Policy Options Paper

The Functioning of the WTO: Options for Reform and Enhanced Performance

January 2016

The multilateral rules-based trading system has been crucial in helping states to cooperate and gradually open up borders to encourage trade and investment for development. It has contributed to temper unilateral approaches and to integrate emerging economies over time. Yet the WTO is currently at a crossroads and is facing an “adaptability” crisis. The world economy has changed since the organisation was created, and new and complex challenges are quickly adding to an already loaded agenda. A key question is whether the WTO is capable of responding to these challenges or whether there is instead a need to revisit the basic foundations on which the multilateral trading system has evolved over the past six decades. The present paper analyses potential avenues for reform to ensure the future success and relevance of the WTO. It offers policy options for consideration in three areas: the negotiation function of the WTO; the role of committees within the organisation; and the involvement of the business sector. First, in order to improve the negotiation function, the paper advocates that a grand bargain be reached to create a package that allows the Doha Round to be concluded, which would be constructed by combining commitments where progress has been made with an explicit acceptance of the move towards using plurilateral approaches within the ambit of the WTO. The latter would be accompanied by a new committee or working group whose mandate would be to work out optimal design features for these plurilateral approaches. Second, recommendations are put forward to increase the role and impact of committee work, with the objective of enabling the system to mature and deliberate on new avenues for rule-making. Third, in order to enhance the involvement of the business sector with the WTO, new platforms for institutionalised interaction are proposed. These include the creation of a Business Forum and Business Advisory Council to establish a formalised dialogue between business and the intergovernmental system. The paper concludes by outlining practical policy steps to implement the proposals in each of the three areas.

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