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Global Governance - What can the WTO teach us?

Time (GMT +00) 00:00 23:59


Gary Sampson

Mr. Sampson began by highlighting just how important trade is in the global economy. One third the world's GDP is traded and trade continues to grow faster than GDP. The GATT/WTO can take a large part of the credit for this, having successfully negotiated a virtual eradication of import quotas and a lowering of tariffs from an average of 40-50% in the post WW2 era, to an average of 3.4% today. The WTO had also been successful in negotiating and implementing a rules-based trading system where every country (in theory) had an equal voice, and the USA could, for example, lose to a much smaller country such as Costa Rica within the WTO system. Furthermore, the success of the WTO was shown by the fact that its membership is growing all the time, and many nations, such as China and Russia, were still trying to join.

The success of the WTO dispute settlement procedure, was down to three key facets: firstly, that the WTO was a legally binding contract, unlike the UN; secondly, that the procedure for dispute settlement was effective in its implementation; and thirdly, that non-discrimination was enshrined in the 'Most Favoured Nation' and 'like products' principles of the agreement. This last principle of 'like products', whereby no nation can discriminate against imports on the basis of the production process itself, has been the cause of much of the trade vs. environment disputes (such as the dolphin friendly tuna case) so hotly debated. Because the WTO does not allow countries to discriminate against products according to how they are produced, it cannot (for example) discriminate against tuna caught in dolphin friendly nets, as against tuna caught in dolphin unfriendly nets. Mr. Sampson believed that the WTO was very well aware of this problem and as a result had set up a Committee on Trade and the Environment. This Committee was very active, and despite its bad press for not producing any constructive outcome, had in fact put out some very good work.

Essentially the WTO did not want to be an enforcer of environmental rules, and would rather leave this to other organisations for whom environmental trade agreements were their remit. The WTO was very bad at public relations in this area. There were areas where further trade liberalisation and environmental improvements would coincide directly, such as removing domestic subsidies on fishing, agriculture and coal, together with further liberalisation in the area of environmental goods and services. Mr. Sampson believed that in general, trade led to a more efficient production of goods and this would help the environment. Furthermore, there was now very little disagreement with the concept of free trade leading to increased national wealth and what was crucial was how such wealth was distributed (equity issues) and spent (with the potential for large increases in spending on environmental management).

Mr. Sampson also believed that the cohesive nature of the WTO (several agreements under one implementing organisation) could act as a model for the plethora of multilateral environmental agreements, such as CITES and the Montreal Protocol, which were in fact supra-legal to the WTO but lacked any over-arching governing body

Mr. Sampson concluded by outlining his four future stages of progress for the WTO. Firstly, a high level meeting on trade and the environment is to be held in the spring of 1999; secondly, the outcome of the meeting will be crucial for setting the international policy environment; thirdly, the outcome of the trade ministerial meeting to be held in the USA sometime in 1999 will determine the agenda for the 'WTO Millennium round' (and Mr. Sampson would like to see an ambitious set of targets for this round).

The fourth and final stage was for reform of the WTO itself, in order to make it run more efficiently, to become more accessible to the international community and to improve its public image. These changes could be broken down into three areas: those changes which do not require the approval of the member governments and hence could be implemented quickly; those changes which did require the approval of governments but for which there did not need to be any change in governments' rights and obligations; and finally, those changes which did require changes in the rights and obligations of member governments. In the first group, Mr. Sampson felt the WTO could improve its transparency by allowing NGOs and other international organisations to attend WTO committee meetings and by setting up a permanent communication interface between the WTO and NGOs, the UN etc. Within the second group, there needed to be an accelerated de-restriction of documentation, for example by speeding up the time which is taken for document translation. Also within this second group there needed to be more progress on "win-win" areas where both the global economy and the global environment benefited. For example, removal of subsidies in fishing and agriculture would fulfil both the aspirations of the WTO and environmental pressure groups. Within the final group there needed to be a clearer interpretation of the dispute settlement system, such as clarifying what really were acceptable as exceptions to Article XX.

The bottom line analysis of the WTO, said Mr. Sampson, was that it was built upon consensus and therefore was democratic. Furthermore, the WTO did not want the power to enforce global environmental agreements. Ultimately the WTO was made up of all 160 members, and the WTO Secretariat should not be seen as the WTO per se.

Questions from the floor came in the areas of imperialism within the WTO by the USA, for example in their successful challenge to the EU Banana protocol; the relevance of product life cycle analysis and voluntary eco-labelling; Mr. Sampson's opinion on the burning issues for the Millennium round; the role of southern NGOs and private sector firms in the trade liberalisation process; the chances of success in removing EU agriculture/ fisheries subsidies; loopholes in the WTO which allow such subsidies to continue; WTO's role in reforming global financial transactions; the hierarchical structure of the various international agreements; the lack of developing country (physical) representation in Geneva; and the inability of LDCs to take advantage of global free trade. The mood of the audience was that whilst Mr. Sampson had shown the WTO to be democratic in its structure ('a level playing field') that the developing world were not necessarily equal players in a global free trade environment. On the issue of trade versus the environment, there was agreement that in certain areas there was mutual benefit, but there was a need for a global structure or agreement to deal with the inevitable conflicts which did arise.


This event highlighted just how important trade is in the global economy, and the success of the WTO.