An overview of debates on governance andAn overview of debates on governance andreform of the multilateral trading systemreform of the multilateral trading system

Dr. Carolyn DeereDr. Carolyn DeereDirector, Global Trade Governance ProjectDirector, Global Trade Governance Project

Global Economic Governance Programme, Oxford UniversityGlobal Economic Governance Programme, Oxford University

May 6th, 2008May 6th, 2008

Efforts to Improve Southern Voice inEfforts to Improve Southern Voice inGlobal Economic GovernanceGlobal Economic Governance

Ongoing DebatesOngoing Debates Reform to IMF governanceReform to IMF governance Reform to WB governanceReform to WB governance Calls for improved governance of financial systemCalls for improved governance of financial system UN, ECOSOC reformUN, ECOSOC reform

Southern Initiatives and InnovationsSouthern Initiatives and Innovations G77, Non-Aligned movement, South SummitG77, Non-Aligned movement, South Summit South Centre, RIS, G-15South Centre, RIS, G-15 IBSA IBSA –– India, Brazil, South Africa India, Brazil, South Africa G7 ExpansionG7 Expansion

Global Trade GovernanceGlobal Trade Governance

With a few exceptions, developing countryWith a few exceptions, developing countryscholars have relatively low visibility inscholars have relatively low visibility indebates on governance/institutional reformdebates on governance/institutional reformmattersmatters

Recent scholarly debate on institutionalRecent scholarly debate on institutionalreform prompted by Sutherland Reportreform prompted by Sutherland Report(e.g., special issues of (e.g., special issues of World Trade ReviewWorld Trade Reviewand and Journal of International Economic Journal of International Economic Law)Law)and Warwick Commission but there hasand Warwick Commission but there hasbeen relatively little subsequent policybeen relatively little subsequent policydebate.debate.

Key debates on reform ofKey debates on reform ofglobal trade governanceglobal trade governance

‘‘Trade and- linkagesTrade and- linkages’’ and the introduction of and the introduction of ‘‘non-tradenon-trade’’issuesissues

The relationship between the WTO and regional/bilateralThe relationship between the WTO and regional/bilateralagreementsagreements

The relationship of the WTO to other multilateralThe relationship of the WTO to other multilateralagreementsagreements

The relationship of the WTO to other internationalThe relationship of the WTO to other internationalorganisationsorganisations

Reform of national trade policymaking processesReform of national trade policymaking processes

Role of non-state actorsRole of non-state actors

Is WTO reform possible?Is WTO reform possible?

Different views in the literature about whetherDifferent views in the literature about whetherinstitutional/governance reform is necessary or possibleinstitutional/governance reform is necessary or possible

Many different objectives and concerns driving the literature onMany different objectives and concerns driving the literature onWTO reform:WTO reform:

i.e., efficiency, legitimacy, accountability, participation,i.e., efficiency, legitimacy, accountability, participation,transparency, development, environmental sustainability,transparency, development, environmental sustainability,labour, human rights, coherence, etclabour, human rights, coherence, etc

The prescriptions for WTO reform vary depending on the particularThe prescriptions for WTO reform vary depending on the particularobjectives and questions posed.objectives and questions posed.

To date, some formal reforms, but largely incrementalTo date, some formal reforms, but largely incrementaladjustments and adaptationsadjustments and adaptations

Rise of developing country powers and coalitions in tradeRise of developing country powers and coalitions in tradenegotiations alters balance of powernegotiations alters balance of power

Literature on WTO reformLiterature on WTO reformProposals related to:Proposals related to:

Negotiating processNegotiating process•• Formal reform of WTO decision-making proceduresFormal reform of WTO decision-making procedures•• Growth of coalitionsGrowth of coalitions•• Informal processInformal process•• TransparencyTransparency•• Civil society participationCivil society participation

The reform of the DSUThe reform of the DSU•• Transparency and amicus curiae briefsTransparency and amicus curiae briefs•• RemediesRemedies•• Developing country use of the systemDeveloping country use of the system

The appropriate scope, funding, staffing and internalThe appropriate scope, funding, staffing and internalorganisation of the WTO Secretariatorganisation of the WTO Secretariat

What development challenges and powerWhat development challenges and powerimbalances should reforms address?imbalances should reforms address?

