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Trade

Not much life left in the WTO

The World Trade Organization is turning 20. But with the chasm between its industrial and developing member states, it won't survive much longer after this anniversary, says DW's Rolf Wenkel.

Geneva is a beautiful city in Switzerland, with lots of culture and leisure activities. Around 640 men and women are lucky enough to live in this place working for the World Trade Organization (WTO).

World trade is a blessing, the common theory goes. The less it's inhibited by duties, tariffs and laws, the better. Just like a rising tide lifts all boats, no matter whether they're luxury yachts or simple rowboats, world trade raises the wealth of all nations, large and small. At least that's what proponents say.

Critics are calling that story a fairytale. Liberal trade across all borders only benefits the industrialized nations, they say. Developing countries don't stand a chance against the states of the northern hemisphere in no-holds-barred competition. The yachts are rising with the tide, while the rowboats are shipwrecked.

Negotiation platform and mediator

Despite the criticism, almost 160 nations have joined the WTO, which originated as the General Agreement on Trade and Tariffs (GATT) after World War II. Two-thirds of members are developing countries. After all, every new country that joins the WTO automatically benefits from the trade agreements that are allotted to all other member states - technocrats call this the "most favored nation clause."

The employees in Geneva have a budget of almost 165 million euros (229 million dollars) to spend on two tasks: offering the member states a platform for new negotiations about further loosening trade restrictions and mediating in disputes on whether a member state has violated WTO rules, or not.

The mediation works surprisingly well, even though the WTO itself doesn't have any power, or mandate, to impose sanctions. Since 1995, the organization has been called to mediate 466 times and many cases solved themselves early on in the so-called consultation phase.

But: industrial nations and emerging economies are clearly the main beneficiaries of these mediations. They are responsible for almost three quarters of the complaints, while only one of the poorest members has made use of the option: in 2004, Bangladesh complained about dumping prices for battery imports from India.

WTO nearing its end?

That uneven proportion isn't due to chance: Geneva is a beautiful, but also a very expensive city. Poor countries simply can't afford to rent hotel suites and offices for huge delegations of experts and lawyers for weeks on end. They only send individuals, who are hopelessly inferior to the western delegations.

And that doesn't just go for the mediation, but also for the political benefits of new negotiation rounds. The last one of these was called the "Doha Development Round," because the developing countries were supposed to profit the most from the results.

It took almost 20 years to reach an acceptable conclusion via last year's famous Bali compromise. Without going into too much detail: According to most experts, developing nations benefit the least from the new agreements. And that's why it's not hard to predict that the Doha Round will probably have been the WTO's last.

That's because agreements in the negotiation rounds and in the WTO's organizational structure can only be reached by a unanimous vote, just like in all the other UN organizations. This used to make sense; it was supposed to put pressure on the participants to agree, to reach a compromise. But now the unanimity rule has become a boomerang: There is always a member that will refuse everything; a nation that will block all action in the WTO.

To add a bit of melodrama to the proceedings, it's possible the desperate efforts in Bali heralded the WTO's final hour. But there may be life in the old dog yet. Developing nations - and the 640 employees in Geneva - can only hope so.

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