The barely functioning and non-functional pillars of the WTO

As mentioned earlier, the WTO has three pillars to keep it running, to monitoring trade policies globally, provide a forum for negotiations on new issues, and to enforce the 60 plus agreements under the WTO and settle disputes between Member states. The functioning of these three pillars is crucial, and although it may sound simple: negotiations for new trade rules, monitoring and resolving disputes, none of these are actually quite easy. The WTO has been facing problems in these pillars and most recently, the pillar on settling disputes has had the most issues but problems in the negotiations pillar comes a close second to the dispute crisis.

The WTO is facing a make or break it situation because in reality two out of the three core pillars are in serious danger and if these two fall, the WTO will lose what matters most to it, their power and their credibility, if they haven’t already lost it completely. The pillar on negotiations has nothing to be proud of except for the Bali package which contained a consolation prize for developing countries in the form of a peace clause on agriculture, promises (yet to be fulfilled) to the Least Developed Countries (LDCs) and the main goal of developed countries and their transnational corporations, the Trade Facilitation Agreement. One agreement has been produced in 27 years of negotiations. Even if you count from 2001 when the Doha Round was launched instead of 1995 when the WTO was established, it is still not a great negotiation feat.

This Doha Round quagmire is a making of neoliberal hubris. It is incredibly vast and covers issues that should not even be under trade rules. (The current WTO covers at least 60 agreements and a number of them would also be better placed elsewhere instead of a free trade body.) To complicate things further, the Doha Round has a single undertaking rule, nothing is agreed until all is agreed. Former WTO Director General Azevedo had to do some acrobatic logic of an early harvest at the 9th WTO Ministerial to get the Bali Package without breaking the single undertaking rule. The new Director General

Okonjo-Iweala, the first Black woman to ever hold the position has big plans and a lot is expected of her, especially from the developing countries who had supported her. She has already had a rough start including the postponement of the 12th Ministerial Conference for fear of the new variant of the pandemic spreading and endangering lives. Her early statements and actions though have raised questions on whether she does have the developing and least developed countries interests on her mind or not. The issue of the vaccines and TRIPS for example, is still being negotiated and the DG’s promises to respond to the pandemic seem hollow if she does not follow this up soon by pushing for the decision that could save millions of the most vulnerable. An insider source has said that informal complaints from developing countries are showing the disappointment as they see that the DG seems to be on the side of the developed countries.

Furthermore, on the negotiations front, curiously, the unspoken rule seems to be to not mention the Doha Round. The working groups are negotiating issues from the Doha Round but not mentioning it. This seems like a tactic to try and move forward without the deadweight that the Doha Round had become over the years. And probably since it will be too much of an admission of failure to state that they are dropping the Doha Round and instead just continuing with issues where negotiations had already started and starting negotiations on the new issues, it would be easier to just not say anything and hope no one raises the issue of the missing Doha Round.

The postponed and yet to be re-scheduled 12th Ministerial Conference are supposed to cover negotiations on fisheries, agriculture, e-commerce and the controversial and vague WTO reforms. Presumably the crisis of the DSM and Appellate Body will be addressed under this umbrella. One of the reportedly included reform is that of changing the decision-making process from consensus building to voting. As mentioned earlier though, this requires changing earlier untouchable legal texts. It is also a clear departure from the WTO narrative that consensus building was supposedly showing the kindred spirit of negotiating amongst trade partners in a multilateral setting. To paraphrase the WTO, it is the cornerstone of rules based multilateral trade between nations and its goal is to make sure that trade flows freely and predictably. Interestingly, it does not guarantee that these flows would be fair.

Case in point, just after all the platitudes of transparency and inclusivity, a draft of a Ministerial text with hardly any consultation was produced before the Ministerial even began. “Without proper consultations, Ambassador Walker produced a draft text of a Ministerial Declaration on the WTO response to the pandemic with almost no brackets and proposed it as a basis for deliberations among a very small group of selected countries. Such processes are designed to put pressure on the rest of the WTO membership, who are not in the room to negotiate…” [11]

If this is any indication of how the DG and negotiation Chairs work, then it does not bode well for the poor countries who are never included in these green room meetings where negotiations that impact them will not even take them into consideration. They did not seem to be important enough to be consulted on a Ministerial text regarding the pandemic, even though many of the developing and least developed countries are the ones in dire need of vaccines, the TRIPS waiver and tools to help them prevent their growing number of sick and dead.

The 12th Ministerial will be a good indicator of how transparent or non-transparent the negotiations will be and if bulldozing the rest of the membership is considered moving forward by the new DG and her Chairs. Whether or not the negotiations with or without secrecy and bullying succeed is definitely yet to be seen. If this Ministerial fails it would be a big blow to the new DG and her team but also it will be an addition to the already crisis ridden pillar of negotiations of the WTO. It is ironic that people are reminded at every opportune moment that the WTO is a rules-based organization and beyond reproach. This platitude is repeated even as secret meetings are held, many left out and are expected to just accept what has decided for them. The emphasis placed on rules is supposed to assure Members as the neoliberals assure the negotiations are done on a level playing field, leaving out the part that many of the trade rules are they by itself are neither fair nor level. The trade rules of the WTO are meant to favor the bigger and richer.

As mentioned earlier, it has now been at least two years since the WTO Appellate body, has been able to function since the body needed at least three Appellate Body Members. That was in December 11, 2019. There was a cacophony of appeals to the US to stop blocking the nominations to the Appellate Body. To no avail, the Trump brand of bullying and refusing to budge on this issue, has set up in the first time in WTO history, that there were no more Appellate Body Members as the last one ended their term on November 30, 2020. It was also mentioned earlier that even though President Biden assured that America is back and immediately unblocked the deadlock on the DG election results. The USTR was also, to the great surprise of many, was supportive of working towards a TRIPS waiver and have been donating vaccines and other tools to fight COVID to developing countries. It just now seemed odd that the US can very easily unblock the process of nominations and the selection process of jurists to fill the very empty seven seats of the Appellate Body. However, it has not done so, and instead is talking about making some WTO reforms, including the DSM, which includes the Appellate Body. The US, EU and Brazil are all reportedly part of this new working group on “WTO Reforms” and will have proposals to present at the 12th Ministerial Conference.

One obvious question though is how is the WTO still standing with all these problems? A few possible answers are: there is no other organization like the WTO – it is still the only multilateral trade organization that has 60 plus legally binding agreements that Member countries are legally bound to follow and implement; then almost all the Free Trade Agreements – bilateral and regional are based and modeled after the WTO rules and agreements. The crises though on not making great progress on negotiations on new issues and trade agreements and the very deep crisis of settling disputes including a glaringly empty Appellate Body will most likely push the WTO to its limits, how far that goes is yet to be seen.

A lot of the attention though at the moment is focused on the dispute settlement pillar crisis and continues to get more attention and dire predictions from the media to trade analysts. The New York Times called it as the WTO having a mid-life crisis. [12] As mentioned earlier, the ability to settle disputes and issue trade sanctions or retaliatory measures against a sovereign State’s non- conforming rules until it changes it to WTO conforming rules, is a key source of power of the WTO. If this core pillar of the WTO were to crack and collapse, there is no telling if the WTO would be able to keep its power and credibility.

[11]Third World Network (2021) “WHAT’S COOKING FOR MC12?
Two processes that could reshape the WTO in the interest of the most powerful” Third World Network Briefing for the 12th WTO Ministerial Conference
[12] Stockman, Farah (2020) “The WTO is having a Midlife Crisis: Fixing the global trading system means first coming to grips with why it is broken” New York Times