In the wake of the
breakdown of the World Trade Organization summit in Seattle, there has been a seemingly
endless round of finger-pointing and recrimination. In the end, however, it is less
important to attach blame than it is to forge a strategy for the future.
In this vein, it is time to seriously
consider a trade-policy option that has been discussed with varying degrees of seriousness
for several decades -- the concept of a GATT-plus. It may well be that this old idea,
based on the WTO's predecessor, the General Agreement on Tariffs and Trade, is the best
solution to the new trade problems made clear in Seattle.
The concept behind GATT-plus, now more
appropriately called WTO-plus, is simple. In essence, a like-minded group of countries
negotiate new trading rules that deepen free trade among them and extend trading rules to
new areas.
A WTO-plus arrangement is similar in
many respects to a large free-trade area. The benefits of the new trade liberalization and
trading rules would be confined to the countries that accepted the WTO-plus framework.
Countries that opted not to be involved
would still enjoy the guarantees set out in the WTO, but not the additional benefits
stemming from the WTO-plus agreement. New members would be allowed to join the WTO-plus
provided they were willing to accept the new disciplines that it provided.
The evolution of the WTO makes this idea
far more attractive than it was in the past. In 1947, the world trading system began as a
relatively small group of like-minded countries interested primarily in cutting tariffs.
As time went by, the trading system's membership expanded and the scope of issues
addressed grew increasingly broad.
Now the WTO claims more than 130
members, with more being added all the time.
In
the near future, a number of countries with quite different perspectives on trade -- like
China and Russia -- are likely to become members.
With this greatly expanded membership,
the WTO can no longer be called a like-minded group. In fact, there is an increasingly
wide gap between the views of developed countries and those of developing countries.
At the same time, the scope of issues
covered by the WTO has greatly expanded. What was once mostly a tariff agreement now
grapples with issues such as protection of intellectual property, trade in services, and
investment. Beyond that, waiting to join the agenda are issues such as labor rights and
the environment.
Simply put, the combination of the
trends toward increased membership and broadened scope of issues make consensus almost
impossible to achieve. The gap between the developed and developing world on issues like
labor rights and investment already seems unbridgeable as developing countries demand more
control over the WTO.
At best, negotiating by consensus in
such a diverse group ensures that the result will be least-common-denominator agreements
that are unlikely to tackle new issues. The breakdown in Seattle demonstrates that this is
no longer just a theoretical possibility.
A WTO-plus would provide an alternative
to break the deadlock. Trading rules could be extended to new areas, like services,
competition policy, labor rights and the environment. It may even be possible to take
initiatives, like slashing or eliminating tariffs in selected industrial sectors.
Such an arrangement is likely to be
attractive to the world's Big Three economic powers, the United States, the European Union
and Japan. It could also appeal to some developing countries, such as Chile.
With a group of this size supporting a
WTO package, there would be powerful pressure on other countries, mostly developing
countries, to accede; the prospect of being excluded from a major agreement would likely
be too great to ignore.
Countries would also be able to accede
when they chose to, which would allow them some flexibility without forcing the rest of
the world to wait.
Within the United States, this option
should appeal both to business groups that favor expanded free-trading rules and to those
on the streets in Seattle who wanted issues such as labor rights and the environment to be
addressed.
A WTO-plus would not be a cure-all.
There are some problems that are essentially disputes among developed countries, such as
the EU-U.S. struggle over agriculture. These will not magically disappear, but they are
not made worse by the movement to a WTO-plus setting.
After Seattle, a bold, new move like
creating a WTO-plus has undeniable appeal. It will doubtlessly be criticized by some
developing countries. In the end, however, the prospect of being left behind may well
prove to be the powerful incentive needed to keep the world moving forward.
Copyright 1999, Journal of Commerce
Join the Conversation
Please log in below through Disqus, Twitter or Facebook to participate in the conversation. Your email address, which is required for a Disqus account, will not be publicly displayed. If you sign in with Twitter or Facebook, you have the option of publishing your comments in those streams as well.
Your tax-deductible gift will help bring promising new voices and ideas into our nation's discourse, and help shape the future of vital public policies.
Join the Conversation
Please log in below through Disqus, Twitter or Facebook to participate in the conversation. Your email address, which is required for a Disqus account, will not be publicly displayed. If you sign in with Twitter or Facebook, you have the option of publishing your comments in those streams as well.