B2 - The trade regime and the future of the WTO

Summary

The year 2009 and early 2010 offer a fascinating paradox. Following the autumn 2008 financial collapse, the world trade regime has displayed remarkable resilience to the severe world economic crisis with so far little evidence of a rise in protection, contrary to prevalent claims. Meanwhile, the obstacles to conclude the Doha Round remain intact. Such a contrast between the resilience of the trade regime and the inertia at the WTO suggests an ongoing systemic shift in the future role of the WTO.

Domestic politics and the WTO Rounds

An initial explanation to the Doha Round inertia – that there are many more WTO members – is not convincing. The Doha negotiations are still largely limited to a few countries, a dozen if the EU is counted as a single entity.

As so often in international trade, more convincing reasons can be found in domestic factors. An increasing number of WTO members are democracies. Many constitutions impede deep trade liberalization. In the United States, for example, the constitution gives a lot of weight to agricultural lobbies in the Senate, and the president has only eight years (with three intervening electoral campaigns) to launch and conclude multilateral trade negotiations.

Moreover, since the late 1980s, all the industrial democracies have experienced increasingly thin governing majorities (regardless of which party ends up governing). Thin majorities offer small and strong vested interests a power out of proportion with their real importance, suffocating the wide support for freer trade among ­consumers and business.