbeyondtheDohaRound.ReformingtheWTONegotiatingProcess,

PolicyBriefing,4.Johannesburg:SAIIA,2009.

89 HoekmanB,op. cit.

90 KhumaloN,op. cit.;LowP,op. cit.

91 KhumaloN,ibid.

92 EhlermannCD&LEhring,op. cit.

93 Ibid.

94 PedersenPN,‘WTOdecision-makingprocessandinternaltransparency’,World Trade Review,

5,2006,inSLesteret al., op. cit.

95 Ibid.

96 HoekmanBM&MMKostecki,op. cit.

97 KhumaloN,op. cit.

98 This sectiondrawsextensively fromNarlikarA,WTODecisionMakingandDeveloping

Countries,Trade-RelatedAgenda,DevelopmentandEquityWorkingPaper,11.Geneva:South

Centre,2001.

99 Toillustrate,effortsbytheWTODirectorGeneral,PascalLamy,toconductinformalmeetings

withtheG7duringtheJuly2008Ministerialsfailedtobothdiscussorresolveissuesofinterest

todevelopingcountries,suchasthecottonissue,thebanananegotiations,duty-freequota-

freeaccessforLDCsandthecountry-specificissuesintheNAMAnegotiations.Allthese

issueswerenotontheagendadespitetheirrelevanceinthenegotiations,becausenoneofthe

countriesthatLamyconductedtheinformalmeetingswithconcernedwiththoseparticular

issues.SeeIsmailF,Reforming the WTO: Developing Countries in the Doha Round.Jaipur:CUTS

International,2009).

100 TheyhavetohaveapresenceinGenevainordertobeconsideredandiftheyareinarrearswith

theirmembershipfeesformorethanayearthentheyarenoteligibletoholdoffice.

101 NarlikarA,op. cit.

102 Ibid.

103 Ibid.

t h E w AY f O R w A R D f O R t h E w t O

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104 HoekmanB,op. cit.

105 IsmailF,op. cit.

106 EhlermannCD&LEhring,op. cit.

107 LowP,op. cit.

108 CottierT,op. cit.

109 TheBrettonWoodsInstitutionsaretheWorldBankandtheIMF.

110 CottierT,op. cit.

111 LowP,op. cit.

112 HoekmanB,op. cit.

113 CottierT,op. cit.

114 EhlermannCD&LEhring,op. cit.

115 LesterSet al.,op. cit.

116 NarlikarA,op. cit.

117 SutherlandPet al., op. cit.

118 NarlikarA,op. cit.

119 DraperP,op. cit.

120 Ibid.

121 MacMillanE,op. cit.

122 ‘Criticalmassdecisionmakingwouldbeasituationinwhichasubsetofgovernmentscould

decidethattheywishedtopursueaparticularnegotiation.Thepresumptionwouldbethat

theywouldn’thavetoinvolveallthemembershipinthenegotiation,norimplicatetheminthe

resultsofthenegotiation.’LowPininterviewwithRVaitilingam,‘WorldTradeOrganization

decision-makingforthefuture’,20November2009,http://voxeu.org/index.php?q=node/4240.

123 TheWarwickCommission,op. cit.

124 Ibid.

125 Plurilateralsareessentiallyaboutthe‘criticalmass’beingabletomoveforwardoncertainissues

inwhichtherestofthemembershipisunableorunwillingtoproceedwithliberalisation.

126 DraperP,op. cit.

127 DraperP&MDube,DreamingoutLoud:ImplicationsofaDohaEnd-GameforSouthAfrica,

OccasionalPaper,100.Johannesburg:SAIIA,2011.

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