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the Future of the WTO: from Regionalism to Multilateralism
The International Conference on
“The 20th Anniversary of the WTO: Review and Outlook”
August 20th, 2015
I am delighted to be here today. Having served as Taiwan's first Ambassador to the WTO during 2002 to 2005, I consider it both a unique privilege and welcome task for me to be invited by Chung-Hua Institution for Economic Research to take part in this event.
While registering my profound thanks to our distinguished foreign experts for coming a long way to contribute to this roundtable discussion, I have additional pleasure to point out that two of my former colleagues at Taiwan’s delegation in Geneva have assumed great responsibilities for Taiwan’s engagement in the functioning of the WTO. They are: Mr. John Deng, who is currently Minister of Economic Affairs, and Ms. Jen-Ni Yang, our previous panelist, who serves as Director General of Bureau of Foreign Trade at the Ministry of Economic Affairs.
Ladies and gentlemen, the WTO,by following the footsteps of the GATT, launched its first multilateral trade talks, the Doha Round, in November 2001. Almost fourteen years have passed since the inception of the Doha Round and no tangible result is in sight.Having said this, the WTO, in many ways, is and will continue to be one of the most successful examples of rule-based multilateralism at work.
Being part of this roundtable discussion, I would like to share with you two points of my thought on the future of the WTO. First, though there is no way around the fact that this multilateralism isstruggling, I remain optimistic about the indispensable role the WTO can play in terms of further liberalizing trade in goods and services in the times ahead. Second, plurilateral approaches could be a useful solution to the current impasse of the Doha Round, and serves as a basis for future trade negotiations within the WTO context. I would like to elaborate my thoughts as follows.
Based on my longtime involvement in the study of GATT/WTO law, I have always shared the view that the blueprint of this multilateral trade organization was and still is the elimination of all types of trade barriers. However, the real world is not ready for such an ideal situation. With this in mind, no one would argue that the launching of a multilateral trade negotiation once a few years should be a desirable ways and means to pursue the progressively liberalized environment for international trade. In this connection, it is quite right to say that multilateral trade negotiations are never-ending games. Past history of the GATT with the completion of eight rounds of trade negotiations has vividly demonstrated its remarkable success in terms of reducing trade barriers. However, the ups and downs of the journey that lasted nearly fifty years have also told us that the progress of trade negotiations sometimes has been fitful, often involving two steps forward and one step back.
Given the experience during the GATT period, it would be of no surprise that the Doha Round cannot be completed within the expected timeframe. With the consensus method for decision-making during the negotiation process remains unchanged, the quick surge of WTO membership from 128 to 161, and each having different levels of economic development, is bound to cause difficulties for the Members to reach agreement. Besides, though the principle of "single undertaking" could possibly bring about a balanced outcome of the negotiations for all Members, the principle which requires nothing being agreed upon unless everything being agreed upon simply makes the negotiations more complicated. In short, the reason for the continued stalemate of the Doha Round could be best illustrated by the saying that "too many cooks spoil the broth".
Ladies and gentlemen, it is very true that a great many key WTO Members, including the US, EU, Japan and China, etc. have been actively taking part in the race to sign FTAs. The "mushrooming" of regionalism may undermine Members' confidence in the WTO as a vehicle for making global trade rules and promoting liberalization, and thus poses a severe threat to multilateralism. However, the much-delayed Doha Round should not be interpreted as a death knell to the WTO as a forum for multilateral trade negotiations. More importantly, it is also true that all key WTO Members have given little consideration to the possibility that the current situation represents the end of this multilateral trading system. In fact, none of them seem to have considered that the bilateral or regional approaches could be the magic formula for replacing the multilateral approach for dealing with the issues relating to further liberalization in international trade.
Having said the above, I would like to point out that, the signing of FTAs among the WTO Members concerned, albeit through such kind of piecemeal approach, could eventually prove to be the catalyst for achieving a much more receptive attitude towards those issues already on the Doha Round agenda. And, in my view, that's probably the reason why some key WTO Members actually welcome the proliferation of FTAs. I therefore still maintain strong belief that the WTO will continue to play an indispensable role in reducing barriers of international trade.
