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WTO REFORM Uri Dadush Carnegie Endowment for International Peace September 15, 2009 WTO Reform: Time to Start is Now • WTO is an essential plank of globalization • But has become sidelined on liberalization • Needed: a more flexible approach to negotiations • Reform process should start with coming Ministerial in Geneva WTO, an essential plank of globalization • Some 370 disputes filed • Accession of China and 24 other countries • Agreements on Telecommunications and Financial Services • Aid for Trade Sidelined on Liberalization World Real GDP and Trade Annual Percentage change 20 15 10 World Trade 5 Real GDP 0 -5 -10 -15 1994 1996 1998 2000 2002 2004 Source: IMF, World Economic Outlook, April 2009 2006 2008 Why so difficult?: Combination of Factors • Tougher issues (agriculture) • Increased complexity (services) +++++ • More numerous and diverse participants • Increased influence of large players (India, Brazil) • Increased influence of groups (LDCs) +++++ • Single Undertaking and Consensus Rule Reform Agenda Outline 1: Towards Plurilaterals • On single issues or small number of linked issues • Criteria for minimizing adverse effects on nonmembers • Preferential treatment for poorest countries • Criteria for accession of non-members • Subject to dispute settlement Reform Outline 2: Harness RTAs • Don’t frown on (or fight!) all RTAs, but promote well designed ones • Well designed RTAs have low external barriers, simple and liberal rules of origin, and are broad and deep in their coverage Reform Outline 3: Assist members design own trade reforms • Runs counter to mercantilist ethos of trade negotiators, yet…. • Most trade reform is autonomous • WB and IMF regularly engaged in advising countries without old fashioned conditionality • Can be done while retaining some negotiating chips (bindings) • Trade Policy Reviews a good instrument Reform Outline 4: Opportunistic Multilateralization • Recognize that current “multilateral” agreements are rife with exceptions • Extend “flexible geometries” (plurilateral and regional) • Take modest steps to bind pre-existing liberalization • Bind in specific sectors WTO Reform: Time to Start is Now • WTO is an essential plank of globalization • But has become sidelined on liberalization • Needed: a more flexible approach to negotiations • Reform process should start with coming Ministerial in Geneva