World Trade Politics

Power, Principles and Leadership

David A. Deese

• Publisher: Routledge
• Year: 2007
• ISBN:
  9781135976583
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

This book develops a new theoretical approach to understanding the role of leadership in trade negotiations. By examining in detail the key role of leadership in the GATT/WTO system, it offers new insights into trade bargaining from the inception of the GATT through to the current WTO Doha Round. David A. Deese makes use of an impressive range and amount of primary material on the GATT/WTO system from a variety of official sources.

World Trade Politics will be recommended reading for upper level undergraduate as well as postgraduate and research students, and will be essential reading for scholars of the global trade system.

Part I
Coverage, concepts, and theories

1 Why study international political leadership and the global trade regime?

Despite its modest beginning in 1947–1948, the GATT-WTO has evolved into what is arguably the most effective and authoritative of all the global inter-governmental organizations.¹ Even with its still modest staff and operating budget,² the WTO and its associated global trade regime maintain unprecedented influence in comparison to other international regimes.³ Its members have gradually and incrementally built very substantial functions and authority into this relatively small organization. It facilitates the resolution of a wide range of trade disputes through either pre-judicial settlements or obligatory, enforceable rulings, guides ever more ambitious and encompassing rounds of global trade negotiations, offers training and special support for new and least developed states, binds a steady flow of new members to its procedures and specific policies, and reviews and shapes the trade policies of each of its 150 members. Its membership could well expand to as many as 170 or more states over the next decade. Despite its “weakness” in terms of the lack of an executive board and the relatively small staff and budget, the WTO serves as no less than the multilateral organizational mechanism underlying a truly global trade regime.⁴

This study is modest in its focus on the GATT-WTO-based negotiations that have gradually led to an ever-expanding set of law, rules, procedures, and norms governing trade worldwide. This work is necessarily narrow in this way because of the difficulty of tracking the many connections and implications of the overall global trade regime. It cannot hope to identify and explain the extent to which this regime connects with national and regional trade institutions worldwide. For example, even the substantial number of small states which are not yet WTO members are certainly affected by the trade regime. The 150 member states are involved either directly or indirectly in almost all trade worldwide, including even the areas such as oil and certain agricultural sectors not covered by WTO agreements. The small states outside the WTO are connected through not only trade exchanges with large trading entities such as the USA and EU but also bilateral or regional arrangements with WTO member states. More generally, although trade relations have distinctive regional characteristics, and trade is heavily affected by national security concerns, the influence of global trade norms and practices is pervasive.

For this reason, it is reasonable to focus on the GATT-WTO-based negotiations as a surrogate or focal point for the global trade regime. Indeed, trade policy activists, journalists, experts, and officials have tended through history to look to the GATT-WTO as both the key indicator of health of the global regime and the antidote to perceived sickness in the regime. In other words, when GATT-WTO negotiations and agreements have been perceived as healthy, the global regime is generally assumed to be strong, When trade rules seem to be ignored and national protectionist measures and high-visibility disputes between major trading states seem to be on the rise, the GATT-WTO process is seen as the first antidote. In fact, weak economic performance in key states, regionally, or globally has also triggered US presidents, EU leaders, GATT-WTO director generals and other political leaders worldwide to call for renewed effort and emphasis on GATT-WTO negotiations as an essential response. The fact generally seems to be lost that any direct effects on economic growth from ongoing or emerging trade rounds will not occur until years later.

It must be noted that this book is not mainly about the most institutionalized or formalized roles, functions, and capabilities of the WTO. The basic idea of a new international organization for trade, the WTO, was in part to make available a more predictable and substantial organizational framework which could carry out more effectively not only authoritative dispute settlement but also the day-to-day roles of information collection, policy and regulatory reviews, working-group-level negotiations on new agreements, training, and technical support. Many members sought to escape the boom–bust environment wherein the capacity of the organization seemed to be dominated by, or at least closely tied to, the up and downs of the current round of global negotiations, or the lack of one. In this sense, this work focuses on negotiating rounds, or what was intended to become relatively less important over time owing to the more centralized and independent (especially in legalized dispute settlement) nature of the WTO as an international organization.⁵ In fact, the perceived influence and importance of the WTO and global trade regime are still closely associated by media and even some expert opinion with the ongoing negotiating round. When the round seems to be in trouble, prevailing opinion, at least as expressed in the media, seems to be that the WTO is less important, if not threatened with irrelevance!

At the same time, the book is quite relevant to these formalized roles of the WTO. First, in dispute settlement the decisions of panels and the Appellate Body for appeals affect the environment, and even the likely outcomes, of negotiations. Longer term, over the first decade of operations these dispute settlement bodies have established a substantial body of international trade law that resolves many uncertainties and sets the parameters for negotiations. Furthermore, this existing law combines with the most recently completed agreements to set the entrance requirements for new members such as China, which in turn shape their negotiating behavior for years after their entry as a new member. Second, the need for negotiations over new agreements arises in part from perceived problems with the operation in practice of existing ones. Thus, the direction of negotiations, particularly in later drafting stages, affects member states’ behavior with regard to existing rules and procedures. Finally, the importance and reputation of the GATT-WTO and the broader trade regime depend on their ability to keep up with technology, basic economic trends, and the needs of members. This, in turn, has required continual broadening of the trade sectors and issue areas covered by GATT-WTO agreements. Thus, for example, the WTO’s ability to extend its coverage to all agricultural trade is crucial in the current Doha Round because of agriculture’s fundamental economic importance to many least developed and developing country members, its economic and political role for many larger developing and most developed states, and its symbolic role in demonstrating whether the global trade regime can become a central factor in economic development through agricultural trade.

