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WTO members achieve breakthrough, but the tough part is what happens next | The successful WTO Conference saw one big failure: agriculture | Our scorecards
By Robert Wolfe
POSTED JUNE 21, 2022 | UPDATED JUNE 21, 2022
Observers of multiple World Trade Organization (WTO) ministerial conferences felt gloomy early during the June 12–17 meeting, when Director-General Ngozi Okonjo-Iweala warned against mingling the issues.
She was reported to have urged ministers to make trade-offs within the same issue rather than across the package of issues.
In an interview with the Financial Times’ Alan Beattie (paywalled) she confirmed her approach.
“Sometimes, all this leveraging and cross connections between outcomes I think in the past has led to the failure to achieve anything, because then everything just doesn’t work and collapses. I was really determined from the get-go that wasn’t going to happen and I was trying to discourage members from linking one thing to another,” she said.
I was trying to discourage members from linking one thing to another
— Ngozi Okonjo-Iweala,
Financial times
Those of us who analyse the WTO have a mental model of how members could reach agreement. When the process seems too slow, or it fails, analysts think: if the Secretariat or members could do it differently, then the obstacles could be overcome. This reasoning is counterfactual, meaning something that has not happened but might happen under different conditions.
The usual suspects blamed when negotiations fail to produce a package include, in no particular order:
- Unsuitability of the WTO to address 21st century issues.
- A lack of business support in the domestic politics of key members.
- Too many small players.
- Obstruction by some members reluctant to engage in negotiations.
- The diverse levels of development among developing countries, and demands for special treatment, or both
- Absence of trust among delegates in Geneva
- Three major powers — EU, China, and the United States — failing to lead
- The consensus rule in decision-making
The list could be expanded, but they all come together when the talks fail to produce a package with something for everybody. If a package does emerge, they have been overcome.
Single undertaking
See my article and the sources cited, “The WTO Single Undertaking as Negotiating Technique and Constitutive Metaphor,” Journal of International Economic Law 12:4 (December 2009), pages 835-58.
A package for everyone is also known as a “single undertaking”. Everything is agreed as a single package.
All international negotiations conclude as a package, not just at the WTO. The question is what issues must be in any particular package for it to be agreed. The package does not have to be huge, but it does have to include issues thought most urgent, and a critical mass of participants.
There is a long tradition of studying the possibility of links among issues and participants in treaties and negotiations. Adding divisive issues can undermine negotiations, especially if it brings in more domestic opponents than supporters of the issues. Adding unrelated issues that the parties value differently can be helpful.
Any package also has a downside. It creates multiple entry points for critics, and veto players. Recent trade negotiations sometimes stir up a hornet’s nest of opposition, without anybody having enough at stake in the outcome to ensure strong support for the negotiations, let alone for a final agreement and its ratification.
The 2013 WTO Ministerial Conference in Bali (the ninth Ministerial Conference or “MC9”) showed that a mini package is possible, if the large players want one.
JARGON BUSTER “MC1” to “MC13”
The Ministerial Conference (MC) is the WTO’s highest decision-making body. It’s supposed to meet every two years.
Insiders identify each conference by a running number.
● MC1 = 1st Ministerial Conference (in Singapore)
● MC12 = 12th Ministerial Conference (in Geneva), the one that has just ended.
● MC13 = the next one, now proposed for late 2024.
This is not to be confused with the running numbers used in official ministerial conference documents, which reflect the years.
This year’s document numbers start with WT/MIN(22)/… which is just as well since a number of documents were submitted last year before the 12th conference was postponed. Their numbers are WT/MIN(21)/…
The full list of conferences is here
— (PU)
But it also showed that single-issue deals are hard to negotiate, even on something as useful, and as internally balanced, as the Trade Facilitation Agreement on streamlining border procedures for goods.
The Bali mini package only succeeded because development issues and agriculture were included. And even agriculture had to have balancing issues within that micro part of the mini package so that the package could be adopted by consensus.
Even then, the final agreement was held up until late 2014 in exchange for a tweaked text on domestic support in developing countries’ food security stocks.
In that sense Bali was a single undertaking. So was Nairobi (MC10) two years later in that everybody was expected to accept all of the elements, or none. Both conferences concluded with a Ministerial Declaration and a package of Ministerial decisions.
By MC11 in Buenos Aires in 2017, constructing even a mini package was impossible. There was no final declaration, only a statement by the Argentinian minister who chaired the meeting, along with a handful of ministerial decisions kicking cans down the road.
There were also a number of joint statements by subsets of members where multilateral agreement was not possible. These were called plurilateral, meaning talks inside the WTO among a subset of members whose eventual outcome is intended to use WTO transparency and dispute settlement procedures.
The apparent lesson was that the consensus decision rule had been abandoned, and that the notion of a “single undertaking” was dead.
