From Drift to Deals: Advancing the WTO Agenda

Gary Clyde Hufbauer (PIIE), Euijin Jung (PIIE), Sean Miner (PIIE), Tyler Moran (PIIE) and Jeffrey J. Schott (PIIE)

Report to the ICC World Trade Agenda. Data disclosure: The data underlying the figures in this analysis are available here.

June 1, 2015

EXECUTIVE SUMMARY

After seven years of stagnation, the World Trade Organization (WTO) received a burst of inspiration at the 9th Ministerial Conference held in Bali in December 2013, with the completion of the Trade Facilitation Agreement and several other accords. It now remains to be discovered whether WTO members will apply the momentum gained in Bali to a broader agenda, launched at the 10th Ministerial Conference (MC10) to be held in Nairobi in December 2015.

To restore itself as a central negotiating forum, the WTO needs a Grand Bargain. The advanced countries should concede the priority demands of developing countries with respect to the Doha Development Agenda – on agriculture and non-agriculture market access (NAMA). In return, developing countries should agree that subsets of WTO members can enter into plurilateral agreements within the WTO framework, provided the agreements are binding only on the signatories. The Grand Bargain would enable the WTO to pursue 21st Century pacts that keep policymakers, business leaders, and the broader public engaged, while answering the legitimate demands of developing members to reduce longstanding distortions to farm trade and manufactures.

This report outlines a work program to carry out the Grand Bargain. While most of the program deals with newer issues, the starting point is agreement on the “traditional” issues of greatest interest to developing countries.

On agriculture, advanced countries should make serious concessions. They should take a lead in eliminating agricultural export subsidies; give duty-free, quota-free (DFQF) market access to Least Developed Countries (LDCs); and reduce their amber box subsidies to the highest annual level paid out since the launch of the Doha Round. The United States should liberalize its agricultural tariff-rate quotas so that they can be filled by willing suppliers.

On NAMA, the advanced countries should accept the tariff formulas proposed in July 2008, even though those formulas require very limited cuts by key emerging countries, such as Brazil, China, India, and South Africa.

In return for these significant concessions, developing countries should agree that new plurilateral agreements can be added to the WTO framework without the unanimous consent of all 161 WTO members, and even without three-quarters majority approval. This constitutional change would acknowledge that the WTO’s greatest potential lies in liberalizing entirely new realms of global commerce, even though not all WTO members are prepared to liberalize at the same pace.

This report outlines nine trade realms that await liberalization and it offers recommendations for frontier agreements on several topics. At or before the Nairobi Ministerial in December 2015, WTO members should adopt the Trade Facilitation Agreement as a protocol to the WTO. This will require the affirmative vote of at least 107 (two-thirds) of the 161 WTO member countries, but to show new resolve, members should unanimously adopt the TFA. Prior to the Nairobi Ministerial, China, Taiwan and Korea should settle their disagreements (centered on flat panel displays) as to the content of the upgraded Information Technology Agreement (ITA). This will give a second “deliverable” to Nairobi, namely the ITA2.

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Gary Clyde Hufbauer Senior Research Staff
Euijin Jung Senior Research Staff
Sean Miner Former Research Staff
Tyler Moran Former Research Staff

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