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INTERVIEW – Wolff: I am in the just-do-it school

Borderlex sat down with Alan Wolff to discuss his new book Revitalizing the World Trading System.

Alan Wolff served as deputy director-general of the World Trade Organization from 2017 to 2021 after a long career in government and law in the United States. His book is a contribution to ongoing discussions and negotiations in Geneva to bring the world trade body out of its current crisis.

Q: You have written a dense and rich book about the WTO. Not every former deputy director-general goes on to write a book. Why did you write it?

I wanted to write the kind of book I would have liked to have before I came to Geneva to work as WTO deputy director-general in 2017. It is like a travel guide-book to give a sense to readers what this organisation is all about.

Although I had a long career of being involved in trade policy, in 2017, I did not have first-hand experience of recent WTO developments and recent ministerial conferences. I was not familiar with the progress being made in new areas such as e-commerce, or with development matters. There is a lot I didn’t know I wanted to know about. This is how this book came about.

My objective, something of a crusade, is to get the book into the hands of teachers and students, negotiators and future negotiators, all those needing to have an input into shaping the world trading system, to understand its values, and to make improvements in it.

Q: Can you give us a flavour of what is in the book?

The book starts out with a short history of trade, from before our species walked the earth to the present.  It picks up in detail with the end of the GATT era. It covers the twelve WTO ministerial conferences held since the organisation was established in 1995.

It was pure fun to  examine the history and pre-history of trade, from the trade in obsidian to the question of ‘certifying’ ancient Egyptian gold exports. I hope it will be fun for the readers too.

I wanted to give the reader the feeling of what it is to sit in a WTO committee meeting. What is it like to be present in the China accessions working party? What is it like to be in a standards meeting?

This sounds rather dull and dry. But isn’t! It’s fascinating.

The most important thing the WTO did in its history was to bring China into the trading system, which was a long, hard negotiation. I tell that story.

The book also looks at the values of the system, and details what isn’t working well and how to fix it.

I was asked by Saudi Arabia, when it had the chairmanship of the G20 in 2020, to identify the foundational principles of the WTO which all in the G20 should subscribe to. So I started looking for these principles, and came up with a list of some 20 values that the WTO incorporates.

I found that some of them, such as ‘reciprocity’ or the promotion of peace or sustainability, are not so much a principle as a value of the organisation.

Q: What struck you most when you were in office at the WTO secretariat in Geneva?

I got involved in the question of trade and peace.

The multilateral trading system was founded to foster peace. Just like the European common market was founded [in the 1950s] to assure that through economic integration we wouldn’t see France and Germany going to war with each other again.

But nobody remembers that the world trading system is a peace project, except of course for the conflict-affected countries acceding to the WTO: they understand.

Timor-Leste, which is soon joining the institution, is one such country. Xanana Guzmao, who led the rebellion to create his country also led the peace as its leader. Guzmao said: “Where there is trade is peace.” He saw a linkage that [US secretary of state] Cordell Hull saw in the 1930s and 1940s and that made the US decide that improved trading relatiohships was the way to have a more durable peace after World War II.

The WTO and the GATT texts don’t say anything about peace. The question of creating the stability that supports peace is in the International Trade Organisation charter [of 1948, an organization that never came into existence, but is very much a forerunner of the WTO].

Q: Large sections of your book are dedicated to reforming the WTO. What is the approach you have chosen?

I ask: Can we get back to binding dispute settlement? How do we get to rule-making when under current procedures, the WTO needs a consensus and the consensus doesn’t come together all that well? What should the executive of this organisation look like?

Q: How do you overcome the consensus hurdle to develop new trade rules for today? Can we have the latest plurilateral agreement on Investment Facilitation for Development accepted as part of the WTO rule book?

I am in the Just do-it school.

Should the [plurilateral Joint Statement Initiatives] be part of the legitimate acquis of the WTO or can one member say no? My view is that any consensus has to be a responsible consensus. But self-restraint is not in evidence in every delegation in Geneva.  Vetos are threatened and exercised.  This is unacceptable.

Adopting the recently concluded plurilateral Investment Facilitation for Development agreement has to happen if the organisation is going to succeed.

A large number of countries, including developing countries, twenty of whom are least-developed, believe that this agreement is in their interest. The agreement certainly is complementary to and consistent with the objectives of the organisation. In my view no-one can be allowed to say no to those who want to join having this agreement in effect as part of their WTO membership.

