Reforming the WTO: what role for the Global South?

The theme of the reform of the World Trade Organization (WTO) has received significant attention from India’s presidency in the G20 in 2023. Within the framework of the Think 20 (an academic offshoot of the G20) several policy briefs have been dedicated to the theme of imp-roving the operations of the WTO, with a key focus being placed on the modalities of the Dispute Settlement Body as well as the use of plurilateral agreements as a way of advancing greater trade openness. But in most of these forays into repairing the international trading system, there are several important “blind spots” – the rising role of regionalism and the greater role of the Global South in the past several decades. Without fully incorporating these factors into the framework of WTO reform, efforts to resuscitate this key global organization are unlikely to succeed.

As regards the rising role of regionalism in the world economy, this trend has been seen by many observers as being inimical to the operation of global organizations such as the WTO. For too long regionalism has been perceived more as a substitute, rather than a supporting pillar for multilateral institutions. In reality, a careful look at the potential dividends of regionalism for the global economy suggests that there is notable scope for synergies between regionalism and multilateralism/globalism. Indeed, the one area where I believe there is still room for the G20 to strengthen its economic efficacy and contribute to the strengthening of the WTO on the international arena is via creating a platform for regional integration arrangements, in which G20 countries are members.

This proposal for the creation of a “regional 20” that brings together the regional integration blocs in the global economy is contained in a recent IIASA paper (group of authors is led by Professor Jeffrey Sachs) produced for the G20 and dedicated primarily to the reform of the World Trade Organization (WTO)[1]. The idea is that the mandate of the WTO would be expanded and its capabilities augmented by greater cooperation with the platform of regional trade arrangements in the “regional 20” circle. Rather than being a hindrance, regionalism in such a setting could become a force that supports global institutions such as the WTO.  

Some of the main recommendations of the paper with respect to the WTO reform and the role of regionalism are as follows: “The WTO needs closer co-ordination with regional integration arrangements. To address this, several steps can be taken.

  • First, the rules of accession to the WTO should be amended to allow the inclusion of customs unions as members, such as Mercosur.
  • Secondly, a platform of cooperation and regular discussion should be created between the WTO and RTAs, similar to what exists between the International Monetary Fund (IMF) and regional financing arrangements. Inclusion of RTAs, especially those which are advanced, in discussions at the ministerial and trade rounds of the WTO could be also recommended.
  • Thirdly, a “Regional Twenty” platform could be established within the G20, with the WTO as one of the key coordinators.
  • Fourthly, a G20 group within the negotiation layer of the WTO could be created to strengthen connectivity between the WTO and G20”.

The Global South could play a key role in the formation of such a platform for regional arrangements – almost all developing economies in the G20 have their very own flagship regional integration project – whether it is MERCOSUR in the case of Brazil and Argentina, or ASEAN in the case of Indonesia. With the African Union becoming a member of the G20 in 2023 the case for the formation of such a platform becomes all the more significant. The creation of a “regional 20” platform could also strengthen the coordination between the WTO and regional blocs with the view to rendering regionalism more open. A “regional 20” circle may also serve as a basis for a new, regional layer of global governance that would complement the levels of global institutions and national economies – in effect such a global governance layer would expand the possibilities for a horizontal coordination of best practices and synergies across the main regional integration blocs.  

Apart from the “regional 20” platform within the G20, there is also scope for the Global South/BRICS+ economies to create their very own WTO platform within the “groups in negotiations” framework. All of the BRICS-5 economies are members of the WTO, but an expanded BRICS-11 formation includes Iran and Ethiopia that are not full-fledged members and have only an observer status with the organization. This should not, however, preclude the BRICS from creating their own platform within the WTO – among the key themes on the agenda for such a grouping could be lower protectionism from the advanced economies, coordination with other “groups in negotiations” of the Global South, a simplification of accession requirements/rules for prospective WTO members (including new members of the BRICS formation), the launching of a new WTO trade round that would accord particular importance to the needs of least-developed economies.  

The formation of a BRICS platform within the WTO could help the Global South address such critical issues in global trade such as green development, digital economy (including digital economic agreements), technology transfers, greater access of developing economies to vaccines. Another important track is the support that could be accorded within the WTO to key regional projects of the Global South such as the formation of the African Continental Free Trade Area (AfCFTA). Developing economies also need to look into aligning their position within the QUAD – an instrument of consultations within the WTO that brings representatives of the developed world (US, EU) as well as the Global South (typically India, South Africa). Going forward there may be a case for the BRICS/BRICS+ WTO platform to feature in these discussions on the side of the Global South.

Overall, the reform of the WTO is of critical importance in a world economy that is increasingly embracing protectionism as a solution to economic difficulties. Without a constructive agenda for new trade rounds emanating from the WTO, national economies are increasingly falling prey to vested interests and protectionist pressures – a global trading system that is not capable of expanding trade and openness is vulnerable to bouts of contraction in trade and “introvert” trade policies based on subsidies, new modifications of “industrial policy” and outright tariff hikes. In this difficult period for the global economy, the Global South has the capacity to make a tangible contribution not only to the reform of the WTO, but also the new impulses towards trade liberalization in view of the still relatively high tariff levels and the sizeable scope for further regional trade liberalization.


Image by Engin_Akyurt via Pixabay