The current negotiating round launched in Doha in 2001 aims to better integrate developing countries into the global trading system

The current negotiating round launched in Doha in 2001 aims to better integrate developing countries into the global trading system. The round has been focused on improving market access for agricultural goods, reducing domestic support of agriculture products, and reducing tariffs on so-called non-agriculture market access goods. Improving market access for services, intellectual property issues, the relationship of the WTO to multilateral environmental agreements, improving market access for environmental goods, and reform of the organization’s dispute settlement mechanism are also on the agenda.
The increased weight of large developing countries such as China, but also India and Brazil, has complicated efforts in completing the Doha Round. These countries were at the forefront of the creation of the G-20 negotiating bloc (not to be confused with the recently established G-20 leaders’ meetings) at the WTO ministerial meeting in Cancun in 2003 and they played a key role in demanding greater agricultural liberalization from developed countries.
Yet despite the economic bene? ts of completing the Doha Round and continued statements of political support – most recently at the Asia-Paci? c Economic Cooperation (APEC) ministerial meeting in Japan and the G-20 Summit in Korea – the Doha Round is now the longest multilateral trade round in negotiations since the inception of the General Agreement on Tariffs and Trade (GATT) in 1947. It remains to be seen whether the round can be successfully completed.
According to the so-called bicycle theory of trade rounds, progressive trade liberalization sustains political support for the WTO. From this perspective, failure to complete the Doha Round could begin to call into question the commitments of countries to multilateral trade liberalization as a whole.2
Certainly one of the immediate consequences of not successfully completing the Doha Round has been the move to achieving trade liberalization through other forums, such as free trade agreements. However, FTAs undermine support for trade liberalization at the multilateral level because it leads to trade diversion and increased costs for businesses.
Another side-effect of the lack of progress in the Doha talks has been that countries have turned to the WTO appellate body to achieve outcomes that would normally be negotiated through trade rounds. This has begun to
undermine the WTO’s implicit balance between achieving market access through trade negotiations and WTO dispute settlement.
Litigating cases at the WTO that should actually be addressed through multilateral negotiations is problematic for a number of reasons. For one, WTO rules and not political sensitivities are the basis for appellate boy decisions.
The WTO’s dispute settlement mechanism is arguably the most widely used and effective international tribunal today. Since its inception in 1995, 405 complaints have been ? led, leading to approximately 130 panel decisions, of which about half have been appealed to the WTO appellate body. Most of these decisions have also been complied with.
Under the WTO’s dispute settlement mechanism, governments can challenge whether another member has breached its WTO commitments. The decisions of a panel or the appellate body are in effect automatically binding on the disputing parties as these decisions are adopted by the WTO unless all members (including the winning party) vote against it.
While the WTO dispute settlement mechanism was established to allow trade disputes to be settled according to the rule of law, it was not designed to resolve issues that should be subject to international negotiations. Nevertheless, many countries are using the dispute settlement mechanism to do exactly that. For example, under the so-called peace clause, WTO member countries agreed to exercise restraint in litigating agricultural subsidies cases at the WTO since these issues were still subject to negotiations in the Doha Round. However, the failure to conclude the Doha Round has led many countries to use the WTO dispute settlement mechanism to challenge subsidies, like the U.S. subsidy on cotton and the European Union subsidy on sugar.
Increased use of the WTO dispute settlement mechanism also highlights the binding nature of decisions and the limited ? exibility that members have to alter a decision that is politically unsustainable. When compared with domestic systems, where judicial decisions can be overturned by legislation, the WTO’s so-called negative consensus rule requires all WTO members (including the winning party) to agree to overturn an appellate body decision.
Finding a way for the WTO to give countries the ? exibility to deal with appellate body decisions that they cannot live with is crucial. In circumstances where issues are particularly political, there may be enough domestic opposition to a WTO ruling that causes the losing country to feel compelled to not comply with the decision. For example, the European Union has still failed to comply with a 1998 WTO appellate body decision on EU restrictions on hormone-treated beef imports. The lack of compliance with WTO decisions not only undermines the decisions but it also undermines the entire dispute settlement mechanism.
If the Doha Round fails, the need for ? exibility could include allowing the use of a super-majority vote to overturn a decision. Alternatively, the WTO could encourage or even require countries to engage in mediation beforehand with a professional WTO appointed mediator. This process might allow disputing parties to come to a favorable solution for everyone rather than facing the zero-sum outcome from the WTO panel process.