Dissatisfaction with the World Trade Organization goes beyond the US: a broad swathe of the 164 members are calling for reforms.

Critics say its dispute-settlement mechanism is too slow and can go beyond agreed rules; some members fail to give notice of changes in their trade policies; the rules don’t capture all subsidies; intellectual-property rights are not adequately protected; and agricultural support is poorly disciplined.

The WTO is also accused of not adequately addressing emerging issues such as e-commerce and digital trade, or helping poor countries – and there is also unease that members self-determine if they are ‘developing’ and thus entitled to preferential treatment. 

A wave of US trade policy actions has heightened the urgency for reform.

Washington sees an anti-US bias in World Trade Organization dispute settlements and an unfair distribution of obligations, even as some members – such as China – allegedly fail to respect the rules.

The US has blocked appointments to the WTO appeals body, leaving just three jurists on the roster – the minimum required for a quorum. One more departure from the roster – likely next year – would effectively prevent the appeals procedure operating.

However, the US is accused of unilaterally taking action against China, despite promises to use the dispute-settlement mechanism, and of invoking ‘national security’ as a basis for imposing tariffs on aluminium and steel imports. In response to such actions, this year alone, there have been 21 new dispute-settlement challenges against the US.

Globally, protectionist policies have been increasingly adopted since the Great Recession of 2008-09, with G20 countries deeply implicated. In 2018, the pace for imposition of new measures has exceeded any year since the recession and almost half concern subsidies and export promotion.

Whether the WTO rulebook is adequate to deal with these measures is now being questioned.

The EU is proposing a two-stage process to reform the WTO's dispute-settlement mechanism, which could address key US concerns. This would first seek to unblock the appeals body appointments by ensuring a more expeditious handling of cases and increasing the number of adjudicators on the roster.  It would then move to deal with more challenging aspects such as the issue of trade measures designed to remedy breaches of the WTO rules.

The independent Bertelsmann Stiftung foundation, worried that rising global tensions threaten the WTO’s credibility, has also proposed reforms, including strengthening of the WTO secretariat and advancing liberalisation using arrangements negotiated among like-minded groups of countries on an opt-in basis

The World Trade Organization has done much since its inception in 1995, not least attracting 36 new members including China. A new Trade Facilitation Agreement aimed at cutting red tape at international borders became effective last year with the potential to boost world trade by USD1 trillion. Members have agreed to eliminate subsidies for agricultural exports and are working on abolishing illegal-fishing subsidies, among other achievements.

But while surveys suggest most people in advanced and emerging economies view trade as good, many doubt in its ability to lift their wages or give them lower prices for the products they consume.

The WTO has a vital role as a forum for negotiation, a channel for trade-related technical assistance, a centre for policy monitoring and statistics, and a mechanism for dispute resolution. But a failure to advance reforms soon risks undermining its viability as the 21st century anchor for the trading system. Its marginalisation could deprive the global economy of an important contribution to growth at a time when it is sorely needed.

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