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Public policymakers and business leaders are spurring the World Trade Organisation (WTO) to continue developing new international trade policy agreements.

WTO Global Trade Negotiations Add New Types of DealsARTICLE

By Karen Lynch

Public policymakers and business leaders are spurring the World Trade Organization (WTO) to continue developing new international trade policy agreements, even though the current Doha Round of global trade negotiations has eluded conclusion for more than 15 years.1,2

With the Doha Round stalled, there has been an increasing focus on other types of international trade accords, some of which are narrower in scope. These include the recently ratified WTO Trade Facilitation Agreement (TFA), sector-specific agreements and “plurilateral” agreements (within subsets of WTO member nations).3

In the run-up to the WTO’s next Ministerial Conference in December 2017, this article looks back at the WTO rounds of international trade negotiations that have occurred over the years, then discusses several current international trade policy focus areas and initiatives.

Rounds of Global Trade Talks

The WTO is a multilateral trading system intended to progressively liberalize trade through successive rounds of negotiations, as one academic characterized it, adding that “it is expected to be always going forward like a bicycle; if not, it may topple over.”4

Yet with the number of WTO members reaching 164 in 2016,5 achieving consensus has become a significant challenge. Some full-fledged trade rounds have taken years of negotiations to conclude.

The WTO’s roots go back to 1947, when the General Agreement on Tariffs and Trade (GATT) was established in Geneva as a post-World War II mechanism to facilitate international trade. This laid out the core obligations for a multilateral system of international trade, including the principles of most favored nation (MFN, ensuring equal treatment among members in international trade relations), tariff reduction, reciprocity and transparency.

Countries signing the GATT agreement were known not as members but as “contracting parties” until 1994, when the final act of the Uruguay Round officially established the WTO. The GATT agreements remain at the core of the WTO’s system of rules.

Nine rounds of GATT and WTO multilateral trade negotiations have taken place over the past 70 years, of which the Uruguay Round is considered the most significant.6 Others include the Kennedy Round, which in the mid-1960s produced an anti-dumping agreement, and the Tokyo Round, which in the 1970s began to tackle non-tariff barriers such as quotas, import licensing systems, and some national regulations. Along the way, to ensure an integrated global trading system, developing countries have attained some flexibility in adoption of agreements (for example, in terms of timing) and assistance in building trade capacity.

Notably, given recent attempts to diversify the kinds of deals forged in international trade negotiations, the Tokyo Round (1973-79) also relied on new kinds of approaches to achieve its ends. For example, a series of agreements on non-tariff barriers emerged from that round, but only a small number of members (mostly developed nations) subscribed to them.

More recently, significant agreements of narrower scope have been reached and signed as “packages” at ministerial meetings in Bali in 2013 and in Nairobi in 2015, as described later in this article.

Uruguay Round

The final act of the Uruguay Round was signed in December 1994. At the time, it was the world’s largest-ever international trade agreement. Negotiations had lasted seven and a half years (1986-1994) – nearly double the time originally planned—but the reward was a comprehensive pact covering seven agreements in total. These covered aspects of manufactured goods, agriculture, textiles, intellectual property (IP), services and anti-dumping. Under the Uruguay Round’s manufactured goods agreement, for instance, developed countries agreed to cut tariffs by 40 percent, while under the agreement on agriculture, certain subsidies were to be reduced.7

Doha Round

Negotiations for the Doha Round opened in November 2001 at the WTO’s Fourth Ministerial Conference in Doha, Qatar.8 It is the current round of trade negotiations among WTO member states, covering about 20 areas of trade, including agriculture, services, market access for nonagricultural products and IP.9

Doha Round negotiations stalled due to a range of issues, especially between developed and developing countries in the areas of agriculture and services trade. At the 2015 WTO ministerial meeting in Nairobi, member states failed to “reaffirm,” (i.e. agree to continue) the Doha Round negotiations. Though this ensured that the talks remained stalled, the Financial Times reported that it had the positive effect of “opening the door to the discussion of new issues at the WTO, such as the digital economy and investment.”10

Global Trade Packages

After more than a dozen years of inconclusive Doha Round negotiations, the 2013 ministerial meeting on the Indonesian island of Bali instead yielded a key set of agreements known as the “Bali Package.”11 The package covered a selection of issues from the Doha Round, such as improving market access for cotton products from less-developed countries.

