Doug Irwin: evaluation

Transcript context

…Is there a future for the World Trade Organization? It has not achieved significant reductions in tariffs for some while. Some people, not all, compare it to the political economy of riding a bicycle, that if you don’t keep on moving forward, you may stop altogether. The action we’ve seen in free trade has been multilateral agreements, outside of the framework of the WTO. It hasn’t achieved real progress on agricultural tariffs. There is a resurgence of nationalism, populism, whatever you want to call it, in a number of nations, including our own. Is there indeed a future for the WTO? I think that’s a big question about whether there is. It used to be said that it’s not so great for negotiating trade agreements anymore. They can’t seem to get a consensus. The Doha Round was the first real negotiating round that absolutely failed, and that’s been terminated now. It’s been over 20 years since they have reached any major, multilateral agreement. The argument among economists has been “Well OK, it’s not so great. People are bypassing it in terms of trade negotiations, but it’s great because of the dispute settlement system.” But now we see the Trump administration saying, “We don’t like this dispute settlement system.” If the US undermines that, it’s really not clear what role the WTO would have. It wouldn’t be an efficient forum for trade negotiations, and it wouldn’t have an effective dispute settlement system if the US blows it up or walks away from it or something like that. Part of the problem with the WTO, at least in terms of negotiations, has been something that Canada identified, way back in the 1940s, which I think is in the book. After World War II, we were going to set up a big multilateral organization called the ITO, the International Trade Organization. At some point, as we were moving in this direction, Canada snuck up to the US negotiators and whispered in their ear, “You know what? It may not be a good idea to get every country talking about these things because not everyone’s on the same page.” In particular, they pointed out India and Brazil and a few others, which they called the more protectionist-minded countries of the era. That’s why we went ahead with the GATT, which is a smaller, nuclear club of like-minded countries to liberalize trade, and the ITO actually never came into being. But when we shifted from the GATT to the WTO, in 1995, we brought everyone into the room. Now it has 160 members or something like that. It operates by consensus, meaning it’s the lowest-common-denominator negotiating forum. Everyone has to agree. The former director general of the WTO once said it’s like a car with one accelerator and 150 hand brakes. Any country, not quite, but almost any country can step on the brakes and stop the process. The question is, is this a way to go forward? What you’ve seen is countries just bypassing it. They’ve gone to regional, bilateral, or even sectoral sorts of agreements to avoid the whole mass of countries trying to agree on one common trade policy for everyone. The United States federal government, it often embodies a great deal of messiness. If you think how many different agencies have we had that regulate banks or financial institutions in some way, it’s quite a few. You could say the same of trade. There’s USTR. There’s the State Department. There’s the Department of Commerce. There’s OPIC. There’s a lot of different layers at which we address trade. Should we just consolidate those into a big, supposedly consistent Department of Trade? Or do you prefer the sprawling mess?…

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