Prospects for the Doha Round -Major Challenges in the Multilateral Trading System and their Implications for Japan-

The session began with a presentation by YAMAMOTO Yoshinobu, Professor, Aoyama Gakuin University, School of International Politics, Economics and Business, titled "The WTO and Global Governance -- Overcoming Obstacles and Confrontation."

I will first report on the relationship between the concept of global governance and the World Trade Organization. In doing so, I consider the following points. First, issues such as intellectual property rights and investment, the so-called trade-related issues and the "trade and..." issues, which have come to the fore since the launch of the Uruguay Round. Second, the relationship between nongovernmental organizations and concepts such as accountability and the WTO. Third, the increasing juridification of the WTO as compared to the General Agreement on Tariffs and Trade or to other international organizations and the limits to the WTO as a system of rules when it comes to its relationship with other mechanisms. And finally, in view of the above three points, I will analyze the WTO from the standpoint of global governance and take up the question of the extent to which the concept of global governance is responsible for the lack of progress in the Doha Round. My discussion will proceed as follows. I will begin by examining the WTO and GATT from based on the concept of international regimes, then discuss moves toward global governance in these international regimes, and finally look at the limits, or the advantages and disadvantages, of such a shift toward global governance.

International regimes are established to achieve a common objective within a certain problem area. In terms of the GATT/WTO regime, free trade is its principle, and its norms are economic efficiency and full employment based on this principle. Furthermore, as a means to realize this common objective, there are rules for action, such as most-favored nation and national treatment; constitutive rules concerning higher level issues such as who the actors are; rules regarding sanctions in the event of violations, such as dispute settlement procedures; and rules concerning collective decision-making, such as the principles of consensus and the single undertaking. On these points, the GATT/WTO regime has been a typical international regime.

In recent years, however, this international regime has undergone changes. These changes can be discussed based on the concept of global governance. Global governance is a framework under which diverse actors cooperate in various ways to resolve global issues. In terms of philosophy or ideology, global governance falls in between globalization and anti-globalization. In other words, while it recognizes the various problems that crop up as a result of globalization, the position of global governance is that such problems are not structural or unsolvable, but that they can be settled through the cooperation of sovereign states and people. Global governance looks at the mechanisms and means of fostering such cooperation. As for the GATT/WTO regime, the scope of the issues it handles has broadened from trade liberalization per se to matters concerning development and the environment; the multiple norms and principles with which it must grapple coexist, and, at times, stand in opposition to one another. In addition, the greater number and variety of actors, particularly developing countries, has led to a widening gap among member nations. And while issues such as development and accountability have cropped up on the one hand, we have seen the entry of new actors such as nongovernmental organizations, which are also interested in resolving these issues. Furthermore, as the scope of the issues has expanded, new mechanisms such as capacity-building, which are designed to deal with these issues, have been introduced. These mechanisms are slightly different from the traditional method of resolving issues through juridification.

The causes for the shift toward global governance are globalization -- the cross-border movement of goods, capital and people -- and the embrace of common norms and values such as human rights around the world. While the shift toward global governance has produced some positive effects, there is a need to define limits between free trade and other issues, in other words, a need to make adjustments among various problems. John Ruggie once pointed out the need to harmonize free trade under the GATT regime with domestic social welfare policies using the concept of embedded liberalism. I believe the current moves toward global governance constitute the second phase of embedded liberalism. In other words, we face the challenge not only of balancing free trade with domestic stability, but of dealing with international problems such as the environment in harmony with principles of free trade, and of dividing the work among the parties involved to implement policy allocation. Meanwhile, the growth of the WTO's membership and the formation of coalitions among developing countries are making the negotiations themselves very complex.

As for the issue of why the Doha Round is deadlocked, I must first question whether it was really the right choice to take up development as a central theme at the WTO. When we look at the ministerial declarations of the Doha Round, we can see that while development was taken up squarely at the outset, more conventional issues such as services trade and agriculture have since taken center stage. The talks are currently in a lull, but be it agricultural or non-agricultural issues, or the issue of services in trade, we are seeing traditional conflicts of interest among member countries and it appears that the issue of norms such as the environment and equity between the North and South has receded into the background. In this sense, the stalemate in the Doha Round at this stage is more the result of traditional conflicting interests among member countries than due to the shift toward global governance.