Most important, the Bali meeting also resulted in the signing of the Trade Facilitation Agreement (TFA), covering another sticking point in the Doha negotiations. Ratified in early 2017 by 110 WTO member nations (which is the threshold to go into effect), the TFA aims to expedite the movement, release and clearance of goods across borders.

The subsequent Nairobi Package in 2015 included six agreements, including commitments to further curb agricultural subsidies.12

New Types of International Trade Agreements

Recently, two focus groups of business representatives drawn from around the world followed months of negotiations with recommendations on business priorities for the WTO. The groups, representing large and small businesses from developed and developing countries, were formed by a joint initiative of the International Chamber of Commerce (ICC) and the B20, which is the business arm of the G20 countries. In addition to substantive recommendations for areas such as e-commerce and cross-border investment, the groups also suggested new types of international trade agreements to implement them.13

The focus groups and ICC have called for more plurilateral agreements, as well as sector-specific agreements in sectors where there is greater apparent willingness among WTO members to reduce tariffs.14

Examples include the already concluded Information Technology Agreement, in which dozens of countries have agreed to eliminate tariffs on most IT products,15 as well as negotiations on a Trade in Services Agreement and Environmental Goods Agreement.16

The Takeaway

International trade policy continues to evolve at the WTO, despite the stalled Doha Round of multilateral trade negotiations. New types of agreements have enabled this progress. In the run-up to the WTO’s Ministerial Conference in December 2017, the global trade community is calling for even more new deals.

Karen Lynch - The Author

The Author

Karen Lynch

Karen Lynch is a journalist who has covered global business, technology and policy in New York, Paris and Washington, DC, for more than 30 years. Karen also is a principal at Content Marketing Partners.

Sources

1. Building for Success: A World Trade Agenda for the Buenos Aires Ministerial, International Chamber of Commerce; https://iccwbo.org/publication/building-success-world-trade-agenda-buenos-aires-ministerial/
2. Making Trade an Engine of Growth for All,International Monetary Fund, World Bank and World Trade Organization; https://www.wto.org/english/news_e/news17_e/wto_imf_report_07042017.pdf
3. “Trade Dialogues: Business Focus Groups Issue Final Recommendations,” World Trade Organization; https://www.wto.org/english/news_e/news17_e/bus_06apr17_e.htm
4. “Breaking the WTO: How Emerging Powers Disrupted the Neoliberal Project – Book Review,” London School of Economics and Political Science; http://blogs.lse.ac.uk/businessreview/2017/04/09/breaking-the-wto-how-emerging-powers-disrupted-the-neoliberal-project-book-review/
5. “Members and Observers,” World Trade Organization; https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm
6. “The GATT Years: From Havana to Marrakesh,” World Trade Organization; https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm#rounds
7. “Tariffs: More Bindings and Closer to Zero,” World Trade Organization; https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm2_e.htm
8. “The Doha Round,” World Trade Organization; https://www.wto.org/english/tratop_e/dda_e/dda_e.htm
9. "World Trade Organization Negotiations: The Doha Development Agenda," Congressional Research Service; http://nationalaglawcenter.org/wp-content/uploads/assets/crs/RS21905.pdf
10. “World Trade Organization Moves on from Stalled Doha Round,”Financial Times; https://www.ft.com/content/08968f4e-a682-11e5-9700-2b669a5aeb83
11. “Bali Package and November 2014 Decisions,” World Trade Organization; https://www.wto.org/english/news_e/news13_e/mc9sum_07dec13_e.htm#cotton
12. “Export Competition,” World Trade Organization; https://www.wto.org/english/thewto_e/minist_e/mc10_e/l980_e.htm
13. “Trade Dialogues: Business Focus Groups Issue Final Recommendations,” World Trade Organization; https://www.wto.org/english/news_e/news17_e/bus_06apr17_e.htm
14. Building for Success: A World Trade Agenda for the Buenos Aires Ministerial,International Chamber of Commerce; https://iccwbo.org/publication/building-success-world-trade-agenda-buenos-aires-ministerial/
15. “Majority of Participants Have Now Implemented ITA Expansion Commitments,” World Trade Organization; https://www.wto.org/english/news_e/news16_e/ita_01nov16_e.htm
16. “G20 Trade Ministers Meeting Statement,” G20; https://www.wto.org/english/news_e/news16_e/dgra_09jul16_e.pdf

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