VARIABLE GEOMETRY FOR THE WTO: CONCEPT AND PRECEDENTS

Abstract

In the aftermath of the breakdown of the multilateral trade negotiations in Cancun in mid-September 2003, various ideas have been put forward not only for their re-launching but also more broadly for the reform of the WTO as an institution and as a repository for agreements on trade and related matters. Amongst the latter is the idea of a WTO characterized by variable geometry, in other words of a WTO that would serve as an umbrella framework for agreements on trade issues whose signatories would not necessarily include all its members, and thus as a vehicle for some countries to undertake deeper integration or liberalization regarding selected subjects without trammels due to the unwillingness of other members to go along. This paper reviews this concept in the context of the history of the GATT/WTO and of different views as to its underlying rationale. It also takes a preliminary look at what a framework of variable geometry might involve and considers some of the benefits and problems likely to be associated with a multi-tier WTO. The paper begins with a review of features of the rules of the GATT which allowed for various kinds of non-uniformity in their application. While some of these were of a highly specific nature, others involved more fundamental departures from the principle of universal applicability. Of particular interest in this context are the Codes negotiated during the Tokyo Round. In the discussion of pertinent issues regarding the rationale and function of the GATT/WTO which follows, attention is drawn to the contrast between those who emphasize the role of non-discriminatory trade rules as a vehicle for reducing sources of economic and ultimately political and military conflict, on the one hand, and those who give greater importance to the WTO´s role as an instrument for achieving convergence in business regimes worldwide, on the other. In a sketch of possible solutions to some of the problems of reconciling variable geometry with WTO rules, the paper devotes special attention to the deviations from the MFN principle which would be involved, and to accession conditions for plurilateral agreements. The idea of variable geometry was raised during the Uruguay Round when the constitution of the new multilateral organization (which was eventually to be the WTO) was under consideration. However, the structure eventually adopted reflects the concept of a "single package" or "single undertaking". More recently the European Union has floated recourse to a plurilateral approach as a way of getting out of the present negotiating impasse regarding certain subjects. However, developing countries have not proved receptive partly, it is reasonable to assume, because the approach would not do anything to resolve the major conflicts in the areas of tariffs and subsidies currently blocking resumption of the negotiations or to deal with features of the outcome of the Uruguay Round which some consider should actually be rolled back. The counter-argument, which refers as much to the longer- term as to the present impasse, is that a multi-tier framework may enable the WTO to avoid the paralysis which could result from attempting to reach uniformly applicable agreements on trade-related subjects among countries with interests and concerns reflecting different levels of economic development.