By agreeing to disagree, WTO inches forward

The outcome document of the WTO’s Nairobi summit states that some member nations want to stick to the Doha round, but others do not. Progress was made on agricultural export subsidies and IT goods. It seems as if the WTO is set for more, but smaller agreements in the future. The decisions make sense in economic terms, but they may prove less beneficial for global governance in general.

Hans Dembowski

20.12.2015

WTO decisions require consensus. It is new for that consensus to explicitly acknowledge dissent. That is what happened in Nairobi. Developing countries made this compromise and thus allowed the summit to sidestep the Doha round of negotiations, which has been going on for 14 years and was supposed to improve opportunities for disadvantaged nations in a major global agreement. They were rewarded by a deal that will immediately phase out the established economic powers’ agricultural export subsidies. This was an important goal of the Doha round, but not the only one.

The Nairobi summit also agreed on a global reduction of tariffs on information-technology goods. Moreover, Liberia and Afghanistan were accepted as member countries.

The WTO has thus not become irrelevant to moving the trade agenda forward, as some had argued. I personally did not expect India and other developing countries to make such a significant concession as sidestepping Doha. However, I am still quite sure that this concession will not lead to ground breaking new global deals on issues such as government procurement, competition policy or investor rights. These are issues the advanced economic powers want global rules for, but the emerging ones are not interested.

The new WTO approach of concluding smaller, narrowly focused deals instead of trying to push for comprehensive rules in many areas of economic policy-making makes sense. However, there will be a price. The USA and the EU were the major powers that wanted to abandon Doha. As I argued in my last blog post, they wanted to put additional issues on the agenda and did not expect to gain much from simply concluding Doha. Now they have walked away from their Doha commitment, after having reiterated it again and again at G7, G8, G20 and other summits.

At some point in the future, other countries are likely to follow their example concerning some other global commitment, and they will refer to the precedent set in Nairobi. China, India and Brazil are certainly self-confident enough to do so, and others might be too.

In the short run, Nairobi’s agreement to disagree is probably good for the world economy, including developing countries. Whether it is good for the cause of coherent global governance, is a different matter. Agreeig to disagree is very healthy for finding common ground philosophically and ideologically, but ambivalence is terrible in the context of collectively binding decisions.