Now, I would like to touch upon the second point of my thought on the future of the WTO, namely the possible role of plurilateral approaches for the Doha Round and future trade negotiations within the WTO context. While firmly supporting the WTO as the bedrock of the global trade system, the stalemate of the Doha Round which causes regionalism as the sole driving force for promoting trade liberalization and rulemaking deserves us to take a hard look at the serious difficulties that the WTO has been facing.
Without going into too much detail, as previously mentioned, the stalemate of the Doha Round is closely related to the decision-making mechanism of the WTO, or more specifically its underlying principles of consensus and single undertaking that have caused the WTO extremely difficult and time-consuming in making decisions. To overcome such a situation, there were two pieces of information which gave us food for thought on the role plurilateral approaches could play within the WTO context.
During the 8th Ministerial Conference in December 2011, some WTO Members supported the idea to seek plurilateral agreements to be discussed within the WTO in order for the WTO to maintain its centrality and universal coverage. In addition, in February 2012, the National Foreign Trade Council of the United States released a paper on "A 21st Century Work Program for the Multilateral Trading System", which, among other suggestions, included a detailed legal analysis of WTO-consistent approaches to plurilateral agreements. In this regard, a plurilateral approach could serve as starting point for new efforts to assess sectors where a "critical mass" may be available.
In principle, plurilateral agreements can be characterized as either “exclusive” or “inclusive”. The Agreement on Government Procurement (GPA) best represents the exclusive type, which only opens up government procurement markets tosignatory Members and a Most-Favor-Nation (MFN) treatment under GATT Article I does not apply. In this connection, like the GPA, any new plurilateral agreements of this kind require the consent of all WTO Members, a rather tall hurdle given the current stalemate of the Doha Round.
As for the inclusive type, the foremost example is the Information Technology Agreement (ITA). Once the major trading Members constituted the threshold of “critical mass”, the principle of MFN treatment mandates the non-discriminatory distribution of benefits derived from such agreements.Since the ensuing trade liberalization is unilateral, the principle of consensus, decision-mechanism of the WTO, does not apply. By all means, this kind of plurilateral agreements has the advantage of achieving some much-needed breakthrough where the overall negotiations of the Doha Round are stalled. In this regard, the successful completion of the Information Technology Agreement (ITA) II in July this year represented an exciting crack for proceeding the Doha Round. The initiative of the so-called "Really Good Friends of Services", which took place in 2012, also represented a good candidate for plurilateral approach to trade in services.
Ladies and gentlemen, today, in light of the proliferation of FTAs that may replace the WTO as the primary rulemaker and promoter of trade liberalization, it becomes imperative to develop a mechanism for making full use of issue-based plurilateral agreements along with FTAs. Plurilateral agreements can and must present solutions and provide much-needed impetus to the WTO. The issue-oriented approach of plurilateral initiatives is instrumental in supporting the free trade regime.
In this regard, based on the lessons learned from the ups and downs of the Doha Round, it would not a difficult task to identify those issues suitable for seeking meaningful plurilateral agreements, not to mention the list of like-minded Members, especially the developing Members. Worthy of mention, ensuring the quality of transparency in the negotiation and the implementation of agreements is key to widening participation. The success of those endeavors would not be possible without the shared understanding of the economic importance of the agreement concerned among the Members. Needless to say, technical assistance and capacity building should be an integral part of plurilateral agreements, so as to encourage as many as possible participation of developing Members, a crucial factor to the successful conclusion of plurilateral agreements of almost any kind.
Ladies and gentlemen, though getting beyond the Doha impasse is a great challenge as it might be, the entire WTO membership simply cannot afford the luxury of further postponing the completion of the Doha Round. Today's gathering here in Taipei reminds me of the 2012 WTO Public Forum, held from 24 to 26 September in Geneva. The title for that forum was "Is Multilateralism in Crisis?"
I have the admirations to note that Dr. Xin-Kui Wang was invited to join a session, sharing his expertise in exploring whether the Asia-Pacific regional economic integration might be helpful in reenergizing the multilateral trading system. On that forum, the then Director-General Pascal Lamy eloquently pointed out that "Yes, the challenges we face today are multiple, and yes, multilateralism is struggling, but we have proven ourselves to be up to the task before, and we can be up to it again." I venture to hope that I could borrow Pascal Lamy's remarks as the conclusion of my talk today.
I thank you, Mr. Moderator for giving me the floor.