Trade
December 21, 2015

The WTO’s Imperative to Lead with Purpose

By Andrea Durkin

WTO purpose

Havana, 1947

Mr. Clair Wilcox served as the chief U.S. negotiator and chair of the International Trade Conference that resulted in the General Agreement on Tariffs and Trade (GATT). In recalling the mood at the opening of the negotiations, he wrote:

“The [Havana] conference opened with a chorus of denunciation in which the representatives of thirty underdeveloped nations presented variations on a single theme: the Geneva draft was one-sided; it served the interests of the great industrial powers; it held out no hope for the development of backward states. Some eight hundred amendments were presented, among them as many as two hundred that would have destroyed the very foundations of the enterprise. Almost every specific commitment in the document was challenged.”*

That sounds familiar.

The WTO’s Purpose

I pursued a career in trade negotiations because I absolutely love the detail of it.  I’m happy in the trenches putting commas and qualifiers where they should go, working to craft provisions around new concepts.  But I’ve also found purpose in teaching a decade’s worth of Generation Y graduate students why it’s important to learn the history of the GATT and WTO and how the institution undergirds peaceful relations among countries.

Before the first Special Trade Representative was appointed in1963, the State Department conducted U.S. trade and investment diplomacy, led famously by Secretary of State Cordell Hull from 1933-1944. Cordell Hull pursued trade policy with purpose.

In his memoirs he wrote:

“When the war came in 1914… I saw that you could not separate the idea of commerce from the idea of war and peace… I embraced the philosophy that I carried throughout my twelve years as Secretary of State…To me, unhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war. Though realizing that many other factors were involved, I reasoned that, if we could get a freer flow of trade — freer in the sense of fewer discriminations and obstructions — so that one country would not be deadly jealous of another and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance for lasting peace.”

The framework of the GATT reflected clear-minded purpose. Under its successor, the WTO, we have enjoyed the luxury of working to address relatively benign areas of trade discord during peacetime.  Most of the downside of trade barriers comes in the form of hampered growth not conflict among nations.

Nairobi, 2015

Doug Palmer observed in Politico Morning Trade the other day that 163 countries are gathering in Nairobi seeking agreement amidst turmoil in the Middle East and tension in the South China Sea, an area with waterways that carry twenty-five percent of the world’s traded goods and twenty-five percent of the oil that travels by sea.

Whether they achieve significant agreements this time around may be less important than the act of gathering, an act affirming that we still believe in its purpose.

Imperative

 The cornerstone principle of the world trading system is non-discrimination.  The fundamental obligations to treat like products equally, irrespective of origin, and to treat the products of other countries no less favorably than your own, are the bedrock upon which a robust body of trade disciplines were built, elaborated and tested.  The integrity of this principle is enduring.

Membership in the WTO is growing.  New Members don’t see the WTO as losing relevance.  They see their participation as a Member as critical to domestic stability through economic growth.  Ministers approved Libya’s and Afghanistan’s accessions this week. Iran’s Minister of Industry, Mines and Trade Mohammad Reza Nematzadeh declared in Nairobi that Iran is ready to join the WTO.

Working with Purpose

Generations Y and Z are leading the charge in our increasingly “purpose-driven” workforce. They are motivated by a desire to produce positive impact for other individuals, organizations and society.  In Aaron Hurt’s book on the shift from the Innovation Economy to the Purpose Economy, he says there are five levers for individuals and organizations to achieve impact through purpose. I’ll describe three.

One is policy.  Organizations can change the rules of the game to make purpose a priority.  Another is to inspire people to see the world differently and optimize purpose. A third lever is to uncover new insights that enable individuals, organizations, and society to deliver purpose.

The WTO’s Purpose

The WTO has been these three levers to good effect.  Its “policy” is clear in the core principles that underlie its rules for equitable global commerce.  It has evolved to build the capacity of its Members to reap the benefits of participation in global commerce, and its committees and work programs produce insights about the global economy.  The WTO ensures Members have a platform for the healthy, respectful exchange of questions and ideas and for the formal resolution of disputes.

But in seeking to negotiate new disciplines for the modern global economy, Members haven’t always put purpose first.  The WTO’s purpose as an institution is enabling individuals and firms to achieve their purpose through the free economic exchange of goods, services and ideas.  But in maintaining positions that seek to protect the interests of a few or that emphasize exceptions over liberalization, Members subordinate that purpose.

Set the Intention

Ministerial meetings don’t need to produce a large-scale agreement to be a success.  Ministers will be successful if they use the opportunity to offer bold ideas and a vision for how the WTO’s work can reflect the future of commerce and not simply its past.  If they can set the intention, the WTO will remain an institution that helps others achieve their purpose.