RIETI Policy Symposium

Quo Vadis the WTO? The Future of the Doha Round and the Management of the International Trade Regime

Information

  • Time and Date:
    9:45-17:55, Monday, August 6, 2007
  • Venue:
    Aso-no-ma Room, Tokai University Kouyu-Kaikan , 3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo (33rd floor of Kasumigaseki Building)
  • Language:
    Japanese / English (with simultaneous interpretation)

Summary of Proceedings

Opening Remarks

The theme of this symposium is, "Quo Vadis the WTO?" This expression is derived from a famous story told in the New Testament apocrypha. Peter, the apostle of Jesus, is fleeing the city of Rome where the persecution of the Christians is becoming increasingly severe. As Peter walks away from Rome, he sees Jesus coming from the opposite direction. Surprised, Peter asks, "Lord, where are your going?" (Domine quo vadis ?) Jesus responds saying, "I am going to Rome to be crucified anew." Peter then returns to Rome with the knowledge that a martyr's death awaits him. It cannot be simply concluded that the World Trade Organization (WTO) is advancing on the road to martyrdom, but it is quite certain that the WTO system is approaching a period of major trials and tribulations. Director-General Pascal Lamy has been calling for the full resumption of negotiations in September of this year, but prevailing conditions make it difficult to foretell the outcome of these efforts. While the Doha Round remains stalemated, countries throughout the world have been busily negotiating free trade agreements (FTAs) and economic partnership agreements (EPAs). Against this backdrop, I believe it is extremely significant that we have gathered here to discuss the WTO and the future of regional economic integration. Participants in this symposium include researchers involved in projects on regional economic integration, as well as experts from Geneva, Brussels, New Delhi, and Seoul.

When it was still known as the Research Institute of International Trade and Industry, the Research Institute of Economy, Trade and Industry published a monograph (1990) concerning the current conditions and outlook for regional economic integration. This was also a time of considerable uncertainty surrounding the future of multilateral trade negotiations under GATT. The emergence of "fortress Europe" appeared threatening, and much concern was being expressed with the move toward FTAs by the United States and others. The views advocated at the time can be summarized as follows. First, regional integration must be consistent with GATT, and Japan should insist that regional integration in all parts of the world remain consistent and compatible with the GATT framework. Second, a very cautious stance must be taken on the question of whether Japan should promote policies for regional economic integration as an alternative to maintaining and strengthening the multilateral trade system. However, with the start of the 21st century, Japan was overwhelmed by the wave of FTAs and EPAs that were being established between countries and regions throughout the world. As a result, more recently, Japan has come to take an active position in promoting regional economic integration. Notwithstanding these initiatives, unless Japanese policies for regional economic integration succeed in overcoming a number of obstacles, there is a real possibility that Japan may become increasingly inward-looking. Should that happen, the question of "Quo Vadis the WTO?" would be replaced by cries of "Quo Vadis Japan?" reverberating around the world. In this symposium today, we will be addressing the issue of the future of the world in the context of the WTO and regional economic integration acting as the two wheels of the cart. We will also be considering future directions for Japan's trade policies. I look forward to active discussions on these topics.

"Introduction: The Status Quo of the International Trade Regime"

Since its start in 2001, the WTO Doha Round has experienced a very difficult passage culminating in a declaration of indefinite suspension of negotiations last summer by Director-General Lamy. Though the talks have since been resumed, the outcome cannot be easily predicted due to the continued three-way deadlock involving agricultural subsidies, agricultural tariffs, and tariff reductions for non-agricultural products. While prolongation of the round process is inevitable in light of the extension of the scope of GATT/WTO law, the truth of the matter is that the Doha Round negotiation package has shrunk to the point where it now only covers the issues of market access and rules.

What are the reasons for the difficulty in round negotiations? One factor is that, due to growing diversity in membership, the WTO has lost its characteristic as club goods primarily for developed countries. Consequently, consensus building has become increasingly difficult. Furthermore, the adoption of an export-oriented growth model and the active pursuit of liberalization policies do not accord with the national interests of many of the developing countries that are playing an increasingly influential role in the negotiations. The resulting erosion in the WTO's rulemaking functions represents a new and unprecedented experience for the international community.

Against this backdrop, the international community has turned to regional trade agreements (RTAs) as one of the paths to maintaining and promoting free trade. As a result, the number of such agreements has increased rapidly since the start of the new century. RTAs have not only extended their scope of discipline to the liberalization of "WTO-Plus" agreements in trade in goods and services but have adopted more stringent trade rules than the WTO. Furthermore, they have entered into areas where WTO coverage remains inadequate, such as investment. The increase in RTAs has given rise to a number of questions in the management of the international trade regime. That is, how far has the legalization process advanced in treaty-based RTAs? And, can such a legislative framework function as a substitute for the WTO? Moreover, in a world where the WTO and RTAs exist side by side, what systems and institutions should be created for mutual interaction between the two?

The WTO's dispute settlement procedures can be considered as another means to maintaining and promoting free trade. Even while rulemaking has stagnated, the WTO's Appellate Body has continued to perform the critical function of maintaining the international trade order through the interpretative process of clarifying the meaning of applicable provisions of the WTO agreement. However, at times, this process has been criticized for constituting legislation through judicial law-making or judicial activism. Is this criticism justified? And, how will new dispute settlement procedures affect the Round negotiations?

Such approaches to the management of international trade policies that substitute for market-opening negotiations are useful, but ultimately they are only second-best measures. Should the world return to the original objective of maintaining and strengthening the multilateral trade regime through international cooperation and speedily and effectively achieving trade liberalization on a global scale, revitalization of the WTO Round process remains an essential requirement.