The WTO - A Change in Discourse?

By Sergey Ripinsky, Research Fellow in International Law

After the suspension of the Doha Round negotiations, Pascal Lamy, the Director-General of the World Trade Organization, has made additional efforts to increase the organisation's transparency and engage the public into greater debate about trade issues. What is striking is the degree of his frankness, quite unusual for generally cautious international bureaucrats. When reading his recent lecture, given at the New York University Law School on 30 October 2006, one cannot help noticing a shift in the official WTO discourse. In fact, the ideas expressed by Lamy bear more resemblance to the views of globalisation critics such as Joseph Stiglitz (see his latest book, Making Globalization Work) or some NGOs, than of a hard-core trade liberalisation propagandist, as the WTO has been traditionally perceived.

Lamy acknowledges that the current system of trade rules creates inequality between the developed and developing world in the sense that for many countries increased market access does not result in trade expansion. He points out specific issues that worsen the position of developing countries, such as higher tariffs on finished products than on raw materials, high agricultural subsidies in developed countries, higher transaction costs and difficulties in financing of the entrepreneurial activity in developing countries, their objective incapacity adequately to deal with adjustment problems (in particular unemployment resulting from trade opening) given weak/absent social safety nets, etc.

In fact, Lamy goes as far as expressly to reject the so-called Washington Consensus (an economic concept accepted in the 1990s by the World Bank and the International Monetary Fund that advocates unchecked trade liberalisation) as being unfair for the developing world. As an alternative, he proposes something he calls the Geneva Consensus which would imply the rebalancing of trade rules in favour of developing countries in order to complete 'economic decolonisation'. He spells out some ideas on the content of this new consensus, in particular his 'Aid For Trade' initiative and the removal of agricultural subsidies, but at the same time admits that the WTO is not a development agency and is not fit to deal with all relevant problems.

In light of the Doha Round halt, the increased intellectual honesty and openness of all stakeholders involved is essential in overcoming the frustration of many countries over the negotiations and in re-establishing their trust in the ability of the WTO to contribute to economic development. One hopes that this strategy will bring positive results.

For the full text of Lamy's lecture click here. Follow this link to learn more about the Institute's activities in WTO and international trade law.