From the viewpoint of the shift toward global governance, the deadlock in the Doha Round, or the WTO itself, is the result of efforts to deal with various problems that come with global governance, such as the diversification of actors, the widening of the scope of issues addressed and the broader range of solutions. Regional arrangements and free trade agreements, which are a sort of "counter-global governance," are a typical response to this problem: Compromises reached by two or three parties make it possible liberalize trade and to prevent the actors from becoming too diverse. Furthermore, in order to keep the areas under discussion from expanding, adjustments are made on a bilateral basis. Various mechanisms other than trade rules are also being introduced bilaterally or trilaterally. According to the "bicycle theory," free trade needs to always move toward greater liberalization, but it can be argued that amid the stalemate in the Doha Round, these bilateral trade liberalization agreements are pushing the pedals of the bicycle at the moment. As for the issue of the relationship between the WTO and China, there is a gap between the issues tabled at the Doha Round and those that China (and China's trading partners) is interested in, and I believe this is one reason why the Doha Round has lost steam and has failed to attract political interest. As for the matter of how to reinstate the position of the WTO, there may come a time when regional trade agreements reach an impasse, as they have the inherent potential to trigger political disputes since they are discriminatory. In the future, I think it will also become necessary for the GATT/WTO regime to come up with a mechanism that actually produces tangible action toward further liberalization via smaller negotiation packages.

In conclusion, the GATT/WTO regime is shifting toward global governance as the issues it addresses diversify, as its actors become more varied and as the means at its disposal increase. At the same time, we see the phenomena of counter-global governance, such as regional trade agreements. However, when we look at the international community as a whole, I believe we are moving toward global governance, albeit gradually.

In response to the above presentation, AKANEYA Tatsuo, Professor, Graduate School of Humanities and Social Sciences, University of Tsukuba, made the following comments.

The debates regarding global governance taking place at United Nations-linked organizations propose that the international economic order be reviewed from a more comprehensive standpoint including politics, economics, society and the environment based on a social-democratic ideology. In contrast, the concept of global governance put forward in Professor Yamamoto's report is very academic and technical, and I had the impression that it was free of any political ideology.

The WTO as an international regime is based on the principles of liberalism, but it appears that the global governance approach generally places priority on the U.N. and focuses on such issues as social welfare, human rights, income distribution and the environment. I believe we can expect a conflict in values and norms if we change the WTO system from a viewpoint of global governance. What do you think?

It seems that many NGOs and civil society groups that are actively involved in the WTO regime and the Doha Round are generally opposed to globalization. How do you think of their position?

If we increase the number of actors taking part in the WTO negotiations, it will make it difficult to achieve progress in the Doha Round. However, if we exclude them, democratic accountability will be undermined and it may become difficult for legislatures of member countries to ratify agreements. How do we allow involvement of NGOs and civil society groups in such a way that the Doha Round can move forward, while at the same time incorporating the demands of global governance?

ABE Kenzo, Professor, Graduate School of Economics, Osaka University, then made the following comments.

I found Professor Yamamoto's presentation especially interesting on two points -- that the conclusion of the Doha Round is being impeded more by traditional protectionism and conflicts of interest between the North and South than by the shift toward global governance; and his suggestion that smaller multilateral negotiations be launched in the short to medium-term while broader issues are dealt with separately in the long term. Am I correct in interpreting your presentation in this way?

What are the specific grounds for your argument that traditional protectionism is a larger problem than the obstacles brought about by the shift toward global governance?

Regarding the relationship between the shift toward global governance and the increasing difficulties in the negotiations, isn't it also possible that expanding the scope of the negotiations and diversifying methods can make negotiations easier?

Based on the economic theory of policy allocation, it is undesirable for trade measures to be used to resolve problems related to the environment or labor standards, and I believe it is better for the WTO to maintain its principles of non-discrimination and national treatment and not get involved in issues such as the environment and labor standards.

Professor Yamamoto pointed out that there should be a distinction between issues to be addressed in the short and medium term and those that should be dealt with in the long term, and that problems such as the environment and labor standards that cannot be handled in the short term should be dealt with in the long term. But is it really possible to solve difficult problems by putting them on the back burner?

KIMURA Fukunari, Professor, Faculty of Economics, Keio University, then made the following remarks.

The problem that arises as a result of the shift toward global governance is that the principles and norms of governance become confused and blurred because of an expansion in three directions: diversification of issues, a wider variety of actors, and a broader range of measures. This makes it necessary to address these problems using principles and norms at a higher level, but the GATT/WTO regime has yet to reach this stage, and I took your presentation to mean that it is important for the Doha Round to first resolve the issues that are close at hand. Am I correct?

