Geoffrey HalePolitical Science 3170

The University of LethbridgeOctober 14, 2010

What is the WTOOrganizational Structure and Governance

Facts, myths, and theoretical insights.Canada’s Evolving Role at the WTOTrade “Clubs”, Canada and the WTO

Other major governance issuesBudget – distributed in proportion to member countries’ share of

global trade – EU > 40%; US: 13.5%; China: 5.9%; Canada 3.36%Total Budget - 189 MM CHF $C 180 MM.

Decision-makingBy consensus – not unanimity (except for changes to general

principles guiding WTO), but not against opposition of major trading power.

Usually requires “log rolling” among major nations, coalitions¾ vote on interpretations of WTO rules, waiving disciplines against

members.Two-thirds vote for technical rule changes, approving “accession” of

new members.

WTO Accession ProcessApplicants must agree to WTO processes, make binding

undertakings re: own trade and related policies.Must negotiate entry with existing WTO members who may

negotiate specific terms in return for approving accession.Negotiations typically “asymmetric”Negotiations have become more demanding with growth,

diversity of existing WTO membership.

WTO Facts and MythsWTO is intergovernmental

organization Members determine start (and

terms) of new negotiating rounds

National governments broker level and terms of autonomy on specific rule clusters

Medium-sized and smaller countries benefit from “club rules” capacity to cooperate in rule enforcement

WTO is not international trade constitution – precluded by detailed negotiations on rules. Still major power asymmetries. Rule commitments are

cumulative.

Medium-sized, smaller countries cannot compel compliance of large countries, although international coalitions help.

Other useful policy insights (per Froese)Political institutions still matter as much as economic ones in

trade policiesNational / regional decision-making structures determine terms

and context of participation, negotiating positions, especially of larger, medium-sized trading countries.

National sovereignty not incompatible with global governanceGovernments still retain capacity for policy discretion within

boundaries of international, regional agreements. Policy “realism” heavily circumscribed by realities of

interdependence for large, small countries alike. WTO embedded within complex networks of international, regional

and sectoral agreements with interconnected implications.

Canada’s Evolving Role at the WTOCanada still 5th largest trading country in world

11th or 12th largest if individual European countries and/or Hong Kong included

But – no longer one of “inner core” players in global negotiationsReflects shift in power of different “trade clubs” at WTO

Factors in Canada’s declining role at WTOInternational

Emergence of large developing countries (e.g. China, India, Brazil) has broadened “inner circle” at WTO

Australia now playing leading role as leader of agricultural exporting countries

Growing important of regional and bilateral trade agreements

Canada-related issues “trivial” to WTO outcomes (per Wolfe.

Domestic Canadian domestic trade options

constrained by persistence of minority governments, related salience of regional issues (e.g. protection of supply management)

Growing impact of competitive liberalization, pursuit of regional trade deals on Cdn. priorities.

Post-2004 division of Commons’ Foreign Affairs / Trade ctees. Relative decline of DFAIT

influence within fed. gov’t?

The Politics of Trade Clubs (per Wolfe)Wolfe – “group of states associated for a particular

purpose”Potential roles:

“Analytical burden sharing” – coordination of national strategies May involve log-rolling among members with complementary trade

priorities.

Keohane & Nye – “places where ‘insiders’ know the rules and ‘outsiders’ have limited influence Proliferation of issues under review at multiple WTO committees requires

all but largest states to focus efforts on areas of key importance.

Features of major trade clubsCommon characteristics

e.g. region or level of developmentCommon objectives

Reduction of barriers to agricultural trade (e.g. Cairns Group)Protection of domestic farm sectors (G-10, G-33)“Bridge clubs” – organized to broker differences among

competing positions.

Factors contributing to “club” growthGrowing number of members

Networking through clubs critical for smaller countries to exercise any influence over trade negotiations

WTO tradition of consensus decision-makingClusters of states more likely to secure accommodation of

positions or provide blocking coalitions until accommodation secured.

WTO tradition of “single undertaking”“nothing is agreed until everything is agreed”

Implications for WTO ProcessesEmergence of negotiations through “series of nested

‘concentric circles’”WTO Plenary Meetings (formalities)Informal PlenariesTechnical experts’ meetings“Green Room” inclusive core group representing key trade

clubs relevant to issue. Wolfe notes Doha roadblock between Brazil, India-led groups, US, EU

attempted bridging by G-4 (US, EU, Brazil, India), G-6 (+ Australia, Japan)