The Value of the WTO

Abstract

Recent developments in global trade include actions by major global traders that lie outside the norms of behaviour of the World Trade Organization (WTO) over the last 20 years. Member frustrations with the slow pace of negotiations and concerns about strategies and behaviours of other members approaches to trade and economic development have created unprecedented stresses on a system of rules and commitments that have long encouraged global trade growth and increased economic integration. In this paper we explore the value of the multilateral trading system, particularly the WTO, and emphasize that the value goes well beyond crucial achievements such as tariff reductions and the prevention of a global trade war, but is also found in increased certainty and transparency. The WTO reduces uncertainty about trade policy thus promoting trade and investment. Membership of the WTO locks in beneficial reform and has a public good nature also fostering trade with non-members. We discuss the importance of the WTO as a multilateral forum to negotiate rules on segments of trade expected to grow in the future such as services and digital trade. We describe how the history of negotiations in the WTO provides useful insights for negotiations on such future topics.