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USTR Michael Froman: Twenty years in and bogged down, what’s the way forward for the WTO?
January 22, 2015

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U.S. Trade Representative Michael Froman

Having marked its 20th anniversary earlier this month, the World Trade Organization must move quickly from celebrating to soul-searching when some of its members convene in Switzerland this week. Hanging in the balance are negotiations that began in 2001, and if approached with a new perspective, could boost global growth.

To be sure, there is one recent achievement that is worth toasting: the Trade Facilitation Agreement. By streamlining customs procedures, that agreement could add hundreds of billions of dollars to the global economy, with developing economies gaining the most.

But this is the first and only deal that all WTO members have signed during the organization’s two-decades of existence. Whether it represents a brief blip or the beginning of broader trend toward enhanced cooperation and greater gains for the global economy depends on the answer to three tough questions.

 First, can we update our discussions to reflect the realities of today’s global economy?

 The current negotiations, known as the “Doha Round,” began in 2001 and haven’t kept pace with tectonic shifts in the global economy, most notably the rise of the emerging economies.

 Take the example of agriculture, the subsidies for which have proven one of the toughest issues to tackle. In 2008, the proposed solution was that developed countries would cut their agricultural subsidies while developing countries would not.

 But much has changed since that time. Just last year, a group representing agriculture-exporting countries, developed and developing alike, published a report listing the top four users of trade-distorting agricultural subsidies in today’s world, with India first, followed by China, the European Union, and the United States.

 In a global commodities market, this double-standard makes no economic sense. In reality, trade-distorting subsidies from emerging economies have the same impact on global commodity prices as trade-distorting subsidies from developed countries. The United States is willing to wade back into the complex thicket of agricultural trade negotiations, but only if the discussion reflects today’s reality.

 Second, what’s the best way to support development?

 As President Obama has made clear, the United States believes that sustainable development is ultimately grounded in trade and investment.  That’s why the administration is working hard to secure seamless renewal of the African Growth and Opportunity Act, which is the cornerstone of U.S. trade policy with sub-Saharan Africa.

 Not everyone agrees that trade and investment are central to development, and there is a sharp debate on this issue among developing countries themselves. Some of the most successful developing economies are pursuing a range of market opening initiatives, including reducing or eliminating their tariffs. Others stand in staunch opposition to further liberalization and have even raised new barriers to trade and investment.

 We need a debate about trade, investment, and development in Geneva that is just as robust as the debate among developing countries.  Put simply, many of the Doha Round’s primary goals will remain inconceivable as long as a subgroup of countries are dogmatically opposed to the whole concept of liberalization.

 Third, can we handle the truth?

 Depending on the answers to the questions above, the United States can still envision an ambitious outcome to the Doha Round. Certainly, this is the outcome we seek.

 But if the debate over the next few weeks makes it apparent that others will not support an ambitious outcome – in opening markets to manufactured goods, services, as well as the full array of agricultural issues – the time has come to deal with that reality.

 In that event, a more focused and tailored agenda, one that is balanced to reflect the world we all live in today, could present an alternative path forward. While no country should be subject to obligations without its consent, we cannot allow a small group of countries to hold back all those who are prepared to move forward.

 As the Doha Round has dragged on, devolving into stalemate, many countries have logically explored alternatives for achieving results. In the absence of further progress on the multilateral front, the trend toward bilateral, regional, and other initiatives will surely intensify and, if done right, can add momentum to the multilateral system itself.

 One way or another, the time has come for the WTO to move forward. Those who care about promoting sustainable development must not only act, but also take on responsibility commensurate with their current role in the global economy.

 At a time of uneven global economic growth and uncertainty, we cannot afford to squander more years.