SUGGESTION TO WTO DIRECTOR-GENERAL PASCAL LAMY

SUGGESTION TO WTO DIRECTOR-GENERAL PASCAL LAMY

To:               The Right Honorable World Trading Organization Director-General Pascal Lamy   

From:           Athinarayanan Sanjeevraja

Date:            October 22, 2011

RE:               Future Multilateral Trading System

Suggestion:    Strengthen the Multilateral Trading System.    

Good Morning Sir. You were talking about defining elements of tomorrow’s multilateral trading system at Deutsche Bank in Berlin on October 6, 2011. The multilateral trading system has been an enormous contributor to global prosperity by opening up markets around the world. WTO encompasses both positive and negative integration. Agreements to enforce minimum standards, for instance, provide patent protection of at least 20 years duration. WTO goes beyond negative integration, for instance, agreement not to exceed a certain maximum tariff on a product, not to discriminate against foreign goods through domestic consumption taxes etc. If I am not mistaken, WTO did not help the vast majority of the developing economies to increase their market access and exports to extent proposed at the beginning, nor to maximize the benefit of their comparative advantage for their own development. I also accepted that developing economies face significant challenges with regard to the execution of commitments proposals put forward by developed economies. I would state that we really need to give extension period for the transition time in areas where implementation problems have arisen.

The present WTO system is well placed to address several emerging trade policy concerns especially FTA. But it needs to be strengthened further to deal satisfactorily with several of them. My view is that it is highly likely that some FTA’s can be negotiated to further improve the current WTO trade outcome, should be based on purely logic and simple reasoning. It is not good enough just to resort blindly to the views of some existing authorities in a field to make conclusions without carefully examining the assumptions involved or used by those authorities. This is not a sound or scientific approach Mr. Lamy.

In my view that the present multilateral trading system has been a major victim of indifference to international reform because the story of unaccomplished deadlines and repeated collapse of the talks are so well known. I don’t need to be repeated here. The present system has been challenged by the damage done through the proliferation of DTA’s. The most part run head on against the essential principles of reciprocity and nondiscrimination which should rest the entire system. DTA’s have taken attention and political capital that could have been used to improve the multilateral trading system. But DTA’s made the hurdles to achieve multilateral agreements much higher. In addition, DTA’s have introduced unnecessary and costly complications to the practice of international trade through the rules of origin that unavoidably accompany them. As a result the multilateral trading system value and suitability of pursuing effective trade reform has been questioned even by true traders. WTO should be deemphasized as an instrument of trade liberalization and rather that this liberalization should be allowed to proceed along unilateral or preferential routes. In this vision, instead of helping to build a liberal international order, the WTO with its complicated agenda and institutional architecture could be retarding its completion. Again it is wrong. It is true that a country should not need to expect reciprocity to harvest the benefits of freeing its own trade. But unilateral liberalization is not sufficient to provide trade partners with the certainty and stability offered by market openings delivered through the multilateral trading system. It is not help to solve commercial disputes. It has also failed to provide reform in sectors like agriculture, of great interest to producers of developing economies and consumers of developed economies. As a result, multilateral trading system has not made significant progress.  

  

Let me conclude, a key rule of the multilateral trade system is that reductions in trade barriers should be applied to all WTO members. This means no WTO members should be discriminated against by another member’s trade regime. I believe these would improve the outcome of trade negotiations and agreements in terms of global commitments to poverty reduction and sustainability development. I hope that a meaningful effort has to be made when you meet in Geneva for the 8^th WTO Ministerial Conference In December 2011 to redraw the multilateral trading system… and make it more sustainable for all peoples and nations.

Sincerely,

Athinarayanan Sanjeevraja.

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