WASHINGTON, Sept 16—The languishing Doha Round of global trade talks elicits questions about the limitations of the World Trade Organization, just as economic crisis and burgeoning protectionist pressures demonstrate the urgency of strengthening trade rules. In a new policy brief, Uri Dadush explains why the WTO needs to be reformed to be effective and to remain relevant.

The WTO is increasingly bypassed in trade reform by unilateral, bilateral, and regional processes, and no new liberalization of trade in goods has come from multilateral negotiations since the institution was founded in 1995. Dadush examines the calls for change and outlines the questions that must be resolved for a successful reform process that will safeguard world trade.

Key Conclusions

  • The WTO must adopt a more flexible approach to trade negotiations, tailored to the needs of individual countries and groups. The institution should move beyond multilateral, all-or-nothing negotiations that are bearing little fruit and find ways to leverage opportunities where liberalization is taking place.
  • Though critical for the WTO’s credibility and to capitalize on eight years of negotiations, a conclusion of the diluted Doha Round will not negate the need for reform. Nor should discussion of reform wait until after the Doha Round has been completed—it might actually encourage progress.
  • A formal discussion about reform should get underway during the WTO’s ministerial meeting in Geneva in November.
  • The WTO is nowhere to be found in several areas of crucial concern, including food security, international financial regulation in the wake of the global financial crisis, and climate change.

“Since its inception in 1995, the World Trade Organization has been the guardian of stability and predictability in world trade, but it has failed to fulfill its promise as a source of new trade rules and liberalization,” writes Dadush. “Urgent issues have come to the fore with the crisis, including government procurement and financial regulation, and these are issues on which the WTO could be making major contributions. However, it is unrealistic to ask an organization to tackle major new challenges when its ability to deliver on such a large part of its core mission is unproven.”

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NOTES

  • Uri Dadush is director of Carnegie’s International Economics Program. He previously served as the World Bank’s director of international trade for six years and before that as director of economic policy for three years.
  • The Carnegie International Economics Program (IEP) monitors and analyzes short- and long-term trends in the global economy, including macroeconomic developments, trade, commodities, and capital flows, and draws out policy implications. The initial focus of the Program will be the global financial crisis and the policy issues raised.
  • The International Economic Bulletin draws on the expertise of Carnegie's global centers to provide a candid view of the economic crisis and its political implications. Addressing the momentous challenges of the economic downturn will require objectivity, and the ability to analyze the political dimensions of reforms around the world.