Why the WTO is Deadlocked: And What Can Be Done About It

Paul Collier

The World Economy, 2006, vol. 29, issue 10, 1423-1449

Abstract: The GATT was hugely successful, yet its successor organisation is to date failing. This paper argues that the expansion in both scope and membership make it radically more difficult for a purely bargain‐based organisation to succeed. Three factors limit the scope for deals that would be recognised as mutually beneficial. Many developing countries are accustomed to transfers rather than bargains; the poorest countries have no basis for bargaining; and even where mutual advantage is possible it requires cross‐sectoral deals which are only feasible with new rules that are unattractive to many WTO members. The paper proposes solutions to these new problems. It proposes an explicit component of ‘transfer’ in the form of non‐reciprocated liberalisation. It proposes a plurilateral solution to the tension between rules and sovereignty. It links these through a ‘grand bargain’ that offers transfers in return for plurilateralism. For the marginalised countries it proposes time‐bound preferences in OECD markets along the lines of AGOA. Finally, to recreate for the larger developing countries similar incentives for liberalisation to those previously achieved for developed countries, it proposes a limited MFN, through which they could restrict their liberalisations to include only other developing countries.

Date: 2006
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