Despite the usual attempts to sound hopeful, the admission of failure by World Trade Organization director general Pascal Lamy last week was so abject it seemed to signal a growing understanding that the WTO is a deeply, possibly fatally, troubled organization.
“There is no escaping that this meeting has failed,” he said July 29 as he sent ministers and negotiators home after 10 intense days of bargaining in Geneva. “Members have been unable to bridge their differences.”
This admission came after almost seven years of bargaining in what was to be a three-year “Doha Development Round” process.
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As usual, there are myriad reasons for the failure: organization, process and incompatible goals.
Among the reasons, the structure of the WTO formed in 1995 to administer the General Agreement on Tariffs and Trade is the most serious.
In its attempt to define commercial trade as the answer to virtually all the world’s economic woes, the WTO continues to admit as members economically underdeveloped countries that often have economies the size of Moose Jaw, Sask.
Little more than a decade ago, membership included 40 or so mainly developed exporting countries with similar world economic views. Despite often-conflicting domestic policies, they at least shared something of an economic prescription.
Now, membership is up to 153 (newest member, Cape Verde, is a small island off West Africa with half a million people, no resource base and a GDP of $1.6 billion US) and many of the members depend more on aid than trade.
Their view of economic solutions is radically different from larger developed capitalist economies.
Yet under WTO unanimity rules, Cape Verde will be as capable of killing a WTO deal as Canada, the United States or China.
Which leads to the process issue.
In a rerun of the 1999 Battle in Seattle fiasco, Lamy recognized that 153 voices will never find common ground on something as complex as world trade rules. So he continued to make the negotiating group smaller until finally there were seven whose “consensus” was then supposed to be the basis upon which the remaining 146 countries bought in.
The exclusion of most created anger and resentment that made unanimous agreement unlikely even if the Magnificent Seven managed to agree on everything, which they didn’t.
And that leads us to the third leg of WTO woes – incompatible goals.
Canada’s well-publicized tensions between exporters and import-sensitive sectors looking for protection are a small template for the world.
All countries want the unfettered ability to export what goods and services they think they can win at while protecting sectors that are less competitive. The problem is that the balance between competitive and import-sensitive varies wildly and the attempt to create universal rules becomes an exercise in cobbling together a series of exemptions or “carve outs” in WTO parlance.
Meanwhile, underdeveloped countries increasingly insist trade liberalization should be trumped by their desire to be as food self-sufficient as possible.
In another sub-group are the critics around the world who argue the WTO is constructed on the false premise that trade, rather than trade that is profitable for producers, is the answer to the development question.
With all those underlying issues, it is no wonder some trade experts are questioning whether the WTO as it is currently structured can survive.
