Global Business Stands Up For Multilateral Trade At WTO

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The global business community this week re-committed its support to governments in multilateral trade negotiations in the hopes of overcoming the Doha Round stalemate. Business and trade experts from more than 20 countries gathered at the World Trade Organization for a first conference bringing private sector perspectives to international trade.

Conference topics [Agenda doc] ranged from the impact of plurilateral agreements on the multilateral trading system to suggestions of new ways forward for the WTO. One suggestion included reforming WTO decision-making rules and advancing the Doha agenda through enumerated plurilateral agreements.

Launched in December 2011 during the WTO 8th Ministerial Conference, the International Chamber of Commerce Business World Trade Agenda aims to establish a set of global business priorities in multilateral trade negotiations. More than 60 business and trade leaders convened in Geneva from 13-14 March kicking off the process planned to culminate at a Doha Business Summit in April 2013.

WTO Director General Pascal Lamy congratulated the ICC on its initiative. “If you look back at the last 10 years, the voice of business in the multilateral trading system hasn’t been that loud,” he said at the conference media briefing. “Now of course, the crisis has triggered a very different situation, a very different picture. Welcome back.”

Business leaders agreed that in the context of the ongoing global economic crisis, they have an important role to play in ensuring that multilateral trade and investment continue to move forward. Victor K. Fung, chairman of Hong Kong corporate giant Li & Fung and ICC honorary chairman, said at the conference media briefing, “I think this has come at a very crucial time in the world economy. As we all know, protectionism is very much on the rise. I think that we have reached a point where the multilateral trading system really is under as much threat as it has ever been.”

The latest round of WTO trade negotiations began in 2001 and has been blocked in large part due to the “single undertaking” decision-making process wherein nothing is agreed until everything is agreed. The Doha Round includes about 20 areas of trade. For the WTO secretariat, the way forward is by taking small steps. A strategy the business community seems to support.

A New Way Forward

In his opening remarks, Gary Hufbauer, Reginald Jones Senior Fellow at the Peterson Institute for International Economics in Washington, DC, spoke on, “The way forward in the WTO: coupling trade and WTO reform.” The economist detailed his suggestions along with co-author Jeffrey Schott, a senior fellow at the same institute, in a policy brief entitled, “Will the WTO Enjoy a Bright Future?” The brief was distributed to the ICC conference participants in draft form.

In short, the economists argue that, yes, the WTO’s future is bright, as long as it adapts to the needs of today’s international economy.

“I am saying that the WTO has to change a lot, and change some of its rules, otherwise it will become irrelevant to trade negotiations in the future. Because these rules are fatal to doing, what I call, big business, serious business,” Hufbauer told Intellectual Property Watch.

According to the policy paper, “single undertaking” decision-making is a dead end. The economists recommend that policymakers should move forward through selected plurilateral agreements. As countries continue negotiating agreements outside of the WTO framework, concluding agreements such as the Anti-Counterfeiting Trade Agreement (ACTA) (IPW, Bilateral/Regional Negotiations, 29 February 2012) Hufbauer calls for keeping plurilateral agreements inside of the international trade institution.

“The advantage of keeping such deals inside the WTO is that it will be easier for other countries to become members as time goes on. And for countries that are in the plurilateral, they can use the existing dispute settlement system, and other services,” he told Intellectual Property Watch.

While many business and trade experts seem to support the plurilateral path, some emphasised the importance of ensuring that such agreements benefit all member states. WTO Director of the Trade in Services Division, Abdel Hamid Mamdouh, spoke during the conference. Afterwards, he told Intellectual Property Watch that one must be careful with the term “plurilateral approach.”

“There is a plurilateral negotiation with a multilateral outcome, where a subset of the membership would get together in a plurilateral negotiating exercise, but the outcome by way of commitment would benefit the entire membership, i.e., their legal obligations would be applied on a most favoured nations (MFN) treatment basis,” he told Intellectual Property Watch. He cited the WTO Information Technology Agreement (ITA), which opens duty free trade between its 73 member countries, as an example of a plurilateral negotiation with a multilateral outcome. “It’s applied on an MFN basis and all WTO members benefit from the outcome.”

In the proposal put forth by Hufbauer, “conditional MFN will likely serve as a cornerstone for plurilateral agreements.” This would mean that “three-fourths of WTO members must agree to a waiver” and forgo the unconditional MFN principle.

Advancing Negotiations Where Possible

Regardless of the decision-making modalities, moving forward on selected agreements that are already widely supported by member states is seen as a realistic path in the short term.

In Pascal Lamy’s welcome and introduction, he said that given the current Doha situation, negotiations should move forward in a “piece meal” manner and that WTO 8th Ministerial Conference (MC8) ministers have given negotiators the “green light” to do so. Lamy cited the Trade Facilitation Agreement as one deal that negotiators likely could strike.

The agreement is expected to facilitate and increase trading opportunities by expediting the movement, release and clearance of goods. Trade experts say such a deal would be a significant stimulus for the real economy. “All estimates of the cost of processing trade world wide is to the tune of 10% of the value of world trade…. If a Trade Facilitation Agreement was to conclude, 5 years from now, the overall cost of processing trade world wide would go down from this 10% to 5%,” Lamy said.

It is expected that concluding the Trade Facilitation Agreement will figure amongst the ICC’s World Trade Agenda priorities.

Industries represented at the ICC event were wide-ranging, such as transfreight, energy, publishing, micro-finance, inusrance, consumer goods, and tobacco, and were from developed and developing countries.

Although intellectual property rights issues are of key interest to business leaders, it’s unlikely that major IPR recommendations will make the ICC’s list. ICC Secretary General Jean-Guy Carrier told Intellectual Property Watch, “Right now, I would say that it’s not at the top of the list. Simply because there are so many more easily attainable goals.”

Related article here.

Rachel Marusak Hermann may be reached at info@ip-watch.org.

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