Academic

Future of the WTO-Relevance (Gregory Shaffer)

Thank you for your opening post Anu and for your follow-up Daniel. Let me add a few things. First, in assessing the Future of the WTO, the immediate question is the WTO's relevance in light of the financial crisis. You both note shifts in power constituting a new world order (the rise of the rest); yet for now, the WTO's relevance is limited more by a shifting attention to other matters-- namely getting ourselves out of the greatest global finance crisis that we have seen since the second world war, combined (for good measure) with the challenges of Afghanistan, Iraq and Al-Qaeda. The WTO is just not the player it was when it spurred the great global protests just a few years ago.

That of course does not mean that the WTO is irrelevant. The invocation by trading partners of its rules got the Obama administration immediately to amend its prize economic stimulus legislation. That shows it still has meaning. Thinking counterfactually, the WTO rules provided tools to domestic political actors to change the most important legislation before this country, tools that otherwise would not exist. We can thus better manage protectionist pressures than we could without the WTO.

As for the Doha Round, it looks pallid in light of the staggering financial crisis that confronts us. It could be that countries look for some symbol of cooperation and solidarity through finishing the Round; yet I question whether they will dedicate the requisite negotiating resources in light of everything else besetting them. Certainly the Obama administration needs to assess its stance on the Round, and clearly it has other items on its agenda of greater priority. In other words, the challenges right now to WTO negotiations are much more than a diffusion of power to the BRICS.

That means there is some time for reflection for the WTO regarding decision-making about which you and Daniel write. One idea is to replace consensus decision-making with what is called "critical mass" decision-making. Critical mass decision-making permits decisions to go forward where those members who are most affected by the issues can reach agreement and those relatively unaffected will not block it. We have seen this approach in the Information Technology Agreement, GATS and some NAMA sectoral negotiations. The Warwick Commission report of 2007 addresses it. To return to your point on power, critical mass decision-making will be driven by those who have markets that matter. Clearly the BRICKS will be part of it.

As for the BRICS greater role, they have been building internal expertise and capacity to assume their place. And that is more difficult than many reckon (Anne-Marie Slaughter's point in her recent Foreign Affairs article on networking and US advantages). You might be interested in a three-year study that I recently published with two Brazilians, Michelle Ratton Sanchez and Barbara Rosenberg, concerning Brazil's development of public-private partnerships on trade matters. It is entitled "The Trials of Winning at the WTO: What Lies Behind Brazil's Success" and can be found at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1137905. The WTO has spurred a competition for trade expertise within Brazil which, in turn, has affected Brazil's ability to engage the WTO. 

Full post as published by The University of Chicago Law School Faculty Blog on February 23, 2009 (boomark / email).