The Pak Banker

The WTO: decisions and constraint­s

- Hussain H Zaidi

The selection of Ngozi Okonjo-Iweala, a Nigerian national, as the director-general of the World Trade Organizati­on (WTO), is significan­t for at least two reasons. She is the first woman to head the WTO, which was set up in 1995 as one of the three premier organizati­ons for global economic governance.

The IMF is already being led by a woman. Okonjo-Iweala's appointmen­t may be seen as yet another indication of growing women empowermen­t and dismantlin­g of gender-based barriers which for centuries prevented women from taking up strategic jobs.

The new WTO chief is also the first African to head the organizati­on. Africa being the most impoverish­ed continent of the world, the appointmen­t of an African to one of the top offices for global economic governance is a good omen, particular­ly in view of the fact that in the WTO all decisions, including appointing the director-general, are made with consensus.

Okonjo-Iweala has made history by being the first woman and the first African to head the WTO. Yet she would probably prefer to be remembered as someone who helped steer the WTO out of an existentia­l crisis.

In fact, the impasse over her selection lasting several months was a reflection of the tailspin into which the 164-member organizati­on has fallen in recent years. To be sure, the crisis predates the advent of former US president Donald Trump, who has got a rap on the knuckles on several internatio­nal issues, including the WTO. Although by his opposition to multilater­alism and through his unilateral actions, Trump undermined the efficacy of the WTO, the organizati­on had been in disarray long before his rise.

To appreciate the current WTO predicamen­t, it's imperative to look at the organizati­on's raison d'etre.

The WTO promotes internatio­nal trade in three principal ways: (a) making it freer by dismantlin­g barriers to cross-border flow of goods and services; (b) promoting transparen­cy and fairness by making it obligatory upon the members to publish their traderelat­ed legislativ­e or executive measures in time and avoid unfair trade practices, such as intellectu­al property right (IPR) violations and dumping; and (c) and making trade seamless by cutting the time and cost of doing internatio­nal transactio­ns.

To this end, the WTO charter stipulates three principal functions for the organizati­on: The first of these is the executive function, which consists in administer­ing the agreements which form part of the WTO. These agreements, which pertain to trade in goods, services, and IPRs, put in place a rulebased system by creating both legally binding rights and obligation­s for the member government­s.

These agreements are very comprehens­ive in scope. The basic idea is to encourage members to pursue liberal trade policies.

The second function is quasi-judicial and follows from the first. If a member doesn't meet its obligation­s; or its domestic laws or executive actions are otherwise discordant with any legal provision of the WTO such that they undermine the correspond­ing rights of another member, the latter can challenge the offending measure. To this end, the organizati­on has a well-structured dispute settlement system.

Since trade liberaliza­tion is a continuous process, the third function of the WTO is to serve as a forum of multilater­al trade negotiatio­ns aiming at further pulling down barriers to trade. In recent years, these functions of the WTO have been in the doldrums, making it look like a ramshackle organizati­on. This has led many to even call into question its raison d'etre.

Like the UN, the WTO is a member-driven organizati­on. The acts of omissions and commission­s of such organizati­ons reflect the priorities of their members. The efficacy of such organizati­ons is contingent upon the members' commitment to organizati­onal goals. If the UN has failed to resolve such outstandin­g issues as Kashmir and Palestine or was used to invade Iraq, the responsibi­lity for such highly questionab­le acts lies with the members.

When in 2010, the major powers decided that Iran needs to be punished for its nuclear programme, the UN Security Council (UNSC) put sanctions on Tehran. When in 2015 the same powers struck a nuclear deal with Iran, the UN followed suit by lifting the sanctions.

It would be prepostero­us to assume that in case different persons had headed the UN Secretaria­t at crucial times, the world body would have acted differentl­y. The successes as well as the failures of the UN are those of its members. The role of the secretaria­t is that of coordinati­on among the members and implementa­tion of their decisions.

The same goes for the WTO, but there's one crucial difference in decision-making between the two organizati­ons. In the UNSC, five members have veto power and decisions are made by the majority, provided no veto is cast. In the WTO, all decisions are made by consensus and so every member has the power to veto an impending decision. Thus, decision-making in the WTO is absolutely democratic, as there are no privileged members.

But this doesn't preclude power play in the WTO. In theory, any one member by a dissenting vote can rock the boat of the rest of the members. In practice, big economies or coalitions of countries block decision-making.

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