Developing countriesDeveloping countries……•• have different economic sizes and varying capacity tohave different economic sizes and varying capacity to

participate in WTO decision-makingparticipate in WTO decision-making•• belong to WTO in part because it helps them to manage powerbelong to WTO in part because it helps them to manage power

asymmetries in their trade relationsasymmetries in their trade relations•• Face power encounter power asymmetries in respect of each ofFace power encounter power asymmetries in respect of each of

the WTO systemsthe WTO systems’’ functions functions

Power asymmetries manifest themselves in many ways:Power asymmetries manifest themselves in many ways:•• Asymmetric negotiation processesAsymmetric negotiation processes•• Asymmetric outcomes of negotiationsAsymmetric outcomes of negotiations•• Unequal capacity to take advantage of international trade rulesUnequal capacity to take advantage of international trade rules

and opportunitiesand opportunities•• Unequal capacity to solve problems at the national levelUnequal capacity to solve problems at the national level•• Unequal capacity to monitor and enforce compliance withUnequal capacity to monitor and enforce compliance with

agreements by larger powersagreements by larger powers•• Vulnerability of developing countries to bilateral pressuresVulnerability of developing countries to bilateral pressures

(including bilateral (including bilateral FTAsFTAs))

Types of power in playTypes of power in playPower takes several forms:Power takes several forms:

•• Coercive, material: Size of markets, control of TACBCoercive, material: Size of markets, control of TACB

•• Discursive: Certain ideas may frame and dominate discussionDiscursive: Certain ideas may frame and dominate discussionand what is considered appropriate behaviour. Beyond states,and what is considered appropriate behaviour. Beyond states,NGOs and corporations may acquire and use discursive powerNGOs and corporations may acquire and use discursive powerthrough research, lobbying, framing, media, etc.through research, lobbying, framing, media, etc.

•• Institutional: international bureaucracies may reflect theInstitutional: international bureaucracies may reflect theinterests of some states and actors over others, may have ainterests of some states and actors over others, may have apreference for particular theories and ideas. There may bepreference for particular theories and ideas. There may beinstitutional path dependence, a dominant internal culture andinstitutional path dependence, a dominant internal culture andinternal career/financial incentives. Member-driven internal career/financial incentives. Member-driven IOsIOs may mayacquire autonomy and authority in their own rightacquire autonomy and authority in their own right

•• Structural: place of some countries in the structure ofStructural: place of some countries in the structure ofinternational economy may limit their options, including theirinternational economy may limit their options, including theirability to see alternativesability to see alternatives

Developing countries and WTO reformFive broad strands:Five broad strands:

Ensuring content of WTO agreements advanceEnsuring content of WTO agreements advancedevelopment issues (e.g. in development issues (e.g. in agag, NAMA, mode IV, reform of, NAMA, mode IV, reform ofTRIPS)TRIPS)

Improving decision-making relationships and proceduresImproving decision-making relationships and procedures

Accountability of negotiators to citizens with respect toAccountability of negotiators to citizens with respect todevelopment objectives in their international trade dealsdevelopment objectives in their international trade deals

Maximizing potential of developing country coalitionsMaximizing potential of developing country coalitions

Improving institutional arrangements for capacity buildingImproving institutional arrangements for capacity buildingand Aid for Tradeand Aid for Trade

A new research agendaA new research agenda A governance audit that focuses on the functionsA governance audit that focuses on the functions

of the WTO system yields new insights intoof the WTO system yields new insights intoopportunities for institutional reform that wouldopportunities for institutional reform that wouldbenefit developing countriesbenefit developing countries

An approach that analyses the WTO as a system,An approach that analyses the WTO as a system,in which a range of actors conduct relevant workin which a range of actors conduct relevant workon many of the functions, including theon many of the functions, including theSecretariat, members states, Secretariat, members states, IOsIOs, NGOs, industry, NGOs, industryand academic experts.and academic experts.

Governance audit asks questions aboutGovernance audit asks questions aboutparticipation, transparency, the scope of theparticipation, transparency, the scope of theagenda, the agenda-setting process, theagenda, the agenda-setting process, theavailability of information, and evaluation.availability of information, and evaluation.

The WTO System and its Functions

MonitoringNegotiation andproblem-solving

Technicalassistance,capacitybuilding & Aidor Trade

Disputes settlement,mediation & arbitration

Research

WTO Member States Secretariat

OutreachCooperationwithinternationalorganisations

DSU

Non-State Actors

Governing the WTO System:Governing the WTO System:

The Capacity Building FunctionThe Capacity Building Function

TrainingTraining

TechnicalAssistance

Capacity Building

Institutional Reform

Infrastructure

Assistance with Adjustment Costs

The scale and scope oftrade-related assistance and capacity-building (TACB)

is expanding

Trade Policy &Regulation

TradeDevelopment

Aid forTrade

WTO Secretariat

IntegratedFramework

JITAP

Academics,think tanks

NGOs

Other UN Agencies

Devt. Banks

ITC

UNCTAD

Bilateral donors

TACB

The number of donors and initiatives has increased

The scale of multilateral initiatives is growingThe scale of multilateral initiatives is growing

14 16.09 18.75 21.0525.3

7.1

12.45

18.7514.56

24.6

20.15

19.2

0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005 2006

Fu

nd

ing

to

mu

ltil

ate

ra

l T

AC

B i

nit

iati

ve

s

($U

S m

illi

on

)