The future of this organisation relies on the ability of the like-minded to do something that is consistent with its objectives.

I do not get tied up in legalisms.  For decades the secretariat of the GATT – from 1947 to 1994 – had no legal existence. Yet it functioned. Can pragmatism win out? Yes it can. Open plurilateral agreements have to be accepted as a legitimate part of the WTO.

Q: Your reform proposals for the WTO secretariat itself are extensive and may well be controversial. They include making the director-general chair the General Council, establishing an Office of Legal Counsel and buttressing the secretariat’s strategic foresight capacities. Why have you dwelled so much on the secretariat?

Every organisation on the planet has an executive. Somebody has to make decisions on how to run it: whether it’s a club, a business, a government or an international organisation.

The president of the World Bank, the managing director of the International Monetary Fund or the secretary-general of the OECD – the WTO’s sister organisations – they all have specific assignments for what they’re supposed to do.

The WTO director-general doesn’t. This is in large part because there was no ‘constitutional convention’ for the WTO.

I was present at the end of the Uruguay Round [that established the WTO in 1995]. The main institutional achievement at the time was introducing binding dispute settlement. Members wanted it because the US was acting unilaterally. The US bought into the idea because there was a feeling that the EU’s common agricultural policy could be attacked through litigation. This was not actually possible, but back then they thought it would be.

There was no discussion whatsoever of how we are going to negotiate agreements in the future, whether there is an executive or what the director-general is expected to do. The negotiators delegated the matter to the  WTO ambassadors. There never was any guidance.

One great example of a GATT executive taking some control was Arthur Dunkel  tabling a text in the Uruguay Round that was the solution that allowed the negotiations to conclude. This is why there is now a WTO. If Dunkel hadn’t put a draft on the table, the deal wouldn’t have come together.

Arthur Dunkel wasn’t thinking of having a new organisation. He didn’t particularly want one nor did he think it would be all that useful. But what he did was act.

If a director-general today told members: “I have the solution to carbon pricing and here it is”, the members would answer: “Who are you? What do you mean you have a proposal? What business is this of yours?”

Leadership is necessary in every organisation.  It can come from members and it can come in part from the director-general that they appoint.

Q: How do we bring the United States back to binding dispute settlement?

This has to be part of a broader package of changes in the dispute settlement system and in the WTO rules.

It could involve new instructions to panelists first, on how to handle trade remedies cases in disputes, obliging them not to rely on ‘precedent’ but to focus on resolving the dispute at hand, second, giving the US some form of opt-out on China issues, and third, making the national security exception basically non justiciable (see below).

Then you need to ask Washington: Can we get binding dispute settlement back between the US and Japan, the EU, Canada or let’s say Botswana? Can we get at least that much solved?

There could be a ‘new’ MPIA [referring to the alternative appeals body set up by the EU, China and a subset of countries to replace the appellate body that ceased to exist due to a US veto on member appointments].

In order to get to a negotiation, the fraudulent practice of having appeals ‘into the void’ to an appellate body that does not exist has to be ended.

This needs to be a negotiation that also looks at what else is on the table at the WTO for example on domestic support in agriculture, industrial subsidies, or any other aspect. Again: this is about putting together a package.

Q: How should the WTO deal with the national security exception in future?

I elaborate on this issue with Warren Maruyama in a recent Peterson Institute for International Economics paper published after my book was released.

Our proposal is that there would be no adjudication of whether a trade measure was justified under the WTO’s national security exception.

But those WTO members adversely affected would have an immediate right to rebalance trade concessions themselves by imposing retaliatory trade measures against the WTO member invoking the exception, unless they were compensated for their trade loss.

The process of negotiation of compensation or retaliation would need to be orderly and modelled on the process that already exists under Article XXVIII of the GATT that deals with ‘modification of schedules’.

The current situation in the WTO is untenable. The latest WTO panel rulings related national security basically give aggressors such as Russia a free pass, as in the case brought by Ukraine related to transit of goods through Russia after the latter annexed Crimea and occupied parts of Eastern Ukraine.

On the other hand, where no ‘emergency in international relations’ can justify a restrictive trade measure, at the present rate the WTO is likely to find it extraordinarily difficult to secure compliance with future national security rulings. These will simply be appealed into the ‘void’.

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