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Bhumika Billa, Research Fellow (Legal), Centre for WTO Studies


World Trade Organization: A Classic Case of Negotiation Disaster

Before I begin with my brief analysis about what has been happening at the WTO for the past 15 years, let me give a brief background to all the non-trade negotiation enthusiasts-

 

The WTO was formed in 1995 and has been accredited as one of the most successful international organizations since its inception. The reason is clearly rooted in the success of its dispute settlement mechanism coupled with generous flexibility provided by the framework to member countries. Initially after the second world war, the organization primarily aimed at global tariff reduction, one of the only practical ways to regulate trade domestically which has not been expressly prohibited by General Agreement on Tariffs and Trade (GATT). Gradually, with the development of issues such as environmental protection, trade in services, intellectual property, sustainability and development goals, the dichotomic issue of tariff versus non-tariff barriers soon turned into an entangled web of complex concerns that needed attention. This web was then covered by the subtle sides developed and developing countries began to take and this subtleness faded away as the world stepped into the Doha Round negotiations in 2001. (For my love of brevity and Marx, I will from here on refer to the developed countries as ‘haves’ and the developing ones as ‘have-nots’. In case you don’t share my love interests, please feel free to read them without a context).

 

With this backdrop, let me go back to a lecture I had attended last month at the Indian Institute of Foreign Trade. One of the most brilliant academicians and policy thinkers I have ever met shared an interesting anecdote about how India negotiated and successfully secured its interest to a significant extent on the negotiation table. India along with some other have-nots agreed to proceed with some of the issues US and EU wanted to talk about, in exchange of a postponement (instead of cancellation) of the talks on issues India was in favour of. I’ll explain.

 

The fundamental objective of Doha Round was to improve trading prospects for have-nots and address the problems they were facing in implementing the already existing agreements. Now, as the history of international relations[1] dictates, the countries have always wanted to secure THEIR interests first, so the sooner you move on from those flowery ideas about free trade and economic liberalism you have been reading for a while now, the easier it will be for you to understand the world (read: Trump).

 

Helping have-nots to implement the existing agreements would mean losing out on the carve outs haves had created during the earlier rounds. Negotiating on the Doha Development Agenda would have meant losing out on the long drawn advantages especially in areas like agriculture, which had significantly helped the haves reach where they are today. The biggest give away for EU and USA would have been reducing the agricultural subsidies (so as to allow the have-nots to export more food, an area where they clearly have an ‘absolute advantage’[2]) in return of which the have-nots would grant market access for services. Well, it turned out that actual control was not really with the ones negotiating at the table (more on this later). The haves then came up with a counter offer of resolving the Singapore Issues[3] first. Allowing two of the four Singapore Issues to move forward in exchange of saving the talks on agriculture and postponing them to a later stage was the trade-off, but clearly not a win-win.

 

This is a classic example of how two parties might have to enter negotiation, even before the real negotiations begin. The parties faced an impasse right at- what the theory of negotiation calls- the stage of ‘agenda setting’. The trade-off used to break the deadlock was short-lived and the haves left as soon as they realized how strongly the have-nots had held their positions. If we think from a negotiator’s perspective, holding onto the position without diving deep into the underlying interests somewhat backfired for the have-nots and led to the impasse. From a political perspective, there doesn’t seem to have been an alternative, given the way the haves have been dominating negotiations for so long. From an economic point of view too, the dreadful deadlock clearly led to an unfavourable outcome.

 

Well, in multilateral negotiations like these, there is much more than meets the eye. The ones at the negotiation table (governments of the haves) were being influenced by domestic lobbyists and agricultural industries having a direct interest in subsidies. These external pressures can never be ruled out, unlike in traditional negotiations (where it is ensured at the beginning that both parties have full autonomy to take decisions). The burden of responsibility can’t therefore be shifted completely on the shoulders of have-nots who did show some flexibility in allowing the Singapore talks to proceed for instance. But more than flexibility, this was yet another instance where the haves were successful in enjoying the upper economic hand. These complexities are the sole reason why the world is shifting from multilateralism to bilateralism. After all, it is much easier to negotiate with one, than to negotiate with all. The influx of disturbances at the WTO is only a mirror to the difficulties we are heading to in reaching consensus. This poses a huge threat to the appreciable reputation WTO has enjoyed for a long time. Now the question is, how can we move on from the deadlocks faced in these negotiations and ensure an amicable solution for all the members? How can this multilateral framework that has contributed majorly to global peace and economic integration be preserved? But the bigger question is, are the haves even interested in preserving it?

 

*The views expressed in this Article solely belong to the Author and are independent of any affiliations.

 

 

 

Bhumika Billa graduated in BA LLB (Hons.) from VIPS, Delhi, India with a focus in international economic laws and ADR. Currently a Principle Associate at the Negotiation Academy and based at Indian Institute of Foreign Trade, she is engaged in independent research work. When not researching, she is usually writing poems or dancing to Indian classical music.

 

 

 

 

 



[1] You can read more on the theory of international relations from open access source by Princeton University here.

[2] Absolute advantage refers to a country’s superior production capability. To read more, see Paul A. Samuelson, William D. Nordhaus, “Ch 18: International Trade”, Economics, p. 433, 19th Ed. (Special Indian Edition), McGraw Hill Education (2010)

[3] The four issues advanced by EU, US, Japan, Korea involved transparency in government procurement, trade facilitation (customs issues), trade and investment and trade and competition.