"The pen is mightier than the sword." For nearly a decade, Brahm has used newspaper articles, magazines and authored over 20 books to explain current affairs, reshape stalled negotiations, and provide a communication platform to Asian leaders and policymakers. His writings reveal underlying central challenges facing Asia over the past decades.

Looking Past the WTO

Written by Laurence Brahm - Published by South China Morning Post on 11/15/2002

I remember sitting at a government banquet in Beijing shortly after China entered the World Trade Organisation. That night an official posed a question: “Do you think the WTO will really change China?”

I thought about it for a moment, as Australian lobster was being served up raw as sashimi and the cadres toasted another “bottoms up” round with French brandy. I murmured: “No. Instead, China may change the WTO.”

Maybe that is about to happen. China has just signed its first bilateral free-trade agreement (FTA), with Chile. The document – covering market access, origins, safeguards and trade revenues – not only opens both markets. It also positions Chile to become Latin and South America’s window to China. And it leapfrogs China’s previously negotiated FTA with Southeast Asia, programmed to kick in come 2010: the China-Chile deal will take effect as soon as both countries’ legislatures ratify it.

Chile’s ambassador to China, Pablo Cabrera, who engineered the successful negotiations, said: “We are pleased that [this FTA] … will demonstrate how a bilateral [deal] can serve effectively within the principles of the WTO, without being constrained by its current limitations.”

This deal may pull the rug out from under the WTO ministerial meeting scheduled for next month in Hong Kong – because it offers an alternative.

The WTO as an organization is unwieldy and carries heavy baggage for the Group of Eight (G8) industrialized nations – namely, the conditions of many deals must be acceptable to G8 nations. While its theoretical agenda is to promote fair trade, it falls short of that goal and, instead, appears to represent unfair – or at least imbalanced – trading interests. Instead of a champion of fair trade, the WTO is now seen as a forum for the G8 to extract trading conditions from less-developed nations. The volume of protest at each ministerial session only goes to underscore these perceptions.

Now that China, the world’s export powerhouse, has signed its own bilateral FTA, it may signal the beginning of a new trend.

Could the Hong Kong ministerial meeting seal a WTO collapse? The potential is on the horizon for a Cancun-type breakdown next month.

Then what happens? Certainly the developing nations of Africa and Latin America have the most to lose should the US take a unilateral approach to trade policy.

That is where the bilateral FTA model kicks in: if China signs more deals along the Chile line, then the formulas change.

In the view of some analysts, the United States will seek a unipolar world, pushing only its own interests. If that happens, the question for developing nations will be how to cope. This is where bilateral FTA arrangements come in: they can help to cushion the sudden impact of changes made by major players such as the US.

The China-Chile FTA is not in conflict with the broad theoretical principles of the WTO. It fleshes out core issues and provides practical solutions to removing trade barriers between nations that have economic synergies.

Bilateral and even multilateral FTA deals can provide approaches to specific questions that are not easily thrashed out in the forum of the WTO. They allow certain barriers to be removed and trade services enhanced.

Then the question arises: what role should the WTO play? Should it be a debating society for a framework of principles; a facilitator for bilateral negotiations; or a tool of US foreign policy?

Protesters on the streets of Hong Kong next month may not be against using the WTO as a policy forum within which to negotiate constructive bilateral trade agreements. Rather, they may be opposing using the WTO as a platform to forge a unipolar world.

Laurence Brahm is a global activist, international mediator, political columnist and author. He is the leading advocate of a fresh development paradigm - The Himalayan Consensus - an innovative approach to development.

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