GED Blog » High-Level Board of Experts on the Future of Global Trade Governance » Can Better Institutional Learning Improve Working Practices at the WTO?

Can Better Institutional Learning Improve Working Practices at the WTO?
How a Systematic Reflection by Members on Transparency Could Promote Institutional Learning

The WTO should have a central role in the making and enforcement of international trade law. But many member states are increasingly frustrated with the working practices in this organization. Could institutional learning help improving the salience of the organization for its members? This paper by Prof Robert Wolfe suggests that systematic discussion of transparency by encouraging institutional learning could help Members of the WTO to recover a shared sense of collective purpose.

The World Trade Organization (WTO) has three primary tasks: to negotiate new rules, monitor implementation, and settle any disputes that arise. It is not fulfilling any of these tasks very well at the moment. Should Members just muddle along, hoping for the best, or seek external advice on how to change the WTO operating system? This paper suggests a third possibility: should Members encourage institutional learning?

It helps that at least some Members know that they have a problem. In July 2017, a communication to the General Council from a group of 47 developing and developed Members said, first, that the political will to find compromises and to forge consensus is lacking.  WTO Members have failed for years to agree that the Doha Round is dead so a new negotiation framework cannot be created. The second observation from the group informally known as the Friends of the System is that compliance with notification obligations is often unsatisfactory, thereby undermining the WTO’s monitoring function because information is late, incomplete or of low quality. These two self-criticisms, about political will to find consensus, and insufficient provision of information, are related: both are a symptom, not a cause; both signify the lack of a shared understanding of what WTO is for.

Some of the explanations for the WTO’s difficulties lie outside the organization in a general malaise of multilateralism, now exacerbated by an Administration in Washington that in putting America First sees a competitor, not a partner, in China, but continuing as before and hoping for a better outcome would be foolish. Muddling through is no solution, and outsiders cannot help. Could a systematic discussion of transparency help Members to recover a shared sense of collective purpose?

The challenges and opportunities for the WTO were both on view in the discussion of fisheries subsidies at the 11th WTO ministerial conference (MC11) in Buenos Aires in December 2017. Members could not conclude the long-running negotiations, but as part of agreeing to keep talking, they recommitted to existing notification obligations. Here is an example of where working on transparency provides a way forward for the WTO. Indeed, at the first meeting of the Rules negotiating group after the ministerial, the U.S. suggested that rather than keep banging away at the well-known impasse, Members should ask the Secretariat and other international organizations to compile better information on IUU fishing and over-fished stocks. The implication is that WTO does not have enough information on fisheries to be able to do its job. In both the Rules negotiating group and the subsidies committee, Members should be asking themselves how this gap in their knowledge could be addressed.

At a time when the negotiation function is blocked, and the dispute settlement system is stressed, this paper suggest a new emphasis on the WTO as the best repository of trade policy information in the world, and an indispensable place for analysis and discussion of that information. Transparency reduces the inherent information asymmetry when a government knows more about its domestic policies than do its trading partners, although it starts by a country learning enough about itself to provide the relevant information to the WTO. Whether WTO information is good enough, and the Friends of the System think it is not, has little to do with formal obligations—it is a judgement Members have to make in each committee. If information is fundamental for the WTO, then Members should be able to assess it. On the basis of such a detailed vertical review, they might be able to come to a horizontal consensus on how to improve the functioning of the system, at least on this aspect.

Analysts often prescribe institutional reform as a solution to the WTO’s negotiating difficulties, but under assumptions of bounded rationality, in which future institutional choices are heavily constrained by the status quo, the paper argues that Members of the WTO are unlikely to make radical departures from the current system unless it proves no longer “good enough”. Hence the paper’s suggestion that Members ask themselves that question about their information, which could promote institutional learning. And it may not. Members are adept at seeking tactical advantage in any situation instead of considering the strategic implications for the trading system. Some may see in any discussion of information an attempt by large countries to impose new obligations. But that is not the paper’s intent. Better information might help Members navigate current negotiation impasses, but that is an incidental benefit of a discussion in each committee about whether the organization is doing as well as it can in monitoring current obligations.