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WTO hampered by ’spaghetti bowl’ deals

Financial Times (London)

WTO hampered by ‘spaghetti bowl’ deals

By Alan Beattie, World Trade Editor

Published: January 17 2005

The World Trade Organisation is being undermined by the intransigence and short-sightedness of its member countries, according to the report of a high-level commission released on Monday.

The commission, led by Peter Sutherland, former WTO chief, said the proliferation of bilateral trade agreements outside the WTO process was betraying the multilateral ideals that underlay the WTO and its forerunner, the General Agreement on Tariffs and Trade.

“The reality today is that the WTO presides over a world trading system that is far from the vision of the architects of GATT”, the report said.

The report, which proposed a series of tangible but limited reforms, was commissioned by Supachai Panitchpakdi, the WTO’s current director-general, amid fears that the current Doha round of trade talks was revealing strains in the system.

It said that the “spaghetti bowl” of bilateral and regional trade deals was undermining the principle of treating all trading partners equally. The report argued that the best way of combating this would be to outflank bilateral agreements with a multilateral deal for far-reaching cuts in trade protection, and urged rich countries to set a date for the complete elimination of trade tariffs.

Other specific suggestions included increasing political involvement by requiring ministers to meet annually for WTO talks, rather than every two years, and for poor countries to be given the right to aid and technical assistance to implement new agreements.

It also called for the WTO director-general to play a stronger leadership role, noting that the position had evolved into one of “international spokesperson and marketing executive” rather than the leader of world trade talks.

The WTO has always been regarded as a system driven by its member countries rather than by the director-general and the Geneva-based secretariat. But the report said: “A member-driven organisation is a valuable long as the vehicle is being driven carefully in a direction consistent with its overall objectives. In recent years, the impression has often been given of a vehicle with a proliferation of back-seat drivers, each seeking a different destination, with no map and no intention of asking the way.”

But the report stopped short of proposing radical changes to the decision-making processes in WTO negotiations, once described as “medieval” by Pascal Lamy, the former European Union trade commissioner and candidate to replace Mr Supachai as head of the WTO.

There were good reasons for decisions to be taken by consensus, as at present, it said, since this gave more leverage to poor countries.

But the potential for gridlock among the WTO’s 148 member countries meant that any nation wanting to block a measure that had widespread support should give the reasons in writing why it was contrary to its vital national interest.

 source: FT