Reforming the World Trade Organization: Problems and Solutions

• Published in: The International lawyer Vol. 56; no. 3; pp. 417 - 441
• Main Authors: Puig, Gonzalo Villalta, Callahan, Ann
• Format: Journal Article
• Language: English
• Published: Chicago American Bar Association 22.09.2023
• Subjects: Coronaviruses; COVID-19; Decision making; Evaluation; Fair trade movement; Food security; Geopolitics; Global economy; Inflation (Finance); International trade; Law reform; Laws, regulations and rules; Legitimacy; Medical supplies; Negotiations; Pandemics; Supply chains; Sustainable development; Trade agreements; United States > US
• ISSN: 0020-7810; 2169-6578

Since its establishment January 1, 1995, the WTO has played a substantial role in striving towards strength, resilience, and growth for the global economy. The exponential increase in WTO membership in both numbers and diversity has contributed to significant challenges in concluding further agreements.4 To strike the right balance between the rights and obligations of WTO "Members" is to determine where a line might be drawn between convergence and managed coexistence.5 Negotiating stasis becomes the norm when Members lack the ability to recognize and deal with that balance, and most observers believe that situation has gotten closer and closer to reality.6 In addition to the membership consensus issue, like the very Members that make up the organization, the WTO has a culture of its own.7 This culture, however, is characteristic of the practices of the original GATT.8 It is not representative of the power dynamics between current Members in a multipolar system, or reflective of present geopolitical realities.9 Nothing is riskier for any public, private, or international entity than attempting to revert to the past or stand still, especially at a time when the pace and direction of change is so rapidly accelerating on a global scale.10 The challenge of addressing and changing the WTO's current direction cannot be postponed any longer. Problems While the economic theory of the WTO is still legitimate-prosperity through comparative advantage through free trade-the organization has been showing its age and has unmistakably entered a period of relative inefficiency and stagnation.29 That being said, the first step in addressing and solving an issue is to acknowledge and recognize its existence. [...]we have selected several key issues that are central to the institutional reform of the WTO, focusing on efficiency, responsiveness, economic development, and dispute settlement. A. Decision-Making A critical reason why the WTO struggles with efficacy in its decision-making and negotiation capacities is due to its Member-driven structure.30 The WTO's decision-making structure is consensus-based, whereby no Member objects to a decision.31 This structure has its advantages and disadvantages.32 One significant drawback is that it oftentimes leads to impasse and blockage where little gets accomplished.33 With the WTO's strictly Member-driven organization, any matter, regardless of its level of importance, is subject to consensus. 34 While there could be alternate manners for decision-making such as distinguishing between substantive and non-substantive matters,35 even altering or adjusting the consensus-based structure would prove difficult.36 This is because, in order to realize change, a consensus would first be necessary.37 Whether or not the WTO can fulfill its objectives and obligations multilaterally is a core issue that the WTO is facing.38 Recent events show that the consensus-based method is unsuitable for an organization with 164 Members, especially regarding policy concerns where it is extremely challenging to create an agreement among Members.39 Since the start of the Doha Round in November 2001, minimal achievements have been made because of the failure by Members to agree on crucial problems, largely due to differing perspectives from developing and industrialized economies. 40 It is further demonstrated by one Member's power, in this case, the United States under the Trump administration, to prevent the installation of the WTO's Director-General, which President Biden did permit to proceed, and to prevent appointments to the Appellate Body and which, indeed, has continued into the Biden administration.41 Because the rulemaking mechanisms of the WTO are so cumbersome, private entities and governments alike have been moving towards alternative forums.42 Many states have increasingly been turning toward the negotiation of preferential, regional trade agreements and settlements.43 Even though it has not been demonstrated that regional trade regimes offer the same economic advantages as multilateral agreements, there are significant commercial forces that push towards negotiating new regional accords, particularly in the world's fast expanding economies.44 With no prior experience of regional trade agreements, developing economies are forming new regional trade alliances, particularly in Asia and Africa.45 Both the United States and the European Union have begun to pursue aggressive plans to negotiate bilateral accords and regional trade agreements with other states and customs territories across the world.46 The proliferation of regional trade agreements is seriously undermining the multilateral trading system.47 Processes for making decisions support and facilitate the ability to achieve legitimate results that are consistent with the WTO's main objectives.