Global Policy Forum

WTO Legitimacy under a Cloud

Bangkok Post
April 13, 2001

The following is the text of the keynote speech delivered on Tuesday by Chart Thai MP Kobsak Chutikul to a European Parliament seminar in Brussels on the need for reform of the WTO.

The prospect of a global economic recession has turned the spotlight back on the World Trade Organization. After its failure in Seattle at the end of 1999 to launch a new round of trade talks, the WTO is now gearing up for its fourth ministerial meeting, to be held in Qatar in November, where many countries hope to launch a new round to help spur world trade and prevent global recession.

But the WTO first still has to answer questions about its own legitimacy and that of the current multilateral trade system that have been posed by national groups as well as transnational civil societies before a new round can successfully be launched.

The concern for "legitimacy" in the international trade system is a relatively new concern for governments as well as for international public opinion. The evolution of the concept of "legitimacy" in the international trade arena stems mainly from two convergent phenomena.

The first is the changing nature of international trade itself, and therefore the changing nature of international trade negotiations. When barriers such as tariffs became less relevant than the domestic barriers that affect trade, it became obvious that the object of trade negotiations was quickly shifting from the dismantling of the barriers at the border to national, domestic trade and economic policies themselves. with multilateral trade rules, the impact of the trade agenda on the daily life of citizens everywhere in the world automatically increased and shifted to touch on sensitivities that never had been raised before.

Little or simply no legitimacy at all was required to formulate trade policies based on tariff and non-tariff changes, in the sense that the domestic political consensus that the trade negotiator was looking for focused on the specific economic interest affected by each tariff change.

At the domestic level, his "legitimacy" was ensured when the national economic lobbies were satisfied with a certain level of tariff change. At the international level, the concern for legitimacy did not go beyond the exclusive and restricted club of duly appointed national trade negotiators.

But with the emergence of multi-disciplinary and comprehensive trade agenda such as the one launched at the Uruguay Round, trade policies encompass an enlarged concept of market access that require a new sort of domestic as well as international legitimacy.

At the domestic level, the social, economic, environmental and cultural interests involved by the topics of the enlarged agenda are numerous in all countries. Therefore, the domestic constituencies that will monitor the decisions of the trade policy-makers and negotiators are increasingly complex and will require painstaking and time-consuming consultations.

To achieve international legitimacy for the multilateral trade regime is even more complex, because it is not simply the addition of the domestic interests of the civil societies of all the national civil societies that is driven by some powerful non-governmental organizations that have more political leverage, more resources and more influence than many developing country governments. Today, the search for legitimate international trade policies and trade rules has to be convincing, in the first instance, to these new non-governmental or transnational actors.

A second parallel phenomenon that explains the increasing complexity of getting legitimacy in the international trade system stems, of course, from the new information technologies, the role of the media and the easy access to information, most specifically on the Internet, in a rapidly globalizing world.

Less than a decade ago, trade diplomats were used to and trained for secret deals, confidential documents, private meetings. Neither transparency, nor full participation of all members, was perceived by the major trading powers as being necessary. Today, it is surprising to observe that even non-agreed documents such as the negotiation proposals are posted on the WTO website. Negotiations and the decision-making process are now open-ended and almost totally public. The room left for private deals, out of the public domain, is virtually disappearing.

It did not seem to help when the former director-general of the WTO, Renato Ruggiero, described the WTO as "a constitution for a single global economy". It merely begged the question: a constitution written by whom, for whom. And other questions that relate to the overall legitimacy of the system itself. It would seem to be worthwhile at this post-Seattle and pre-Qatar stage to address some of the outstanding issues and at least mull over some possible answers.

In the first instance, it has to be recognized that poor countries are often insufficiently represented at the WTO, and their capacity to introduce their legitimate arguments is limited by their weak representation and participation in the decisions on trade issues.

Admittedly, a core group of medium-sized developing countries now seems to have gotten the knack of mustering enough support to mount guerrilla-style offensives to block progress on certain trade items, but this is still a far cry from effective, substantive participation that leads to concrete rules and disciplines.

As Rubens Ricupero, secretary-general of the United Nations Conference on Trade and Development, has repeatedly pointed out, the failure of developing countries to become "effective players in the multilateral trade system in terms of deriving full benefits from trade liberalization, enjoying their multilateral rights and complying with their multilateral obligations" is one of the major reasons for the perceived "legitimacy gap" that afflicts the WTO today.

