If an organization today must be nimble and agile, the World Trade Organization better watch out. And why not? Its bulk and slow pace frustrate many and have led countries to form fast-acting, regional trade blocs, in effect questioning the WTO’s moral authority and its need to exist. As this lawyer and experienced international trade negotiator describes, the WTO must meet three organizational challenges if it is to regain its influence.

Regionalism and global norms

Regional trade agreements are cropping up everywhere, with new negotiations being announced almost every day in some part of the world. Are these regional deals undermining the paramountcy of the World Trade Organization? And what is the effect of these splinter agreements on the quest for a system of universally-applicable trade rules? This article looks at the impact of regionalism on the multilateral trading regime.

High hopes after the Uruguay Round

In the rush of enthusiasm after the conclusion of the Uruguay Round in 1994 it looked like the world was embarking on a new era. There were predictions that the newly-created World Trade Organization would be the paramount global institution – a beacon of stability and order in an otherwise chaotic world. But those days have passed and today, the WTO is beset with problems.

The legislative arm — the WTO General Council and its committees that oversee trade negotiations — seems incapable of moving forward. The current Doha Development Round is stalled. There is anxiety in Geneva about finding a formula for completing the Round by the end of 2006, two years behind the original schedule.

On the dispute settlement side, decisions by WTO panels are not enforced, as governments equivocate endlessly on implementing WTO findings, either through stonewalling or a seemingly interminable system of appeals.

Partly in frustration with this state of affairs, governments are turning away from the WTO and resorting to preferential trade deals between and among themselves. At last count, there were some 300 of these regional agreements either in force or in various stages of negotiation.

Regional deals are, of course, quintessentially preferential in nature. The European Union and the NAFTA are two leading examples, and there are hundreds of others, large and small. These kinds of agreements used to be the exception. But they are rapidly becoming the main feature of international trade in the 21st century.

What are these regional deals are doing to the fundamental role of the WTO and the principle of non-discrimination, the bedrock of the post-World War II international trading regime? Some observers are suggesting that the WTO will face a diminished role in the face of unrelenting regionalism. Let’s look at this more closely.