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Beyond the Failure of the WTO: Resilience of Trade Multilateralism

Part of the The Sciences Po Series in International Relations and Political Economy book series (SPIRP)

Abstract

The World Trade Organization (WTO) has encountered so many setbacks since its inception that it can be dubbed a “pioneer organization” when it comes to experiencing the “crisis of multilateralism”. The Doha round launched in 2001 is in limbo. Criticism about the organization's deficiencies and lack of leadership has been overwhelming. It has culminated with Donald Trump, the US “trade wars” against China and Europe, and his maneuvers to paralyze the appellate body of the organization's dispute settlement procedure. Although this criticism is partly founded, this chapter will also demonstrate that trade multilateralism is resilient, lively and entering a new historical phase. The WTO is indeed going through a “complex multilateralism” never experienced before. Rising economic powers have multiplied in the last 20 years and have eroded the GATT period's transatlantic leadership. The multilateral trading system is less asymmetrical and more centered on distributional issues (relative gains). As a result, the stakes of global economic competition have diversified and been driven by increasingly high added-value technologies and security issues. Moreover, the proliferation of regional trade arrangements shows that states still pursue free trade. Consequently, WTO is facing a multilateral configuration that has never been so multipolar, heterogeneous and potentially conflictual. However, is multilateralism not precisely about that: resolving heterogeneity, multipolarity, and conflict? Can a workable multilateralism be reached in the context of conflictual interdependence?

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Notes

  1. 1.

    Appellate Body Report on United States—Standards for Reformulated and Conventional Gasoline, adopted 20 May 1996 (WT/DS 2).

  2. 2.

    The fourth WTO Ministerial Conference (9–14 November 2001) took place in the shadow of the September 11, 2001, attacks and the international community put on a show of consensus by highlighting the renewal and improvement of North–South relations as its key goals. The DDA was also a response to the WTO legitimacy crisis following the failure of Seattle Ministerial conference and the unborn “Millenium Round” (November–December 1999).

  3. 3.

    Among the potential explanations for secular stagnation there are: a rise in saving rates due to the resurgence of emerging markets, a decline in investment opportunities, a decline in the relative prices of investment goods, and a decline in the rate of population growth. Each factor is a primary fundamental driver of international trade and investment.

  4. 4.

    See WTO. (2022). https://www.wto.org/english/news_e/pres22_e/pr902_e.htm.

  5. 5.

    Per Thucydides’ trap, intensifying Sino-American tensions could lead to a direct clash of the superpowers. Per Kindleberger’s trap, the international system could end up adrift, as it did in the 1930s when the US did not fill the gap left by the hegemonic decline of Great Britain.

  6. 6.

    We use the term Copernican revolution in order to emphasize the changes in sectors, modalities and purpose of the multilateral trade regime that emerged from the Uruguay Round negotiations.

  7. 7.

    The first and second generations related to tariffs and to non-tariff barriers. The third generation relates to national and sovereign control systems. The most common non-tariff trade barriers are: technical measures, administrative rules and procedures, standard and expertise procedures, quantitative and regulations restrictions on imports, internal taxes, restrictions on competition and freedom of circulation, and labeling requirements.

  8. 8.

    See sections 2.2 and 2.4 of the Agreement on Technical Barriers to Trade, 3.3 and 5 of the Agreement on Sanitary and Phytosanitary Measures, Articles VIII and X of GATT 1994. Furthermore, the WTO regulates the use of exemptions for non-commercial reasons (Articles XX and XXI of GATT and XIV of GATS).

  9. 9.

    NAMA refers to all products not covered by the Agreement on Agriculture. In practice, it includes manufacturing products, fuels and mining products, fish and fish products, and forestry products. They are sometimes referred to as industrial products or manufactured goods. Paragraphs 16 and 31 (on the liberalization in environmental goods) together define the NAMA negotiation mandate. See http://www.wto.org/french/thewto_f/minist_f/min01_f/mindecl_f.htm. Accessed 25 November 2013.

  10. 10.

    It means that developing countries should be allowed to choose and undertake the scope of tariff binding and rates of tariff reduction appropriate to their development needs and industrial strategies.

  11. 11.

    The Friends of Ambition were the European Union, Australia, Canada, Japan, Norway, New Zealand, Switzerland and the United States.

  12. 12.

    The following States are the members of NAMA-11: Argentina, Brazil, Egypt, India, Indonesia, Namibia, Philippines, Tunisia, Venezuela and South Africa, which is the coalition's coordinator.

  13. 13.

    The objections included the following: that there were overbroad Appelate Body rulings on the scope of the nondiscrimination obligation; that there was lack of deference to investigating authorities in trade remedy cases, including in relation to the practice of zeroing and the proper interpretation of the term “public body”; that there was an expansive approach to appeals of factual issues, including appeals under DSU Article 11; that the Appellate Body was offering advisory opinions on matters that did not need to be addressed to resolve the dispute at hand; that the Appelate Body treated its past rulings as binding precedent; and that the Appellate Body was taking longer than the mandated 90 days to issue its reports without first receiving permission from the parties to the dispute.

  14. 14.

    These members have put forward a temporary appeals mechanism Pursuant to Article 25 of the Dispute Settlement Understanding, to keep the system functioning until a permanent solution can be found.

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Abbas, M., Duchesne, E. (2023). Beyond the Failure of the WTO: Resilience of Trade Multilateralism. In: Guilbaud, A., Petiteville, F., Ramel, F. (eds) Crisis of Multilateralism? Challenges and Resilience. The Sciences Po Series in International Relations and Political Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-39671-7_10

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