International Trade CentreJITAP Integrated Framework WTO Trust Funds

Donor commitment to Donor commitment to multilateralmultilateral initiatives varies initiatives varies

4.8Japan

11.8United States

15.8UnitedKingdom

15.3Canada

19.5Germany

22.6Netherlands

28.45Norway

31.0Sweden

38.69Switzerland

Combined contributionsto multilateral TACBTrust Funds *(2001-2006) ($US millions)

48.81Total

2.32Other bilateral donors

.80European Commission

.92Korea

1.11Luxembourg

1.19France

1.25Italy

1.25Ireland

1.43Australia

1.62Canada

2.45USA

2.51Japan

2.75Denmark

4.08Netherlands

4.56UK

5.93Norway

6.80Sweden

6.88Germany

Contributions to the WTOGlobal Trust Fund (2005-2007) (SFr millions)

* These trust funds include those for the International Trade* These trust funds include those for the International TradeCentre, JITAP, the Integrated Framework, and WTO TrustCentre, JITAP, the Integrated Framework, and WTO TrustFundsFunds

Developing countries face the challenge ofDeveloping countries face the challenge ofmanaging many donorsmanaging many donors

17Netherlands, Italy, Sweden, UK,Germany, US, Japan, Denmark

US, Japan, France, Korea, Denmark,Norway, EC, IMF, ITC, UNCTAD,WCO, AITIC, WTO

Uganda

14Belgium, Japan, Italy, Germany,Korea, EC, US, IADB,

US, Germany, Spain, Japan, Korea,France, Canada, EC, IADB, IMF,IDA (World Bank), WTO

Peru

8Japan, Korea, Thailand, Norway,AITIC, WTO, UNESCAP, FAO

Japan, Korea, Thailand, AITIC, WTO,UNESCAP

Myanmar

18France, Italy, Belgium, US, Korea,France, Japan, Canada, Germany,EC, Switzerland, UNIDO, ITC,FAO

US, Canada, Japan, Korea, France,IDA (World Bank), ITC, UNCTAD,IMF, WCO, WTO, AITIC

Cameroon

22Japan, UK, Belgium, German, US,Korea, Finland, EC, Norway,UNDP, ITC, ADB

Japan, US, Korea, Australia, Canada,EC, Norway, Netherlands, ADB,UNESCAP, UNCTAD, UNIDO,WCO, WTO, IMF, AITIC, IDA(World Bank)

Bangladesh

Number ofdonors

Donors providing support for TradeDevelopment (2001-2006)

Donors providing support for TradePolicy & Regulation (2001-2006)

Total TACB to Cameroon in the category of Trade Policy & Regulation(2001-2006) (in US$ thousands)

*Partial data for 2006, Source: WTO/OECD Database

0

500

1000

1500

2000

2500

2001 2002 2003 2004 2005 2006

The scale and focus of support to individualdeveloping countries fluctuates over time

A sample of trade policy making capacity in theA sample of trade policy making capacity in thepoorest countriespoorest countries

Geneva Negotiators

Trade Ministry in Capital

Limited input fromnon-tradegovernmentministries or fromnon-governmentactors

Geneva Negotiators

Services Manuf PhRMA

Industry Advisory

Committees

Agriculture

Ag, Interior State EPA

Inter-agency Process of govt

departments

Commerce

Non-Industry

NGOs Academics Think tanks

U.S. Congress

NGOs States Experts

Industry

USTR

Civil society & research community

The trade policy making capacity:A simplified sketch of the U.S. process

Scientists

White HouseUnions

Priorities for Future DebatePriorities for Future Debate

Supporting TACB activities that build durableSupporting TACB activities that build durableprocesses, institutions, and capabilities insideprocesses, institutions, and capabilities insideand outside governmentsand outside governments

Strengthening development-oriented, notStrengthening development-oriented, notneutral, TACBneutral, TACB

Improving independent monitoring andImproving independent monitoring andevaluation of TACBevaluation of TACB

ConclusionsConclusions Considerable scope for greater academic and policy discussion ofConsiderable scope for greater academic and policy discussion of

governance and institutional reform of WTO from the perspectivegovernance and institutional reform of WTO from the perspectiveof developing countries and sustainable developmentof developing countries and sustainable development

Much has changed over the past decade in the practice of tradeMuch has changed over the past decade in the practice of tradegovernance and the WTO systemgovernance and the WTO system

A functional approach to the question of governance and reformA functional approach to the question of governance and reformmay serve to reinvigorate discussion and yield new prospects andmay serve to reinvigorate discussion and yield new prospects andproposals for reforms that would benefit developing countriesproposals for reforms that would benefit developing countries

Much need for further academic and policy debate on the optionsMuch need for further academic and policy debate on the optionsfor reforming global trade governance to better address needs offor reforming global trade governance to better address needs ofdeveloping countries and challenges of sustainable developmentdeveloping countries and challenges of sustainable development