Geneva 2022
The package adopted at this year’s conference — described in our scorecards — ought to modify this lesson.
The “outcome” document contains no decisions, although the few that were made are attached. It makes few advances on the issues it mentions, and largely kicks a cacophony of cans down the road by calling for further work and reports to ministers at the next conference, with little concrete guidance even on WTO reform.
But there were urgent matters where the agreement of all members was essential, including fisheries subsidies, the response to the pandemic, food insecurity, and the moratorium on customs duties on e-commerce. Ministers delivered a package deal, even if the price of consensus was weaker texts than some might have liked.
Notably missing from this package is the document on the agriculture negotiations (subsidies, support and market access) that had been presented to ministers in draft.
Without consensus it failed completely because the economic spillovers of subsidies can only be managed multilaterally. That requires all members to agree, and will eventually have to be incorporated in another ministerial package.
The outcome of the conference was indeed a package, but were the issues within it linked?
Some trade issues are inherently linked or at least linkable. For example, the most-favoured-nation rule (countries treating their trading partners equally) allows negotiations to cut tariffs — essentially bilateral — to roll up into a multilateral outcome.
But there were no market access issues on the agenda this time. When the agenda includes disparate issues that might not conclude on their own, a package allows leverage, for good or ill.
This Ministerial Conference was not a funeral for the single undertaking as a negotiating technique, but worried relatives should not celebrate yet. A test for maintaining the integrity of the WTO itself as a single undertaking is coming.
Plurilaterals and packages
A number of issues where work can proceed for now without a consensus of the full membership were also part of this year’s conference, and these declarations and statements are also shown in our scorecards.
But the outcome postpones thorny problems with the current plurilateral discussions (where only part of the membership participates) for later. They include political questions about the process used, and legal questions about how to incorporate any outcomes in the WTO.
Three broad options are available.
The first is a critical mass agreement in which participants in the negotiations incorporate the results in their schedules (or lists) of commitments. Agreements of this type come into effect when a pre-determined number of participants have circulated revised schedules. Consensus is not needed.
The approach works for any regulatory domain so long as free riding by other WTO members is not a concern. That’s why a critical mass of participants is needed. Critical mass agreements affect the obligations of signatories but leave the obligations of non-signatory members unaffected.
If the intent is to restrict the benefits of the deal only among its participants, the second option is to insert the deal under Annex 4 of the WTO Agreement (explained here).
This limits the risk of non-participants free riding on liberalisation, but legally-speaking the participants discriminate against non-participants. So that route requires permission from the full membership — meaning consensus — which was the obstacle that led to the plurilateral negotiations in the first place. So a reckoning is coming.
The third option is to negotiate outside the WTO. If the inside options are not attractive, there is a risk that the major powers will abandon most-favoured-nation (MFN) treatment, the key principle of non-discrimination between trading partners.
The 2021 EU paper on WTO reform contained an implicit warning: if no effective formula is found to integrate plurilateral agreements in the WTO, there would be no other option than developing such rules outside the WTO framework, which could fragment the system.
What the EU meant is that the outcome of some possible agreements might not be suitable for inclusion in schedules of commitments and so members must debate the option of inserting the deal into the WTO agreements under Annex 4.
So far, they have not. They did not need to at this year’s conference because the only plurilateral that was ready to conclude, and did, was done under the first option: the agreement on domestic regulation in services is a Reference Paper that participants enter in their schedules of commitments under the General Agreement on Trade in Services (GATS).
And so the experience of the latest Ministerial Conference confirms that packages are needed, and that more careful preparation of the package can produce a stronger outcome. Left for another day is how to include plurilateral outcomes in a package that maintains the overall multilateral framework.
Regulatory issues of the sort covered in the plurilaterals do not provide opportunities for cross-issue linkages comparable to market access negotiations. Outcomes on some of the plurilaterals are feasible on their own, if internally balanced, so a package may only be needed as a forcing device to get countries who want one domain to accept action in another.
Find out more
For a discussion of the issues raised by plurilaterals see
- Bernard Hoekman and Charles Sabel: “Plurilateral Cooperation as an Alternative to Trade Agreements: Innovating One Domain at a Time”, Global Policy, 12:S3 pages 49–60 (2021)
- Hamid Mamdouh: “Plurilateral Negotiations and Outcomes in the WTO”, King & Spalding, Geneva, unpublished memo, April 16, 2021
- Tu Xinquan and Robert Wolfe “Reviving the Negotiation Function of the WTO: Why the Onus Falls on the Three Major Powers,” in Bernard Hoekman, etc, editors, Rebooting Multilateral Trade Cooperation: Perspectives from China and Europe (London: CEPR Press), pages 29–43
Robert Wolfe is Professor Emeritus of Policy Studies, Queen’s University, Kingston, Ontario. He has written extensively on WTO reform issues. Follow him on Twitter: @BobWolfeSPS.
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