The WTO has taken a historic breakaway from its past at the Nairobi Ministerial Conference. It has launched a counter-offensive against the Regional Trade Blocs (RTBs). Long suffocated by the mushrooming of regional trade blocs; the WTO’s primary responsibility at Nairobi was to show the world that the institution is important.
Nobody can reject the challenging environment in which the Nairobi MC took place. It was not just the non-conclusion of the Doha Development Agenda. Rather, RTBs like the US led Trans Pacific Partnership are going ahead like race cars. All trade liberalization discussions with serious efforts are taking place outside the WTO – ie., at RTBs.
The European Union, ASEAN and RCEP- all have taken trade liberalization to the new advanced levels. On the other hand, the WTO was in injury bed because of the conflict between the developed and developing countries on DDA.
So far the WTO’s vulnerability is that no trade promoting decision was taken during its twenty year life time.
At the Bali MC itself, the developed world arrived to extend a funeral ceremony to the WTO led multilateral trading system. Largely the EU and the US were disinterested at the WTO trade discussions. They wanted fast and furious trade liberalization to escape from recession. If WTO is not doing it, they have the RTBs.
At Nairobi, the least developing countries feared a future situation of developed world disengaging with WTO. Hence a ceasefire was offered and accepted indirectly. Result was that the developing countries were forced to abandon the long disputed issue – the Doha Development Agenda.
The WTO itself hints its reinforcement against the RTBs as the most positive outcome of the Nairobi MC.
“In their Nairobi Declaration, ministers cited the “pre-eminence of the WTO as the global forum for trade rules setting and governance” and recognized the contribution the rules-based multilateral trading system has made to the strength and stability of the global economy.”
“We reaffirm the need to ensure that Regional Trade Agreements (RTAs) remain complementary to, not a substitute for, the multilateral trading system,”- the WTO update quotes the Nairobi declaration.
WTO’s website on the declaration says that the Committee on Regional Trade Agreements (CRTA) would discuss the systemic implications of RTAs for the multilateral trading system and their relationship with WTO rules.
Nairobi has inarguably initiated a process of reinstating the primacy of WTO in setting international trade rules.
From a political angle, strengthening of the WTO itself is good for the developing world. International trade system should not get their directives from the shortsighted RTBs like the TPP that concentrates on the interest of few countries. Rather it should get rules from the multilateral WTO where the poor developing countries are having some voice.
For that if the developing countries have abandoned the DDA, it is to strengthen the WTO and for the better future of the developing world. Nobody can forget that most of the developing countries are not members of any meaningful RTBs.
For the WTO, to overcome the RTBs on the free trade track, the only solution was to opt for the new issues that the developed world has put forward. This means that the institution has to reprioritize its agenda. Nairobi has done this work; it has put the DDA into death and given green signal to the new issues so that they remain the ‘agenda of the organization in the twenty first century’.