The Club Approach to Multilateral Trade Lawmaking

The World Trade Organization (WTO) stands at the center of an emerging structure of global economic governance. Its rules affect important aspects of everyone\u27s lives--how much people pay for the products that they purchase, what types of employment are open to them, and which medicines they can access. And yet, while the WTO was conceived as a negotiating machine that would develop rules in sync with an increasingly dynamic global economy, negotiations on a new set of global trade rules have now been deadlocked for over a decade. This impasse is all the more surprising in light of the fact that the multilateral trade regime was, up until the establishment of the WTO in 1995, one of the most productive engines of international lawmaking. The present Article explores why multilateral trade lawmaking used to work, and why it is no longer working today. A key part of the answer is that before the establishment of the WTO, the multilateral trading system worked as a club, which allowed the major trading powers to manipulate the circle of participants in trade negotiations depending on how these powers weighed the costs and benefits of the participation of additional states. The Article identifies three factors that led the major trading nations to adopt this approach: (1) the greater practicality of negotiations among a smaller group of countries,(2) the insiders\u27 greater influence on the outcome of the negotiations, and (3) the chance to subsequently compel outsiders to join the agreement on the insiders\u27 terms. The Article shows how the major trading powers were able to implement the club approach to multilateral trade lawmaking throughout the pre-WTO era-an ability that accounts for much of the legislative dynamism of that time. The Article then argues that the founding of the WTO, while itself an example of the successful employment of the club logic, has made the use of the club approach in the multilateral trading system much more difficult, if not impracticable. As a result, the pace of lawmaking in the multilateral trading system is now circumscribed by the need to seek the support, or at least acquiescence, of all WTO members

WTO’s Trade Liberalisation, Agricultural Growth, and Poverty Alleviation in Pakistan

Pakistan is an agrarian based developing country, and like many other developing countries, its agriculture sector is subjected to domestic forces of demand and supply and changes in prices at international level, as well. More specifically, in the late 1990s, the World Trade Organisation (WTO) emerged as one the major players affecting such market changes more vigorously at international arena. The WTO’s Agreement on Agriculture, which was established as a result of the 1986–94 Uraguay Round talks, requires, for both developed and developing countries, to initiate a process of reforms in their agrarian economies with the objective of establishing a fair and market oriented agricultural trading system through multilateral trade negotiations. This Agreement on Agriculture (AoA) specifically asks for major reductions in export subsidies, domestic support and import barriers on agricultural products to achieve this objective, the WTO’s Agreement of Agriculture [WTO (2001)] had set the following quantitative targets for cuts in each of the three specified area, namely import tariffs, domestic supports and export subsidies.

The World Trading System after Cancún, or: How the rhetoric of the development round rebounded on the industrialized countries... How the rhetoric of the development round rebounded on the industrialized countries…

"International trade increases worldwide growth and improves the chances of successful poverty reduction. A development round could reinforce this potential. Development scholars largely agree on what would constitute a development round: improved market access for developing countries, no negotiations on investment and competition rules in the current round, additional support for developing countries in the field of trade-related capacity-building. In contrast to their own rhetoric, however, trade policy makers in industrialized countries do not feel obliged by this consensus. It is therefore they who bear the main responsibility for the failure of Cancún. In Cancún the developing countries successfully presented themselves as an articulate group with the potential to block multilateral trade negotiations. It remains to be seen whether they will use their new-won scopes of action to take a hand in constructively shaping the world trading system. This will depend largely on newly industrializing countries (NICs) and anchor countries like India, China, or Brazil. The conference's failure does not mean a success for developing countries since they failed to achieve their trade-policy goals. What remains is the hope that the shock of Cancún will lead to a greater willingness to compromise, above all on the part of the industrialized countries, but also on the part of NICs and anchor countries, with a view to giving the WTO a more development-friendly shape. If this fails, the multilateral trading system would be in serious trouble." (author's abstract

Not just a "second order" problem in a wider economic crisis: systemic challenges for the global trading system

