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reform the WTO?

Friday 6 February, 2009

I attended this lecture WTO Regulation of Bilateral Trade Agreements:  A Reform Proposal by Prof. Ralph Folsom of U San Diego law school & adjunct prof & advisory board member of the Center for International Law @ John Marshall Law School.  His talk was based primarily on this paper.  He’s apparently an old-school kind of guy because he had no powerpoint presentation, which is fine by me, but that means I have to summarize what he said.  Here goes:

Folsom set the ground work by saying that by the failure of the Doha Round of the WTO negotiations, bilateral trade agreements (BTA’s-including regional trade agreements) have taken over as the favored international trade pattern.  BTA’s possess advantages over multilateral treaties:

  • they can cover more subjects, i.e. foreign direct investment
  • government procurement can be included (optional in WTO, ex. it’s addressed by NAFTA for Mexico, but not in WTO)
  • labor rights & environmental issues are more often included

“There are now about 400 BTA’s of which we’re aware, but because there are no specific recording requirements to the WTO or any other international governing body, we’re not exactly sure.  That’s part of what’s broken & part his reform proposal.  Only 200 of the ~400 BTA’s are posted by the WTO, which is a regulatory failure. The WTO’s 2006 transparency mechanism apparently hasn’t cut it.  So his revelation is the current system is a failure & suggests we should simply ditch it.  We should then create a transparent mechanism to make all countries post BTA’s or make them subject to mandatory penalties, similar to international dispute settlement mechanisms the WTO invokes in cases of trade sanctions, etc.  Folsom maintains these penalties have teeth & I can see that.

My take:  I’m all for more disclosure & transparency.  Not mentioned in the lecture, but included in his paper, it sounds like he’s proposing an oversight role by the WTO for BTA’s as well.  I’m not a lawyer, but I’m a little wary of more reporting requirements & bouncing mutually-agreed-upon negotiated agreements off of a higher authority.  My assumption is the relevant parties, i.e  the business people who are buying & selling between the included countries, are aware of BTA’s, which is the most important thing.  I’m not completely clear on the benefit of overseeing & reporting BTA’s.  I’d like to know the cost/benefit comparison.

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