Former Director-General of the GATT and WTO Peter Sutherland spoke yesterday about challenges to the multilateral trading system. A few highlights amongst Mr. Sutherland’s comments:

– He believes that TPA renewal under the Democratic Congress is unlikely, but an outline of a Doha round agreement must be on the table within two months for reauthorization to have any chance.
– Doha failure will accelerate bilateralism in trade, which has historically resulted in trade deals that benefit rich countries and harm poor countries.
– Bilateralism is useless to multinational corporations with supply chains spanning many countries.
– One source of Doha’s trouble is the ill-conceived launch as a “development round” with unrealistic expectations. The WTO is not a development institution, and although its mission is to create a favorable and open global trading system that is conducive to development, “trade deals can’t deliver development.” Trade liberalization favors those who trade – the rich countries.
– In regards to the WTO’s ability to do research and advocate on behalf of global trade: “The WTO’s staff is one-quarter of the World Wildlife Fund’s.”
– “Neither the outcome nor the path to it has been satisfactory.” Sutherland echoed the message of the 2005 WTO report he chaired, criticizing the Doha round approach of announcing formulaic headline goals attenuated by numerous details and caveats. He characterized the Uruguay Round as involving more pragmatic give-and-take. Sutherland defended the “green room” sessions as a means of hammering out a consensus amongst key players who could serve as “honest brokers,” arguing that LDCs’ interests largely align with those participating in the green room.
– Similarly, Sutherland emphasized the importance of senior-level negotiators doing the heavy lifting. He noted that when he became Director-General, the Uruguay Round had already suffered two near-catastrophic ministerial meetings, and that the deal was completed six months later without a ministerial meeting. Marrakesh was a coming out party.
– Sutherland also noted that trade preferences can drive countries to specialize in commodity exports in which they don’t have a comparative advantage. His example was Caribbean nations growing bananas thanks to the EU’s ACP preferences, despite Central America’s productive superiority.

During the Q&A, I asked Mr. Sutherland to identify the forces he thinks were responsible for the Uruguay Round’s successful completion. I noted that competing interpretations of that negotiating history motivate current strategies for Doha:

Some in Washington claim the strategy helped break a deadlock in the Uruguay round after the EU balked at opening its protected agricultural market. They say by threatening to turn Apec from a loose grouping of Pacific Rim economies into a rival trade bloc, the US forced the EU back to the bargaining table.
Others, however, think such claims exaggerated. Not only have Apec’s efforts to free regional trade achieved little but, they argue, the EU softened its position on farm trade in the Uruguay round only because mounting costs made reform of its common agricultural policy unavoidable.

Sutherland acknowledged that both of those forces may have played some role (EU internal politics more than the threat of APEC), but argued that individual people matter far more in the actual negotiations. He characterized the APEC narrative as “ex post facto theorizing” rather than a compelling explanation.

Sutherland’s story emphasized the role of particular negotiators and national leaders in building a consensus and hammering out controversies. Particularly amusing was a tale of fervent discussions at 2am in the green room shortly before the completion of the round, in which negotiators debated whether the word “unfair” carried appropriate legal import to be included in a paragraph on anti-dumping. The next morning, shortly before Sutherland was due to announce the round completed, the Japanese representative informed him that the ministry of foreign affairs and MITI disagreed about the text. The ensuing brinksmanship (as narrated by Sutherland) was quite entertaining (in retrospect), and thank goodness it worked out for the best, as Japan raised no objection when Sutherland gaveled the round to a close.



Sutherland’s story of the Uruguay Round’s completion was both amusing and insightful. I hope he someday puts it into print.