Reform of the multilateral trade regime is not simply a second order problem within a wider economic crisis. The completion of the Doha Round may be a second order question but the global trade regime faces a series of broader systemic challenges beyond the completion of the current negotiations. This paper identifies five challenges: (i) a marked reduction in popular support for open markets in major OECD countries; (ii) the stalling of a transition from one global economic equilibrium to another; (iii) a lack of clarity and agreement on the agenda and objectives for the WTO as we move deeper into the 21st century; (iv) the demand for fairness and justice in the governance of the WTO—the 'legitimacy' question and (v) the rise of regional preferentialism as a challenge to multilateralism. Failure to address these challenges will represent not only a fundamental question for the future of the WTO as the guarantor of the norms and rules of the global trade regime specifically, but also the ability to establish greater coherence in global economic governance overall when its need is arguably greater than at any time since the depression years of the 20th century inter-war period

Strengthening the World Trade Organization – Critical Demands for Imperative Success: Identifying Politically Viable Options for Incremental Reform

The multilateral trade regime and the World Trade Organization (WTO) are a major success story of global governance. In few other domains have states managed to cooperate as successfully in the last 70 years as in global trade affairs. Since the 1990s, the multilateral trade regime – with the WTO at its centre – nonetheless goes through a crisis. The crisis culminated in 2016 with the collapse of the Doha Round. The crisis puts into question the WTO’s ability to effectively and efficiently govern global trade. Stakeholders, moreover, increasingly challenge the legitimacy and accountability of the WTO. The main purpose of the study is to review E15 work to identify weaknesses in the WTO’s institutional setup and related reform proposals. As institutional aspects received comparatively little attention, the study draws also on other academic and policy publications to complement E15 work. The underlying rationale is that the current crisis has various – including institutional – causes. An institutional reform may thus contribute to overcoming the WTO’s current problems. The political climate does not allow for wholesale amendments to the WTO Agreement. The study therefore focuses on incremental reform proposals rather than grand and ideal-type solutions. The study focuses on three main challenges and reform areas

The EU, the US, and Trade Policy: Competitive Interdependence in the Management of Globalization

Competitive interdependence marked the European Union (EU) - United States (US) relationship as the GATT/ World Trade Organization (WTO) was strengthened and as each enlarged its territorial sphere of influence. The EU initially expanded its influence outside Europe by granting nonreciprocal preferences to the African, Caribbean, and Pacific (ACP) states while the US subsequently used the WTO to force the EU-ACP relationship into WTO-compliance. Adopting regional and bilateral strategies, the US negotiated NAFTA and Latin American and Asian free trade agreements. The US thereby expanded its sphere of influence. The EU responded by negotiating equivalent free trade agreements in both Latin America and Asia. As it expands its territorial sphere of influence, the EU may now be managing globalization by outstripping the US. The US-EU relationship thus is marked by both competition and interdependence

Revitalizing Multilateral Governance at the World Trade Organization Report of the High-Level Board of Experts on the Future of Global Trade Governance. Bertelsmann Policy Brief 2018

If international trade is not governed by rules, mere might dictates what is right. The World Trade Organization (WTO) serves as a place where trade policy issues are addressed, disputes arbitrated, legal frameworks derived and enforced. Through these functions, the WTO ensures that the rules of trade policy are inspired by fairness and reciprocity rather than national interest. It is more important than ever to vitalize the global public good that it rep-resents against various threats that have been undermining it. Therefore, the Global Economic Dynamics project of the Bertelsmann Stiftung has called into life a High-Level Board of Experts on the Future of Global Trade Governance. Composed of eminent experts and seasoned trade diplomats, it elaborated a series of feasible policy recommendations that will increase the effectiveness and sali-ence of the WTO. We hope that this Report provides helpful suggestions in a time marked by increasing trade disputes and protectionism and instead contributes to stronger multilateral institutions and fora.1 The Bertelsmann Stiftung owes a debt of gratitude to Prof Bernard Hoekman, the Chairman of the Expert Board and author of this report. His invaluable expertise and experience, guidance and ability to bridge controversial opinions have been crucial in defining the work of the Board. We would also like to express our sincere thanks to all our Board Members, who generously contributed their expertise, time and networks. Without their dedication, this Report would not have been possible. Finally, we would like to thank Robert Koopman and Aik Hoe Lim of the WTO for their support throughout the whole process and Christian Bluth of Bertelsmann Stiftung for managing this common endeavour