Mr Ricupero has further observed that, for any international organization, "legitimacy" depends on three main factors: universal membership and accession mechanisms, participatory and effective decision-making, and a fair sharing in the benefits of the system.

On universality of membership, it is becoming more evident that the process of accession to the multilateral trade system is cumbersome and painful. Over 40 countries - including the world's most populous nation, China - have been in the process of accession since 1997. One of the major complaints has been that acceding countries are being obliged to accept higher levels of obligation than the present WTO members, and that developing countries are not being permitted to enjoy the special and differential treatment incorporated in the multilateral trade agreements.

On participatory and effective decision-making process, much has been made of the inequity of the exclusive Green Room process confined to 30-40 countries that in the past had made most of the decisions. But there are no easy resolutions on how to involve all 138 member states simultaneously in delicate and often technically complicated negotiations.

But as Joseph Stiglitz, formerly of the World Bank, wrote even before the Seattle conference, international organizations are directly accountable not to the citizenry but rather to national governments and particularly to agencies within these governments. They lack the democratic legitimacy that derives from the electoral process and thus must derive legitimacy from the manner in which they conduct their business. If policies, or the output of an organization, seem to reflect the power of a few large members then the legitimacy is reduced. If policies seem to reflect special interests, then legitimacy is reduced.

Given that there appears to be no easy answer to finding a proper balance within the institution between inclusive and effective negotiations, and given the reality that no amount of capacity-building to enhance negotiating skills and participation can realistically overcome large disparities in economic and political power, we seem to be left with the last element of "legitimacy" - that of a fair sharing of the benefits.

There is a real perception that the system is not providing an equitable share of the benefits among countries and between various groups within countries. The sense that past inequities have to be redressed finds itself reflected in the position of developing countries that implementation should take priority and that new initiatives should await the effective implementation of past commitments in such areas as agricultural subsidies, anti-dumping duties, tariff peaks, movement of natural persons, removal of textile quotas, and transfer of technology.

In addition, developing countries are calling for an extension of transitional periods in the implementation of various Uruguay Round agreements. Together with their opposition to newer issues related to the environment, labor, investment and competition policies, this litany of Third World grievances would appear to pose seemingly insurmountable obstacles to a new round.

If the environment in Qatar proves protester-free as many hope, how the in-house institutional issues of participation, decision-making procedures and the substantive negotiating agenda are resolved could prove decisive in the world's perception of the legitimacy of the WTO and the international trade system.

Parliamentarians could play a more active role in bridging the currently perceived "legitimacy gap". Drawing on the inherent legitimacy accorded by democratic processes, parliamentarians everywhere could help disseminate an understanding of the trade agenda and its domestic implications, generate popular support and provide to governments sustainable negotiating mandates that could ensure the success in the long run of their trade policies.

Democracy cannot provide all the answers for the WTO given that some of the basic tenets of democracy such as majority rule, full participation, elected representation, full disclosure and accountability are often in conflict with the day-to-day working necessities of the WTO. Democratic norms cannot be fully transferred to the WTO context, not least because many of the developing member states are not fully democratic, Indeed, the full application of democratic principles to the WTO could turn it into another ineffective United Nations forum ruled by a majority without the means, the many without the money. But democracy as an ideal can provide a cloak of legitimacy. Democracy is a seasoned practitioner of the art of the possible, and has evolved ways to not only enforce the will of the majority but to incorporate the needs of the powerful few and the strongly felt demands of a vocal minority.

In the lead-up to Qatar and at Qatar itself, incorporation of the parliamentary/democratic dimension into the process could help generate public support and bring about the bare minimum of what could have been achieved at Seattle - a compromise that satisfies all factions, a sense of give and take, the ability to cut a deal in the full glare of public opinion. Another failure such as the one at Seattle would be a devastating blow to the multilateral trade system.

Agreeing on an agenda to commence negotiations should not be harder than concluding a negotiation. Democratic impulses, personified in the form of parliamentarians can provide the goodwill necessary in drawing up an all-inclusive, indeed a democratic, agenda for a development round leading to a fair apportionment of the benefits of the system that would serve to fully legitimize the international trade system.

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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.