Like most people, I suspect, I find the details of international trade negotiations eyeglazingly boring. So, I was as surprised as anybody when the WTO meetings in Cancun suddenly collapsed, with less developed countries walking out en masse.
The immediate cause seems to have been the fact that the meetings focused on liberalised investment rules (pushed by the Europeans) while the poor countries wanted to talk about agricultural barriers and to have their proposal treated equally with a joint EU/US offer.
The underlying cause, in my view, is that the WTO now lacks a real backer, that is, a rich and powerful country or group of countries who want it to play a central role. The UN is backed by the Europeans, the IMF (with occasional qualms) by the US and the World Bank by both. Until recently, the WTO had the backing of the US which was historically the world’s biggest exporter and stood to gain a lot from expanded trade.
But now the US has switched to a strategy of bilateral negotiations like the proposed FTA with Australia where it can extract better terms. Moreover, like most net importers, the US is becoming more protectionist as its trade deficits build up.
Finally, the aggressive overreach by the WTO itself (things like the tuna-dolphin decision, that led to the Seattle explosion a few years ago means that the organisation has few real friends among NGOs and the broader public.
Given that, in the dispute over US steel tariffs, the WTO is bound to rule against the US, and the US seems unlikely to back down, it’s conceivable, though still improbable, that the organisation could collapse completely in the next few years.