Redesigning the World Trade Organization for the Twenty-first Century

1. Why Institutional Reform of the WTO Is Necessary

3 1 Why Institutional Reform of the WTO Is Necessary DEBRA STEGER I. Origins of This Book This book emanates from an international,collaborative project on institutional reform of the World Trade Organization (WTO), organized by the Emerging Dynamic Global Economies (EDGE) Network and funded by Networks of Centres of Excellence Canada and the International Development Research Centre (IDRC). This project, which commenced in 2007, includes major research institutions and leading researchers in Africa, Asia, Europe, North America, and South America. Inspired by the Report of the Consultative Board to Director-General Supachai Panitchpakdi (the Sutherland Report),1 it has three major research themes: decision-making and internal management of the WTO; relationship between the WTO and regional trade agreements; and transparency. The contributions in this book were initially presented and discussed at a workshop, ‘Institutional Reform of the WTO’, held at the Centre for International Governance Innovation (CIGI) in Waterloo, Canada, in March 2008. In 2003,WTO director-general Supachai Panitchpakdi appointed a consultative board, chaired by former director-general Peter Sutherland, to address institutional challenges facing the WTO in the future. The Sutherland Report was published in 2005, on the tenth anniversary of the WTO, but has met with littleresponsefromtheMembersof theWTO. Amongotherthings,theSutherland Report expressed serious concern with the spread of preferential trade agreements and recommended that the WTO subject such agreements to meaningful review and effective disciplines. On dialogue with civil society, it suggested that the membership should develop clear objectives for relations with civil society but did not go further to recommend specific avenues for engagement. With respect to decision-making, it recommended that Members take a fresh look at variable geometry as well as approving decisions by a critical mass. It also proposed that the role of the Director-General and Secretariat be strengthened and improved and that a senior officials consultative body be established.2 The Sutherland Report was both comprehensive and pragmatic; it addressed serious questions relating to the governance and legitimacy of the WTO as an international organization. It provided an excellent start—it asked the right questions about very important issues and made pragmatic, practical recommendations . If anything, it did not go far enough. The first Warwick Commission was established in 2007 with a broad mandate to examine the governance of the multilateral trading system and to make recommendations to improve it. It noted that there is waning support for further opening of markets, particularly in industrialized economies, and emphasized that sustaining the WTO is a collective responsibility on the part of all Members.3 It recommended, inter alia, that consideration be given to the use of a critical mass approach to decision-making. On dispute settlement, it recommended the establishment of a Dispute Settlement ombudsman, the strengthening of transparency mechanisms including acceptance of amicus curiae briefs, and consideration of cash compensation as a remedy when compliance is not forthcoming.4 With respect to preferential trade agreements, the Commission encouraged major industrialized countries to refrain from negotiating such agreements with each other and emphasized the need to clarify WTO disciplines and strengthen review mechanisms for such agreements.5 Finally, it recommended that‘a process of reflection’be established in the WTO for Members to consider the challenges facing the multilateral system and develop a plan of action to address them.6 The Doha Development Round has stalled, with little prospect of real progress being made on the negotiating front in the foreseeable future. This is an appropriate moment to reflect on the WTO as an institution and do some serious thinking about reform of the institutional structures of the WTO. II. Why Institutional Reform of the WTO Is Necessary There are a number of reasons that institutional reform of theWTO is important at this time in the history of the multilateral trading system. We are at a transformational moment in the history of the world. The rapid rise of the emerging economies—China, India, and Brazil—has shifted the global power balance, and the influence of the United States as a hegemonic power is declining. The current architecture of the international system was 4 Part I Why Institutional Reform Is Necessary created in the 1940s by developed countries, led by the United States and Great Britain, for a very different world and time.As originally conceived, there were to be two Bretton Woods organizations: the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (the World...