Breaking the WTO

This chapter explores the immense changes that are currently reshaping the global political economy, with the rise of new powers, such as China, India and Brazil, challenging the dominance of the US and other advanced-industrialized states in the global economy and its governance. It introduces and situates the key questions at the core of the book: What agendas are the emerging powers pursuing? How is their rise affecting the governing institutions created under US hegemony and the American-led project of neoliberal globalization? It explains why the WTO is a critical case to shed light on these questions and understand the causes, nature and implications of contemporary power shifts. It sets out the book's central argument: the rise of new powers has precipitated a crisis at the WTO, a core institution of the neoliberal global economic order, signalling a moment of disjuncture in the institutional project of neoliberal globalization.

This chapter explores the tensions in the US-led global economic order. It argues that, while multilateralism and free markets served as its core pillars, both were in practice highly asymmetrical. The US created and used multilateral institutions as a means to exercise its authority over the international system and promote its own national political, economic and security interests abroad. In the economic realm, the US hegemon deployed the discourse and policies of free markets – propagated through multilateral institutions – to compel other countries to open their markets to its goods and capital, while nonetheless maintaining substantial protections in its own. This exercise of American power, however, contained the seeds of its own undoing: the expansion of global markets gave rise to new economic competitors and involved the creation of institutions and discourses that could eventually be used against the hegemon.

This chapter examines the WTO as a central institution in the American-led project of neoliberal globalization. It provides an overview of the history and evolution of the multilateral trading system. The chapter highlights the tensions within the liberal principles of multilateralism and free trade that lie at the center of the GATT/WTO. It shows how the superior economic and political resources of the US and to a lesser extent other Northern states have enabled them to dominate the institution and design and structure the rules of international trade to serve their economic and strategic interests. It also looks at the historically disadvantaged position of developing countries within the multilateral trading system and the particularly onerous costs exacted from them in the previous Uruguay Round.

This chapter examines power shifts at the WTO, challenging the assumption that the emergence of new powers is a function of their growing economic might. While China's rise has been closely tied to its economic weight, it shows that Brazil and India used their activist and entrepreneurial leadership of developing country coalitions to propel themselves to power. Despite their relatively small economies and limited roles in world trade, Brazil and India assumed a more aggressive and activist position in WTO negotiations than China and played a greater role in shaping the agenda of the Doha Round. Later, China did come to exercise significant influence as the negotiations neared a potential conclusion, but in a reactive veto capacity, unlike the proactive agenda-setting of Brazil and India. It also shows that even China, though a follower rather than a leader, has sought the benefits and protections afforded by developing world alliances.

This chapter focuses on Brazil's objectives and behavior at the WTO, which have been driven by the rise of its highly competitive agro-export sector. It shows that far from rejecting the discourse and tools of global neoliberalism, Brazil has become arguably the most active and aggressive proponent of trade liberalization in the current Doha Round. Brazil has advanced the interests of its agribusiness sector by portraying them as a universal interest of the Global South and strategically mobilizing a discourse of development and social justice and the politics of the North-South divide. The influence of Brazil and its agribusiness sector is critical to explaining the direction that developing country "activism" has taken in the current round, with an intense focus on liberalizing agriculture markets through the removal of subsidies, rather than advocating policies that would mark a more radical departure from the WTO's traditional neoliberal trade paradigm.

This chapter examines China's position at the WTO to highlight the constraints on the emerging powers. China has a major interest in reducing trade barriers and further opening markets to its exports but has been cautious in pursuing its offensive trade interests in the Doha Round. For China, the massive expansion of its industrial capacity and exports are perceived by states around the world as a threat; aggressively seeking to expand its market access through the Doha Round would risk provoking a backlash that could ultimately jeopardize its exports and economic growth. In addition, a further constraint operating on China and the other emerging powers stems from the need to maintain their developing world alliances. Thus, although they have indeed gained power and exercise considerable influence at the WTO, the new powers are not unconstrained in their ability to pursue their offensive trade interests.

This chapter examines India's agenda at the WTO. It challenges the widespread characterization of India as an irresponsible power, intent on derailing WTO liberalization. It shows that India's process of domestic reform and liberalization, coupled with the development of a world-leading services export industry with substantial interests in liberalizing foreign markets, has fundamentally altered its orientation towards the multilateral trading system. Far from an opponent of global trade liberalization, India has major export interests that it has sought to advance through the Doha Round, although its offensive interests are also balanced by important defensive concerns in agriculture. India's negotiating position at the WTO has therefore combined efforts to promote liberalization in its areas of export interest and to secure protections in sensitive sectors where it is vulnerable to liberalization. Contrary to the claims of its critics, far from being unusual, such behavior closely resembles that of the traditional powers.

This chapter argues that emerging powers have imperilled the neoliberal project at the WTO – ironically, not by rejecting its goals and principles but embracing them. Rising challengers usurped the dominant norms, discourses and institutional tools of the WTO, which had once been instruments of US hegemony, and used them to destabilize the existing hierarchy. Yet their challenge to American dominance has had profound and unpredictable consequences: when the weapons of the powerful became appropriated by formerly subordinate states, the system itself broke down. A situation of more equitable power relations among states has caused the Doha Round to collapse and thus cut short the American-led neoliberal project at the WTO. The current crisis at the WTO is a crisis of the liberalism underpinning the international economic order created under US hegemony, unleashed by power shifts that exacerbated the contradictions contained within its foundational myths of multilateralism and free trade.