Aside from the worldwide visibility and controversy associated with the WTO and global trade regime, and the current Doha Round of negotiations in particular, why dedicate an entire book to the relatively narrow economic domain of international trade negotiations? To the extent that the reader is intrigued by international relations, foreign policy, international law, international economics and business, or international leadership, there are several important answers. First, political leadership in international contexts is not only, or even mainly, about power, dominance, coercion, or states as unitary actors. Many books published in international relations and foreign policy during the first decade of the twenty-first century focus on questions of “empire,” “unipolarity,” and “hegemony,” and most often with emphasis on the policies and actions of the United States. Indeed, at this time in international political history, prevailing modes of thinking would not suggest an investigation of leadership at all. And it is certainly nor popular in the United States, other countries or internationally to speak of American leadership in light of the failed intervention in Iraq. One prominent commentator argues that “[o]ne reads about America’s desire for leadership only in the United States . . . everywhere else one reads about American arrogance and unilateralism.”⁶ Furthermore, the widespread public opposition to US policies in Iraq and the Middle East more generally only reinforces deeply held skepticism among publics worldwide about the negative aspects of economic globalization, and US and WTO roles therein.

For these exact reasons, however, it is urgent to reexamine international political leadership, and to separate this inquiry from the different domain of theories focused on hegemony and unipolarity. What is the constructive potential for international political leadership in the first quarter of the twenty-first century? To what extent must this leadership be joint in order to be effective? How have large, medium, and small powers worked out their leader and participant roles in a core issue area (international trade) of international political economy, international organizations, international economic law, foreign policy, and international business? What role can officials of a public international organization play in facilitating leadership, and joint leadership in particular? How do US, European, and other leaders understand and determine trade-offs between national security and foreign economic goals? Even for scholars in the field, all are familiar with theories related to “hegemony” whereas many are not even aware that there is a distinct body of theory about international political leadership.

A second reason to investigate trade negotiations is that their long and rich experience offers key insights for officials and states involved with many other important global, multilateral, and regional treaties and regimes across a wide range of issue areas in various stages of development. Whether operating with only the modest supporting structure of an arrangement such as the North American Free Trade Association (NAFTA), or with the more elaborate organizational basis of the International Monetary Fund (IMF), many treaty systems and broader international regimes will benefit from studying the failures in trade leadership at the global level so as to avoid or mitigate such failures in the future and the successes in order to emulate them. While the GATT-WTO experience is less applicable to the process of creating new agreements or regimes in the twenty-first century, it is centrally relevant to the development and enhancement of existing treaty systems and regimes. In this way, the study aims to help address a relative dearth of work on the long-term evolution of international regimes.

Third, the international trade system offers an experience that is quite distinct from those of the Bretton Woods international monetary system and the international development loan institutions (originally the World Bank and later the IMF as well). Instead of the comprehensive International Trade Organization (ITO), which was stillborn, the GATT began with a very narrow mandate and an extremely informal institutional structure. From these tentative beginnings, the story of international trade is one of long-term, episodic development built upon a long series of successes and failures at key turning points in ever more ambitious rounds of negotiations. After fifty years of GATT-based negotiations, the Uruguay Round culminated with the new WTO and a much more broadly based global regime. In sharp contrast, the monetary and development regimes began as relatively elaborate organizations, involving the IMF and World Bank respectively, but then gradually experienced collapse or basic failures in accomplishing their core mission, as well as shifts in the fundamental focus of their operations.

In sum, the long experience of leadership of GATT-WTO-based international trade negotiations may suggest a solution to the single most fundamental problem confronting international organizations in the twenty-first century: How is it possible to simultaneously keep engaged and committed both the most powerful member states, which rightfully expect a disproportionate role in decision making, and the least powerful states, which rightfully expect to participate in meaningful ways? Students of political science or international relations are often perplexed, if not offended, by the relative inequality of influence among the member states in public international organizations in terms of influence over decision making, despite the one state–one vote principle. Furthermore, critics who would either abolish or reform the WTO and its trade regime, and even leading European trade negotiators, have all complained about the lack of formality and organization in decision making. At the same time, serious thought should be given to how many different negotiators and state officials, on behalf of many different states, have provided leadership in the context of GATT-WTO-based negotiations. There can be no doubt that, historically, US and European heads of state and negotiators have been the main leaders, yet a wide array of other states have consistently produced leaders of substantial importance to the negotiations. Most important, a very substantial number of states gradually have built a political culture around the training and advancing of highly effective trade negotiators. This book argues that a very few of these have joined US and EU officials in providing vital joint leadership, and that this trend will surely continue into the future.