I believe there are many issues, such as development and trade, that can be resolved as an extension of existing economic theory, but what level of principles and norms do you mean when you say that principles and norms need to be reviewed and expanded? If we are really seeing a situation where principles and norms are not shared among the participating actors, the issue is then the need for a higher level of principles and norms. But what, exactly, might those be?

Regarding the approach toward development issues, Professor Yamamoto mentioned the possibility of coordinating with other international regimes or with global governance, but is such coordination possible? Is there some logic or paradigm that can mediate such coordination?

Is the GATT/WTO regime an incomplete form of global governance and if so, should it strive for a form of global governance that embraces everything, or is the realization of global governance in the end an impossible goal, which makes it necessary to build more limited norms on the premise that multiple forums exist to address these issues?

Professor Yamamoto responded to the above comments as follows.

As for the issues that Professor Kimura pointed out -- how to deal with the shifting principles and norms that come with the move toward global governance; whether I believe in a form of global governance that embraces everything; or whether there should be a dividing up and assigning of norms and principles based on adjustments among several forums -- I am clearly an advocate of the latter. Therefore, as Professor Akaneya pointed out, I take a different position from those who support a very radical form of global governance centered on the United Nations.

As for Professor Abe's comment on whether issues can be resolved by deferring difficult problems, the purpose of this presentation is to highlight the fact that, based on the premise that the international community is undergoing major change, existing forums require comprehensive reorganization, and that if such a reorganization is to be undertaken, it is impossible to deal with all the issues in a short period of time and that a more long-term view is necessary.

The most important thing regarding the shift toward global governance is the problem of how to sort out conflicts between norms. When we consider the conflicting norms between anti-globalization and the GATT/WTO regime of free trade, the realization of a metanorm is impossible, and the problem is that if we are to discuss free trade, we need to consider how to persuade people of its validity to maintain and expand the principle of free trade.

As for Professor Akaneya's comment regarding the use of the concept of global governance, I employed the concept in this presentation because I believe it can be used analytically to describe one aspect of the situation the WTO finds itself in. As for the argument that advocates changing the international community from a social-democratic point of view, I must say I doubt whether that can be realized. I believe things that can be brought in analytically should be included, and that things that cannot be discussed fruitfully should be treated as such.

Two questions were posed from the floor.

As for the concept of embedded liberalism, some argue that the free trade system escaped this process of embedding during the transition from the GATT to the WTO, and that this, in turn, is giving rise to criticism of the WTO. What do you think of this argument?

What, specifically, is the second phase of embedded liberalism that you mentioned in your presentation, and what makes it occur?

Professor Yamamoto responded as follows.

I agree to some extent with the argument that the free trade system escaped embedding with the shift to the WTO, but the purpose of my presentation was to put forth the hypothesis that we need a stabilization mechanism for the international community as a whole amid a situation where the entire world has, in a sense, become one society after the end of the Cold War led to the disappearance of opposing camps, and that the second phase of embedded liberalism may be one where liberalization among countries and stabilization of the international community are simultaneously compatible.

A third question was then taken from the floor.

What is currently being discussed concerning the issue of international wealth distribution, and how should the matter be considered from a realistic point of view?

Professor Yamamoto gave the following response.

In recent years, discussion on this point at the GATT/WTO has been conducted based on the principle of distributive justice. However, it is difficult to debate distributive justice solely in terms of trade, and I believe a system that goes beyond trade is necessary. I also believe that the concept of democratic accountability that Professor Akaneya commented on is an issue of distributive justice on the political front. However, as to this concept, I believe it is necessary for new actors not to simply participate but to also discuss the meaning of accountability.

A final question was then raised from the floor.

It appears the general trend within the WTO is to embrace just about everything that involves economic activity, but isn't Professor Abe's argument that environmental issues should not be dealt with through trade policy but rather through domestic policy too narrow, in view of the thinking prevalent at the WTO?

Professor Abe responded as follows.

My argument is not that the WTO should totally ignore environment and labor standards issues, but a narrower one that discusses the need to consider which policies to address in terms of policy allocation. For example, if trade dealings themselves are adversely affecting the environment, it may be justified from the viewpoint of economics to take some sort of trade measures and, in such exceptional cases, we should allow for trade measures that improve the environment.