The World Trade Organisation is about to appoint its first-ever female head. But as it prepares to write a new chapter in its history, the multilateral is on the verge of becoming a thing of the past. Once considered an indispensable tool for drawing countries towards the economic model of the ‘free world’; the multilateral body is now seen as a threat to the hegemony of the US and its allies over the global economy.
Washington’s biggest peeve is Beijing. It accuses the world’s second largest economy, of not playing by the rules because it excludes US tech giants like Facebook, Twitter and Google from its market. It also provides subsidies and other state support to many of its industries, helping them gain an edge over exporters in other countries. There’s hardly any doubt over either of these allegation. But using this complaint as rationale for sabotaging and ultimately shutting down the enforcer of global free trade, is ironic on at least two counts; firstly, one of the main functions of the WTO is to dispose of exactly such complaints. Secondly, both the US and the EU are guilty of providing very similar support to many of their own industries, to the detriment of developing countries.
Regardless of any other country’s position on the matter, the writing is seemingly on the wall for the WTO because the US has decided the multilateral has lost its utility. Its much-vaunted dispute resolution mechanism has already been rendered useless because Washington has blocked the appointment of new arbitrators. What countries like Pakistan can do, is assess whether or not the WTO has proven advantageous to them, and what they intend to do to safeguard their interest when the trade body is either extinct, or rendered dysfunctional.
The dispute resolution mechanism is slow and often times, inconclusive. Less than one-third of the 596 cases brought to the platform have been resolved. This number includes cases that were terminated because the underlying conditions changed before a decision was announced. Proceedings have not even commenced on another 175 cases because they are still stuck at various stages of consultations.
Over the years, Pakistan has been involved in 22 disputes that were registered with the WTO. The country is the complainant in five of these cases. It’s the respondent in another four, while it is a third-party in the remaining 13 cases. Of the nine disputes, in which Pakistan is a direct party, only one has been decided in its favour. Five of the cases are still languishing at various levels of the WTO’s dispute resolution mechanism. The decision in one case has gone against Pakistan while it has opted for a settlement in three matters. Simply put, the multilateral’s dispute resolution mechanism has not been of any significant advantage to Pakistan.
Another stated function of the WTO, was the uplift of developing economies, like Pakistan. The Doha round which was held in 2001 concluded by promising to prioritize these economies so that they could lift millions of people out of poverty and develop more balanced and sustainable trade relations with the developed economies.
Nearly two decades later, there has been little beyond lip service to this objective. In 2017, Washington handed out $11.5 billion to US farmers. This year, the cash handouts have reached more than $32 billion. These funds are in addition to the US Agriculture Department’s discretionary budget of $24 billion. Likewise, the EU has raised assistance to its farmers every year since it committed to stop doing so. Effectively these bailouts for farmers of rich nations work against agriculturists of Pakistan and other developing countries.
Instead of helping the country, the WTO has also failed Pakistan at its hour of need. 20 million people were displaced by the floods that swept across the country in 2010. Damages exceeded $10 billion and Islamabad adopted a ‘trade not aid’ approach and sought a short-term relaxation on trade rules to be able to help its people and economy recover. But the trade body did not grant these concessions until two years after the disaster. Much of that delay can be attributed to India. New Delhi initially objected to duty waivers for Pakistani exporters. But even after it withdrew its objections, the WTO took months to finalise arrangements that eventually led to a net benefit of about $80 million a year to Pakistan.
While the global trade regulator has little to show in terms of helping Pakistan’s economy develop; the demise of the WTO will present the country with a host of new challenges. In this era of rising trade protectionism and unilateralism, bilateral diplomacy is becoming even more crucial. But building the requisite capacity is expensive and time consuming.
Case in point, New Delhi’s ongoing effort to get basmati rice registered as an exclusively Indian product in the EU. Besides lobbying dozens of members of the European parliament and other EU officials, the Indian government is engaging academicians and other experts to literally create research papers, newspaper articles and even entire books dedicated to trying to prove that basmati rice doesn’t grow on the other side of the Line of Control. It remains to be seen whether the first-ever female head of the WTO can do what many men before her have failed to do, make it a fair and functional trade regulator. But it’s clear, Pakistan would be best served preparing for life beyond the WTO.