WTO Launches a Report on the Future of Trade, amidst come controversies

April 24, 2013, Geneva

The WTO Director General’s Panel on Defining the Future of Trade made public its conclusions today in a report titled “The Future of Trade: The Challenges of Convergence”. The launch event held at the WTO headquarters today in Geneva saw intense debate over some of the recommendations of the panel pertaining to issues like competition and investment rules. These have been controversial issues among some NGOs who thought other issues of specific interest to least developed countries should have been better upfronted in the report.

“Don’t insult the intelligence of least developing countries. They are not children in a kindergarten any longer and know that the issues they turned their back to fifteen years ago are worth considering again fifteen years later” said Pradeep Mehta, Secretary-General of the NGO CUTS International and member of the panel, in response to these concerns. He added that after many years of experience gained through intergovernmental and nongovernmental organisations, they are far better equipped than before.

“For example, many of them have become aware that having a competition regime is a domestic necessity, and in spite of the lack of discussions at Geneva, but because they understood it would protect their own businesses and consumers in our fast-changing world”, he added. “In 1995, only 35 countries had a competition law, and today more than 120 countries and regional economic organisations have a competition law”.

Mehta’s views were supported by two other panellists, Festus Mogae, former President of Botswana and Jurgen Thumann, President of Business Europe. They also pleaded for respect to be shown to poor countries by the critical NGOs.

Pascal Lamy, Director General of the WTO said he convened this panel of twelve “tremendous professionals from different backgrounds, different continents and different expertise” in April last year with the mandate of examining and defining the challenges to global trade opening in the 21st century. He made clear that “it does not offer quick fixes to conclude the Doha Round”, but rather “offers food for thought to our members as they think about their medium to long-term trade policies and also about the medium to long-term prospects for this organization.”

The report proposes a number of recommendations for possible action for the WTO to better serve an open, vibrant and relevant multilateral trading system in the future. According to Pascal Lamy, these suggestions may be best captured by the word “convergence”. That is, “Convergence of the trade regimes of the WTO members, reflective of the evolution of their progressive economic and social development; convergence of the non-multilateral regimes with the multilateral trading system; convergence between trade and other public policies, i.e. greater coherence in non-tariff measures; convergence of trade and other domestic policies, such as education, innovation and social safety nets.” He summarised.

Through a scenario-building exercise, the panel identified the main factors shaping international trade today and in the foreseeable future, and the challenges they pose to a trade opening that works for welfare. “Globalization has changed our world in ways scarcely imaginable by bygone generations”, the report notes referring to the “combination of new technologies, social adaptation, policy openness and innovative business models” that have led to intensified interdependence among nations.

The rise of international value chains is identified in the report as a major development in world trade. “The production process today involves several countries specialising in different tasks. This reality has forced us to think of trade in a different way”, the panel reported.

In fact, the shift from “trade in goods” to “trade in tasks” tends to make the “exports are good, imports are bad” paradigm irrelevant since imported inputs now make up 40% of export products on average. International value chains have also made investment and trade much more complementary and goods and services markets more integrated.

“Markets are deeply integrated today, both nationally and internationally. Treating them separately in policy terms is likely to result in foregone opportunities”, the report reads. Entrepreneurs have themselves pointed out policy measures like port procedures and tariff and non-tariff barriers as major impediments to trade in several surveys. Indeed, the rise of non-tariff barriers is one of the other dominant policy trends that the report says are shaping the future of trade. “NTBs have been bothering the policy community for a long time and in the short term they will become a more important issue than tariff,” Mehta said.

Finally, the explosion of free trade agreements over the past few years also received special attention from the panel for they increase substantially the complexity of the international trade regime and are less democratic than the multilateral trading system they put at risk. In this regard, Jürgen Thumann said: “It has to be incredibly difficult for businesses to keep track of all existing and upcoming FTAs and not be lost. We need to do our very best to come back to multilateralism”.

For further information please contact:
Julien Grollier, +41 (0)22 734 60 80, jg3@cuts.org