The Institutional Environment: Canada and the World Trade
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Transcript The Institutional Environment: Canada and the World Trade
Geoffrey Hale
Political Science 3170
The University of Lethbridge
October 14, 2010
What is the WTO
Organizational Structure and Governance
Facts, myths, and theoretical insights.
Canada’s Evolving Role at the WTO
Trade “Clubs”, Canada and the WTO
Other major governance issues
Budget – distributed in proportion to member countries’ share of
global trade – EU > 40%; US: 13.5%; China: 5.9%; Canada 3.36%
Total Budget - 189 MM CHF $C 180 MM.
Decision-making
By consensus – not unanimity (except for changes to general
principles guiding WTO), but not against opposition of major trading
power.
Usually requires “log rolling” among major nations, coalitions
¾ vote on interpretations of WTO rules, waiving disciplines against
members.
Two-thirds vote for technical rule changes, approving “accession” of
new members.
WTO Accession Process
Applicants must agree to WTO processes, make binding
undertakings re: own trade and related policies.
Must negotiate entry with existing WTO members who may
negotiate specific terms in return for approving accession.
Negotiations typically “asymmetric”
Negotiations have become more demanding with growth,
diversity of existing WTO membership.
WTO Facts and Myths
WTO is intergovernmental
organization
Members determine start (and
terms) of new negotiating rounds
WTO is not international
trade constitution –
precluded by detailed
negotiations on rules.
National governments broker
Still major power asymmetries.
level and terms of autonomy
on specific rule clusters
Medium-sized and smaller
countries benefit from “club
rules” capacity to cooperate
in rule enforcement
Rule commitments are
cumulative.
Medium-sized, smaller
countries cannot compel
compliance of large countries,
although international
coalitions help.
Other useful policy insights (per Froese)
Political institutions still matter as much as economic ones in
trade policies
National / regional decision-making structures determine terms and
context of participation, negotiating positions, especially of larger,
medium-sized trading countries.
National sovereignty not incompatible with global governance
Governments still retain capacity for policy discretion within
boundaries of international, regional agreements.
Policy “realism” heavily circumscribed by realities of
interdependence for large, small countries alike.
WTO embedded within complex networks of international, regional
and sectoral agreements with interconnected implications.
Canada’s Evolving Role at the WTO
Canada still 5th largest trading country in world
11th or 12th largest if individual European countries and/or Hong
Kong included
But – no longer one of “inner core” players in global negotiations
Reflects shift in power of different “trade clubs” at WTO
Factors in Canada’s declining role at WTO
International
Emergence of large developing
countries (e.g. China, India,
Brazil) has broadened “inner
circle” at WTO
Australia now playing leading
role as leader of agricultural
exporting countries
Growing important of regional
and bilateral trade agreements
Canada-related issues “trivial” to
WTO outcomes (per Wolfe.
Domestic
Canadian domestic trade options
constrained by persistence of
minority governments, related
salience of regional issues (e.g.
protection of supply
management)
Growing impact of competitive
liberalization, pursuit of regional
trade deals on Cdn. priorities.
Post-2004 division of Commons’
Foreign Affairs / Trade ctees.
Relative decline of DFAIT
influence within fed. gov’t?
The Politics of Trade Clubs (per Wolfe)
Wolfe – “group of states associated for a particular
purpose”
Potential roles:
“Analytical burden sharing” – coordination of national strategies
May involve log-rolling among members with complementary trade
priorities.
Keohane & Nye – “places where ‘insiders’ know the rules
and ‘outsiders’ have limited influence
Proliferation of issues under review at multiple WTO committees requires
all but largest states to focus efforts on areas of key importance.
Features of major trade clubs
Common characteristics
e.g. region or level of development
Common objectives
Reduction of barriers to agricultural trade (e.g. Cairns Group)
Protection of domestic farm sectors (G-10, G-33)
“Bridge clubs” – organized to broker differences among
competing positions.
Factors contributing to “club” growth
Growing number of members
Networking through clubs critical for smaller countries to
exercise any influence over trade negotiations
WTO tradition of consensus decision-making
Clusters of states more likely to secure accommodation of
positions or provide blocking coalitions until accommodation
secured.
WTO tradition of “single undertaking”
“nothing is agreed until everything is agreed”
Implications for WTO Processes
Emergence of negotiations through “series of nested
‘concentric circles’”
WTO Plenary Meetings (formalities)
Informal Plenaries
Technical experts’ meetings
“Green Room” inclusive core group representing key trade
clubs relevant to issue.
Wolfe notes Doha roadblock between Brazil, India-led groups, US, EU
attempted bridging by G-4 (US, EU, Brazil, India), G-6 (+ Australia,
Japan)