Angelos Pangratis was formerly an EU ambassador to the WTO and currently serves as an advisor on EU economic diplomacy. He has also contributed to a high-level board of experts on the future of global trade governance for the Bertelsmann Stiftung, and after his recent appearance at the DOC Rhodes Forum in October 2018, we caught up with him to discuss multilateralism, global trade, and the WTO.
Dialogue of Civilizations Research Institute: During your talk delivered at this year’s Rhodes Forum, you referred to what you called a ‘paradox of multilateralism’. Could you briefly outline what you had in mind?
Angelos Pangratis: I indeed referred to the ‘paradox of multilateralism’, particularly of approximately the last two decades. During this period, accelerating globalisation and interdependence, as well as the increasing complexity of the international trade environment, constantly called for more substantive common solutions and common rules at the level of the WTO. A rapidly changing world required corresponding updates to the WTO rule book in order to adapt existing rules to today’s economy and to fill the gaps in terms of capturing new practices and new areas of international trade. It also required a strengthening of the other functions of the WTO, particularly its monitoring role and it ability to handle increasing pressures on its Dispute Settlement function.
The paradox is that during that period, where multilateral solutions were needed more and more and the common interest of countries in producing them was increasing rapidly and consistently, the organised international community, in the context of the WTO, appeared less and less able to deliver multilateral solutions. The WTO did deliver some significant steps – for example, the Trade Facilitation Agreement in Bali in 2013 and decisions adopted by ministers in Nairobi in 2015 on export subsidies and other export support measures – but clearly these steps were insufficient, compared with the speed of change in world trade realities.
DOC: You also mentioned that the present turmoil would not actually be a result of technical problems internal to international organisations. Neither would it be a result of historic specificities or path dependencies. What, then, is the main driver behind that turmoil and how could it be surmounted and resolved?
AP: The substantive cause of the current turmoil is the inadequacy of current rules, which need to be seriously adapted to make them able to capture important new realities. The ‘paradox of multilateralism’ of the last two decades has clearly not been a sustainable process. The world has been changing too quickly and the WTO has not been able to follow. This, of course, does not mean that the current crisis of the WTO was inevitable in the form that it has taken. The more recent EU proposals for ‘WTO modernisation’, as well as those of other members with similar approaches, illustrated the point adequately.
The causes of the ‚paradox of multilateralism’ are relatively simple. The functioning of the WTO was built on the basis of the experience of the previous Rounds, with important operational rigidities embedded such as the ‘Single Undertaking’ requirement for the whole Round to be decided as a whole, the more favourable treatment of all developing countries, the strict unanimity required for even simple decisions like agendas of meetings and other things. These rigidities became increasingly incompatible with the speed of change in the world economy and the increasing complexity of trade negotiations based on a Round approach. It is worth noting that the Dillon Round took 11 months to negotiate in 1960, then 37 months were needed for the Kennedy Round, 74 months for the Tokyo Round, and 87 months for the Uruguay Round while the Doha Development Agenda was launched in 2001.
To surmount and resolve the current turmoil, the members of the WTO need to deal with the imbalances and gaps. Practices concerning state-owned enterprises, subsidies of all kinds, state trading companies, new forms of state intervention in markets, aspects of IP or procurement, and other issues need to be better captured by common rules. The WTO finds itself in an important transition process. Negotiations will be needed, certainly within the WTO and most probably outside the WTO as well, bilaterally or otherwise.
DOC: What are the main challenges and tasks international organisations such as the WTO and others would need to envisage and undertake to come to grips with their current structural and logistical problems?
AP: The main tasks and functions of the WTO are well-defined and as pertinent as ever. The organisation needs to now cope with the most fundamental transition period in its history, adapt its internal functioning practices and fill the gaps in its rule book in order to produce a better structure that is adapted to the realities of the 21st century global economy. This is not going to be a simple and quick process
DOC: Could you elaborate on the Bertelsmann report for the reform of the WTO? What was the reason for writing it, who contributed and participated? And what is the outcome?
AP: The Global Economic Dynamics project of the Bertelsmann Stiftung put together a high-level board of experts on the future of global trade governance. Guided by Christian Bluth as the project manager and Bernard Hoekman as the chairman of the high-level board of experts, the board was composed of ‘eminent experts and seasoned trade diplomats’. It published a series of feasible policy recommendations and suggestions, mainly concerning the internal functioning of the WTO. The main suggestions included, among other ideas:
- expand policy dialogues on non-tariff measures affecting competitiveness;
- foster sustainable deliberations in WTO bodies;
- encourage open plurilateralism (initiatives among groups of members);
- bolster the support function of the secretariat;
- review organisational performance regularly.
The suggestions are generally well-targeted and pertinent. They cannot guide the WTO out of the current crisis alone but when the wider conditions will finally be met and the revival will come, delivering substantially on these orientations will be part of the new reality of the WTO.