Open Plurilateral Agreements, International Regulatory Cooperation and theWTO

Abstract

Sustained high growth in many developing countries (‘the rise of the rest’) combined with long‐standing World Trade Organization (WTO) working practices hamper the ability of the WTO to perform its routine functions and paralyze efforts to adapt to new circumstances. For want of an alternative, preferential trade agreements have taken up some of the slack in addressing differences in domestic regulation of product safety, environmental and social conditions, but these are exclusionary and inefficient from a global perspective. In this article, we argue that a new type of agreement based on open plurilateral cooperation offers better prospects for groups of countries to explore and develop their potential common interests on regulatory matters, while safeguarding core aspects of their national regulatory sovereignty and increasing the possibility of regenerating the WTO from within.

Preventing the Bad from Getting Worse: The End of the World (Trade Organization) As We Know It?

“…Establishing a common understanding and baseline data on national policies that are feeding current trade tensions or that are likely to do so in the near future is a precondition for negotiating agreements, whether on a plurilateral or multilateral basis. 62  Second, consider changes in the governance framework to support greater use of open plurilateral agreements, as we have argued for in Hoekman and Mavroidis (2015) and Hoekman and Sabel (2019). Variable geometry is not only unavoidable but for many issues is desirable, given differences in social preferences and national priorities and capacities.…”

“…It is, therefore, not surprising that cooperation on domestic regulation occurs among likeminded players in plurilateral settings. These include deep PTAs as well as sector-specific cooperation among national regulators outside trade agreements (Hoekman and Sabel, 2019). Examples include huband-spoke arrangements in which a country or PTA-bloc (e.g., the EU) conditions trade on the effective implementation of regulation in exporting countries ("spokes") that is either identical or deemed to be equivalent to the applicable domestic regulatory regime in the importing or consuming jurisdiction.…”

“…One dimension of the 'value proposition' offered by the WTO in this regard is in the area of enforcement, as new (plurilateral) agreements will need to have conflict resolution mechanisms. Determining how the WTO judicial function can and should apply to future plurilateral agreements and where other mechanisms such as the specific trade concern process used in some WTO committees (Wolfe, 2020a) or recourse to expert advice (Hoekman and Sabel, 2019) are more appropriate to address compliance and implementation concerns is an important dimension of the challenge confronting WTO members. This raises questions that require governments to consider whether to stick with the presumption that the State is the primary actor when pursuing multilateral cooperation.…”

“…A Transparency Mechanism 2.0, inspired by the original, 56 with the mandate to create a regular flow of information between PTAs and the WTO would help members to determine areas of PTA-based cooperation that could be multilateralized (extended to encompass non-PTA signatories). This could take the form of open plurilateral agreements (Hoekman and Sabel, 2019), or, where feasibleas was the case with trade facilitationthe creation of new multilateral agreements. 54 See, e.g., Drake and Nicolaidis (1992).…”

WTO Reform Priorities Post-Covid-19

“…Plurilateral agreements offer a potential 'third path' for trade cooperation, complementing discriminatory PTAs and multilateral negotiations that span all WTO members. The key promise -and critical constraint -is that open plurilateral agreements (OPAs) permit like-minded WTO members to cooperate but must do so without discriminating against non-participants (Hoekman and Sabel, 2019). This implies that the scope for cooperation in policy areas where there are concerns about freeriding by non-participants will depend on whether a critical mass of WTO members can agree to cooperate.…”