Approach and methodology

The approach in researching this book was to seek out the primary and most relevant secondary, scholarly sources available and then conduct elite interviews to cover gaps in the primary sources or resolve inconsistencies in the secondary materials. Wherever possible, the research cross-checked primary and scholarly secondary sources not only against each other but also with elite interviews. This involved considerable archival research at the WTO in Geneva, numerous government missions in Geneva, national government offices in key trading states, and major university libraries. For the empirical analysis of key decisions, meetings, and other events, this included interviewing the person deciding, someone else present at the time, or the most reputable chronicle of the event, preferably one written by someone who was present. Normally an interview of at least one additional participant or observer was conducted. Elite interviews were conducted in parallel with archival research at the WTO, government missions in Geneva, government offices in several key states, and non-governmental organizations in Geneva and other capital cities. Of course scholarly research provided an invaluable and reliable record when it was based heavily on an appropriate combination of documents, other primary sources, and interviews. In the case of most of the processes traced and mapped for this book, the secondary literatures are invaluable. They generally provide solid and comprehensive coverage of the events, particularly micro-level analysis of the eight complete GATT trade rounds. Several sources should be listed, but key examples include Gilbert Winham’s classic work on the Tokyo Round (1986) and John Croome’s comprehensive history of the Uruguay Round (1995). Indeed, in some cases a leading participant has written an account of key events, for example EC trade negotiator Hugo Paemen’s coauthored book on the Uruguay Round (Paemen and Bensch 1995). That coverage extends through completion of the Uruguay Round in 1993–1994, but is not available for the final case studies: the WTO ministerial meetings in Seattle of 1999, Doha of 2001, Cancún of 2003, and the Doha Round preliminary agreement of summer 2004, which were based heavily on interviews and primary materials. Insights from the Cancún, Mexico, ministerial meeting of 2003 are based on the author’s coverage of the meeting, participation in press and NGO briefings, and numerous interviews on-site. The rich description provided by past researchers on negotiations through the Uruguay Round allowed this book to focus on empirical questions where the literature is either in disagreement or insufficient in coverage.

However, work that tends to sacrifice historical accuracy on the altar of advancing theory was not weighted equally with theoretical explanation that was careful to get the history right. In other words, some scholars are clearly more committed to their theory than to the empirical cases or data. This book takes the other path, in part because there is considerable divergence between the scholars working in the different traditions outlined above. Equally important to the theoretical context is an accurate map of the causes of macro-level decisions taken with respect to regime development. At the same time, as explained above, the research questions are drawn from the most pertinent theoretical literatures and integrated into a political leadership of international regime negotiations approach. In this way, the cases are designed to contribute to our understanding of state sovereignty, international bargaining and cooperation, and the role of institutions in each of these areas.

The book’s methodology represents a blend of archival research, interviews of political elites, and process tracing in the tradition of historical institutionalism. ⁷ It maps out the background conditions, the crises, coalitions, and cleavages, and the barriers to change involved with the key events that were intended to develop the international trade regime through GATT-WTO-based negotiations.⁸ Each time that member states attempted to make major changes in the organization or regime is considered to be a defining period. Equally important, the book relies on analysis of the turning or focal points in negotiating, as related to bargaining stages or phases, as is explained in Chapter 2. Thus, the study aims to include all of the major turning points in the evolution of the trade regime.

It is important to explain how the cases will address the challenges of avoiding circular reasoning and causal relations, and distinguishing normal bargaining behavior from international political leadership, including how to understand when successful bargaining outcomes are due to leadership rather than power. For these purposes, three key methodological steps are taken. First, political and international political leadership are defined in detail, and divided into two main types, structural and entrepreneurial, which can be traced and analyzed in interaction and contrasted with each other. Leadership as defined in this study emphasizes the clarity and precision of leaders’ ideas and policies (including the pursuit of collective international in addition to national interests), the degree of committed and persistent goal seeking, and the continual building and maintenance of coalitions or consensus groups (at both domestic and international levels).

Second, particularly for structural leadership, the bargaining proposals and subsequent compromises offered before and during negotiations are compared to known national positions in order to identify any elements that represent broader, or collective, interests. In this way, initial proposals and positions can also be contrasted with subsequent ones to identify shifts toward collective interests. In addition, leadership in this sense is also distinguished from integrative bargaining, which takes some account of others’ positions. Leadership reaches a higher threshold than simply taking other parties’ positions into consideration when forging a bargaining strategy. In the trade context, political leadership aims to advance the development of the global trade regime, but it does so by offering new ideas or approaches, and often by offering to move earlier and further than other parties. Finally, as explained below, cases are contrasted in sets of failed and successful attempts in order to help differentiate causal mechanisms and pathways.

Thus, a history of more than fifty years can be summarized as a series of attempts at international political leadership to advance the regime through negotiations. In each case, the initial conditions are compared to the outcomes, both positive and negative, with respect to the dimensions of the dependent variable or factor, as explained further in Chapter 2. The key stages and turning points are identified and traced to determine the precipitating actions and even...