Editor’s Note: This post responds to Bernard Hoekman and Petros Mavroidis’ article in the current issue of EJIL Vol. 26 (2015), No. 2, titled “WTO ‘à la carte’ or ‘menu du jour’? Assessing the case for more Plurilateral Agreements”. For a post by the authors of the article, introducing their piece, see here. For other comments see here and here. For the authors’ concluding response, see here.
Two phenomena characterize the contemporary world trading system, namely, the deadlock of the Doha Development Agenda (DDA) and the proliferation of preferential trade agreements (PTAs), in particular, mega-FTAs such as Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP). The former illustrates the difficulty of the 161-member WTO in reaching consensus in trade negotiations, and this may have been one of the driving forces for the latter. Proliferation of PTAs has both pros and cons for the world trading system. On the one hand, PTAs facilitate trade liberalization between the parties, and they may be an incubator of new rules governing global trade and investment. On the other hand, PTAs may have trade diverting effects for non-parties. Their proliferation may result in the fragmentation of rules for global trade and investment. To sum up, the contemporary world trading system is suffering from the decay of the multilateral trading system and the disorderly proliferation of PTAs. Hoekman and Mavroidis’ recent article, titled “WTO ‘à la carte’ or ‘menu du jour’?”, published in the latest issue of the EJIL (Vol.26, No.2), tries to find a breakthrough in the world trading system by advocating the use of plurilateral agreements (PAs).
They are not the pioneers of advocating PAs. For instance, Richard Baldwin, in his article in 2012 (Richard Baldwin, “WTO 2.0: Global governance of supply chain trade”, Centre for Economic Policy Research Policy Insight No.64, December 2012), advocated a ‘WTO2.0’, which is practically a PA with limited membership, consisting of those WTO members who accept high-level rules that secure the well-functioning of global supply chains, without the special and differential treatment (S&D) to developing countries which is incorporated in the current WTO Agreements, or WTO1.0. A similar proposal was made by Michitaka Nakatomi in his article in 2012 [Michitaka Nakatomi, “Exploring Future Application of Plurilateral Trade Rules: Lessons from the ITA and the ACTA”, RIETI (Research Institute for Economy, Trade and Industry) Policy Discussion Paper 12-P-009, May 2012]. These proponents of PAs and Hoekman/Mavroidis share the common view of the contemporary world trading system. First, they regard the stalemate of the DDA as a result of the incapacity of the WTO in meeting the needs of the 21st century global trade, characterized by the globalization of value chains. Secondly, they regard the proliferation of recent RTAs, in particular mega-FTAs, as attempts by major trading countries to meet such needs. Thirdly, however, they don’t think of the proliferation of RTAs as an optimal solution to the challenges of the 21st century global trade, mainly because it might result in the fragmentation of rules for global trade and investment.