Trade Facilitation in the Multilateral Trading System - An Analysis of the Doha Round Negotiations on Trade Facilitation

Abstract

The World Trade Organization (WTO) as the world trading system is at a “cross roads”. Following the failure of ministers to reach an agreement on the WTO negotiations at their meeting in Geneva in July 2008, the WTO Members have retreated for serious reflection on the continued efforts to conclude the Doha Round. WTO Members, NGOs and scholars have raised concerns that if the Doha Round is not concluded then the WTO will exhaust its legitimacy and lead to a myriad of unequal and diverse bilateral or regional trade agreements.

International studies confirm that trade facilitation, by means of improving administrative trading processes and harmonizing regulations and laws, can result in greater economic growth than tariff reductions that are on the negotiation table. In light of these findings, those favoring bilateralism argue that trade facilitation should move forward without waiting for a multilateral agreement. However, the multilateral trade system offers an institutional platform, which no other international organization or its bilateral counterparts can provide. Regardless of its shortcomings, the WTO still has a strong support among its members and many of them are taking initiatives to resume the Doha Round. Proponents for a multilateral system also argue that great problems can arise when important trade topics, like trade facilitation, under the WTO framework are taken from the multilateral trade agenda and settled in bilateral agreements.

Trade facilitation, regulated under Articles V, VIII and X of the GATT, is not a divisive subject in the WTO, being added only in 2004. Still, trade facilitation has widely been recognized as bringing benefits to the WTO Members, particularly to developing countries, and has caused relatively few disagreements between the WTO Members. However, the special and differential treatment and the technical assistance that are being offered to the developed countries in order to ease the implementation process, have been and will continue to be the difficult issues to be settled in future negotiations. These implementation issues, that entail additional negotiation time and political effort, become more complex since the aid instruments have the nature of soft law. The main reason for the state of affairs is that many developing countries lack the economical and administrative platforms to implement trade facilitation, and consequently they require guarantees that go beyond non-binding commitments.

Against this background, the aim of this thesis is - besides scrutinizing the institutional, judicial and political implications and benefits of trade facilitation - to examine if there are any more efficient implementation alternatives than the multilateral approach. The main conclusion of this thesis is that although trade facilitation will result in some implications for the developing countries the advantages exceed the disadvantages. Moreover, the WTO even with its democratic deficit and institutional shortcomings is the preeminent legal institution to implement trade facilitation. This thesis recognizes the difficulties ahead for the multilateral trading system, but believes the Doha Round in the near future will be resumed and hopefully results in an agreement, which not only launches trade facilitation, but also restores WTO’s legitimacy as an international trading system.