Columns: The WTO deadlock - Trade without trust

Written by Amitendu Palit | Updated: Oct 17 2014, 06:28am hrs
Within much less than a year of a euphoric outcome at Bali, the World Trade Organisation (WTO) appears to have lost the momentum. This is evident from the WTO Director-General Roberto Azevedos recent lament: While Bali marked recovery of trust within the WTO, it seems that it is beginning to lose that trust once again.

As multilateral trade negotiations meander through a seemingly unresolvable vortex, trust, or the lack of it, again comes to haunt trade talks. Indeed, the comeback of trust, albeit in a deficient form, raises questions over whether the multilateral framework can indeed deliver what it has been promising to.

During the last 13 years since the fateful Doha Ministerial of the WTO in 2001, lack of trust has been conspicuous in the singular lack of progress on the Doha Round. Bali was a remarkable exception when the WTO members agreed on implementing a small part of the Doha agenda. However, the euphoria over the consensus, achieved on a markedly limited set of issues, made most overlook the fact that the consensus reflected only a facile show of trust. The reality was that even on the narrow set of issues that Bali dealt with, trust was missing.

India was the cynosure of all eyes at Bali, as it was in Geneva earlier this year during the Bali follow-up, and obviously for wrong reasons. The UPA government let Bali go on the assurance that its concerns on public stock-holding would be addressed. Nobody, including India, however, had much clue on how it could be within the framework of the WTO. As a result, the world was happy to accept an interim solution. Being clueless, the rest of the world thought the interim would allow materialisation of the rest of the Bali deal without fuss from India.

Being equally clueless, India, or more appropriately the UPA government, thought that securing the interim was the best that it could have done without torpedoing its image further at home or abroad. It could always sell the uninitiated and unconvinced logic of interim becoming permanent over time. And best, it could always leave the searching of the solution to a new government, which, by the early indications already available in December, was unlikely to be a Congress-led UPA.

Rather than being a deal achieved after ironing rough edges, placating egos and capable of going through smoothly, Bali left its results open-ended. In the months that followed, the enthusiasm of the worlds major traders, particularly the US and Europe, over the trade facilitation agreement made most forget the caveat of passing Bali as a single undertaking. The noise created by India over food security was taken to have subsided. As India switched governments, the main backers of trade facilitation at the WTO were further convinced about the death of concerns over public stock-holding. Surely Indias new pro-business, market-friendly government, sworn in with a massive mandate, would hardly bother wasting time over politically catchy entitlement-based food security concerns at the WTO!

It was, therefore, a massive shock when India refused to let the trade facilitation deal pass through and insisted on treating Bali as a composite undertaking inclusive of a solution on public stock-holding. By doing what it did, India ensured it hardly had any friend left in the WTO. The new government, however, appeared determined not to own the vacuous position of the earlier government on the issue and was unmoved by the flak it took.

Since then, hardly much has changed. Hours after the US and Indian leaders jointly urged the WTO to end the impasse, the preparatory committee on trade facilitation that had been set up for moving forward on the issue declared that positions remained unchanged on the subject. The WTO membership was variously divided over whether the Committee should continue its search for a solution. In the meantime, the developing country community at the WTO represented by the G90 with the LDCs, Africa, Caribbean and Pacific economies, backed by India and China, have asked the WTO to move beyond the Bali package and take on more issues from the Doha agenda.

Trust is clearly not in abundance at the WTO. And it is also not a question of India versus the rest of the WTO on trust. The lack of trust is in the WTOs mechanism itself. The impasse over Bali shows that even a narrow implementation agenda cannot be sanctioned as a package. Different elements of a trade package have varied significance for consenting members. While major priorities of some can be meaningless for others, a package needs to go through as a whole. Such consensus across extremes is difficult to achieve. The difficulty erodes trust in the framework trying to achieve the goal. The trust deficit becomes stronger and pervasive given the knowledge that even one member can hold up consensus effortlessly regardless of strategic size.

The WTO is trying to perform the impossible task of achieving consensus between atheists and agnostics. Maybe it is time to seriously think whether it can at all do so.

The author is Senior Research Fellow at the Institute of South Asian Studies in the National University of Singapore. He can be reached at isasap@nus.edu.sg. Views are personal