TRADE & INVESTMENT – 20 Years of WTO, What’s Next?

Appointed one of the four deputy director generals of the World Trade Organization in 2013, Karl Brauner, formerly Director General for external economic policy in the German Federal Ministry of Economics and Germany’s representative in the Trade Policy Committee of the European Union, talks about the extensive efforts to facilitate trade on a global level for growth and development

By Channy Lee


Since it was founded in 1995, the World Trade Organization (WTO) has shown extensive efforts to facilitate further trade on the global level, extend benefits of trade as a tool for growth and development, and promote multilateralism. 2015 was a year of commemoration for the international organization’s efforts in the past 20 years.

One of the events marking WTO’s 20th year anniversary was the 10th Ministerial Conference held on December 15-18, 2015 in Nairobi, Kenya. Four days of intensive negotiations resulted in multilateral agreements commensurate with the significance of what became the first Ministerial Conference in Africa, another stretch of moving forward from the Doha Development Agenda.

“I must say I had not expected that we would have success in Nairobi because when we were preparing for the conference, there was so much antagonism among the members that I actually thought multilateralism as a whole is in danger,” Karl Brauner, Deputy Director General of WTO, reflects in a recent discussion at AmCham.

“And I was very pleased when we had a positive outcome in Paris [at the United Nations Climate Change Conference],” Brauner says, highlighting two decades’ worth of work by the organization and what lies ahead.

“Before, we had positive outcomes from the sustainable development goals for the United Nations in New York, and now we have the positive result of Nairobi, so there is still hope for multilateralism.”

A strategic role

Brauner was appointed one of the four deputy director generals of the WTO in 2013. He previously served as Director General for external economic policy in the German Federal Ministry of Economics and as Germany’s representative in the Trade Policy Committee of the European Union.

Karl Brauner
Karl Brauner

His role in the WTO Secretariat revolves around budget, finance, human resources, legal affairs and the dispute settlement system. However, he has long been closely involved in trade policies on the international level, taking part in all WTO ministerial conferences since 2001, including the one in Hong Kong in 2005.

Despite being absorbed in internal matters of the organization, he now plays a much more active part in trade negotiations. The role – not bound by the identity of being a representative of any particular country – has allowed him to take part in institutional growth and to understand what he believes to be recipes of success in multilateral discussions.

His observation is that successful negotiations in the last few years are often the results of stand-alone discussions on a deal itself for which involving parties can come to a compromise without overreaching to other issues. And Brauner applauds the efforts made by the WTO as well as its member states.

“I’m definitely convinced that trade is going to be freer and that trade is going to be more efficient,” he says.

Milestones

The Trade Facilitation Agreement, the first multilateral trade agreement under the WTO, was concluded at the 9th Ministerial Conference held in Bali in 2013. Once implemented, the agreement is expected to set forth a series of measures intended to move goods across borders expeditiously, while reducing total trade costs by more than 14 percent.

Other achievements of equal economic importance include the Agreement on Government Procurement in 2014 and the expansion of product coverage detailed in the Information Technology Agreement in 2015. The “most significant outcome on agriculture,” as touted by WTO Director General Roberto Azevedo, is the recent elimination of export subsidies for farm products.

On the organizational level, Brauner points out accessions of new member states and success of the dispute settlement system as milestones for the WTO. In addition to the founding members, there are now 34 members having acceded to the WTO since its establishment, while the organization’s dispute settlement system has grown past the receipt of its 500th case.

Brauner has set out plans to make the dispute settlement system more efficient. The system has recently been overloaded beyond its capacity and has become a victim of its own success. It currently takes from 15 to 18 months for a single case to be resolved. Even with a growing influx of cases, he and his team seek to maintain the speed and quality of service.

A believer in the bright prospect of free trade, Brauner is optimistic that international trade will continue to lift the quality of life for many. “It is global trade that gives consumers a much wider choice; it is trade that helps to achieve the Millennium Development Goals and lift people out of poverty. It is only through these global exchanges that people can earn a decent life in dignity.”

Chart 16

The art of negotiation

In a critical assessment of WTO’s 20 years of facilitating international trade, Brauner notes that antagonism between members is a challenge and one of the factors that have slowed down the process of producing results. The most apparent example is over the course of the Doha Development Round.

Initiated in 2001, the Doha Development Round was launched with the ambition of allowing every member state involved to gain something of their interest. With its grand objective, deals were safeguarded with the rule that nothing is agreed until everything is agreed.

Although the rule was meant to strengthen negotiators, it essentially had the opposite effect of preventing any conclusion from being reached as negotiators took hostage of one issue for another, Brauner explains. After 14 years since its initiation, the WTO continues to strive to conclude the Doha Round of negotiations on trade liberalization.

As antagonism between countries remain under the architecture of multilateral negotiations, and because the WTO is a member-driven organization, conflicts as such are precisely the reason that the future of WTO will be decided by members of the organization, Brauner points out.

“I cannot tell you what is going to happen in Geneva because nobody knows,” he explains. “We are not in a position where we could say ‘Okay members, now you are back, and here’s your agenda. You should now look at this and that.’”

“I always say we are humble servants of the members,” he adds. “And our influence is that we privately tell them what they should be doing, and sometimes they listen and sometimes they don’t. We should look at the individual issues, and what issues we are looking at will be determined, hopefully, by you.”

Photo 9

Multilateralism

The notion of multiple countries working cooperatively on a given issue has often been one linked to a lack of effectiveness and efficiency. Especially amid burgeoning “bilateralism” and “plurilateralism,” the future of multilateralism is questioned for its capacity for substantial achievements despite the presence of institutions like the UN and the WTO.

But Brauner feels otherwise. “What is going to happen is, we’ll have so many bilateral and regional agreements that are paired with a variety of rules, particularly rules of origin; and when you look at the reality of production along value chains, you’ll find that it becomes very complicated to rip the benefits afforded in these bilateral or regional agreements.”

“Therefore, my prediction is that at one stage, they will all come back to the WTO, look at the best practices out of the bilateral and regional agreements, and multi-lateralize it.”

In accordance with the auspicious view, there is precedent of ideas tested through bilateral trade agreements and brought to the multilateral system for discussion of widening the range of members. The opportunity of multi-lateralizing a deal surfaces once consensus is reached bilaterally and plurilaterally involving a much smaller group of parties.

“I think we are in a transition period where these bilateral or regional trade agreements will give members an advantage, but eventually it will be multi-lateralized on the basis of the best practices,” Brauner believes.

“So it may not be in our favor at this point in time, but this is only a transition period. When you’ve done this once, it’s easier to do it a second time.”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s