The head of the World Trade Organisation warned on Thursday that the body had descended into “paralysis” and called for an urgent rethink on how the institution operates.
Roberto Azevedo, the Brazilian who took over the WTO’s leadership a year ago, told its 160 members that efforts to convince India to lift its objections to a deal struck in Bali last year had failed. In response, he said, the members needed to have a major discussion about how the WTO could become an effective organisation.
“We have seen this situation too many times. So we can’t continue in such an inefficient and ineffective way that is so prone to paralysis,” he told a meeting of the WTO’s trade negotiating committee.
“This could be the most serious situation that this organisation has ever faced,” Mr Azevedo said. “I am not warning you today about a potentially dangerous situation – I am saying that we are in it right now.”
India, with the support of a small group of countries including Cuba and Venezuela, has blocked the implementation of an agreement to reduce red tape at borders around the world since earlier this year.
Delhi wants to gain a permanent exemption for a government programme to buy food for the poor that critics say amounts to a subsidy for Indian farmers and has distorted global markets in products such as rice.
The move has proved particularly damaging for the WTO, as the deal struck in Bali was designed to be a confidence-building exercise and meant to restore some life to the long-stalled Doha round of negotiations. By proving that the WTO cannot implement even what its members finally agree to, the row has instead led to even greater distrust within the organisation, officials say.
“What we need now is to get out of this vicious circle,” Angelos Pangratis, the EU’s ambassador to the WTO, told Thursday’s meeting.
“What is at stake is not only our ability to reach agreements, but also to implement what has been clearly agreed. There should be no mistake, the current stalemate will have consequences on the WTO and the multilateral system.”
The impasse has already prompted leading members to discuss radical steps to change the way business is done at the WTO, which has since its birth in the mid-1990s operated under the principle that all decisions are taken by consensus.
The US, EU and others have already begun discussions on how to negotiate “plurilateral” agreements on specific sectors within the WTO. The US and EU have launched a number of such agreements outside the WTO in recent years. But discussion now is over how to find a legal mechanism that would allow them to be conducted within the WTO, senior trade officials in Geneva say, and circumvent the veto powers that individual countries such as India have at the moment.
Were those discussions to come to fruition, they would mark the biggest shake-up in the way global trade negotiations are conducted at the WTO in 20 years.