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)