Why the WTO decision-making system of 'consensus' works against the South

Although decisions at the WTO are by consensus and the overwhelming majority of its members are developing countries, the decisions of this body have been invariably against the interests of the South. Bhagirath Lal Das explains this paradox.

IT is a big paradox of international economic relations that the developing countries, which outnumber the developed countries in the World Trade Organisation (WTO) by about four to one, are not having their way in this forum and have to face adverse situations almost perpetually. Unlike the International Monetary Fund (IMF) and the World Bank, there is no weighted voting in the WTO, which works on the principle of one country one vote. And yet the developing countries, which form an overwhelming majority in numbers in the WTO, have not had any success in pursuing their objectives. They are always on the defensive and have to strive hard to reduce the hazards and damage that come their way. It is important to understand how this sad situation has come about.

The highest decision-making body in the WTO is the Ministerial Meeting which generally meets once in two years. The next decision-making body is the General Council which takes decisions in between the Ministerial Meetings. The formal process of decision-making in these bodies is by simple majority of the Members present, with one Member having one vote. However, there is hardly any occasion of formal voting as, in practice, decisions are taken by consensus, which is held to exist when no Member present at the meeting formally opposes the proposal. Then there are specialised bodies, like the Councils on goods, services and trade-related aspects of intellectual property rights (TRIPS), the Committee on Trade and Development, various Working Groups, etc.. Generally these bodies take decisions on the basis of consensus. The reports of dispute settlement panels and the Appellate Body are considered by the Dispute Settlement Body (DSB) which also works on the basis of consensus.

The reality

In this scheme of decision-making, a country wishing to oppose a harmful proposal can be effective only if it puts up a formal opposition at the time a decision by consensus is sought. And for a positive action, it has to muster the support of the majority of the Members present. One would expect that a developing country, being satisfied that a particular proposal is not in its interest, would formally put up its objection at the time when consensus is being determined. Also one would expect that the developing countries in large number will formally oppose a proposal if it is not in their interest and would get it turned down by majority vote, since they really do form the bulk of the WTO membership. Similarly, in respect of a proposal which is in their interest, one would expect them to sponsor it with the support of a large number of them. But nothing like this actually happens. Part of the reason lies in the actual operation of the WTO process in considering a proposal.

Generally, important proposals in the GATT/WTO are normally made by the developed countries. After they have formally made a proposal in a particular body in the WTO, there would be some preliminary observations by some delegations made in a non-committed manner. Thereafter the action shifts away from the main stage. The main sponsors hold limited consultations with some delegations, first trying to consolidate support and then involving the others to soften their possible opposition. Sometimes, the chairmen of the relevant bodies of the WTO and even the Secretariat organise such consultations. Invariably these are limited to a small number of delegations, the ones selected for participation being those that may have a keen interest in the subject or those that may be vocal in opposition in the open forum. A very large number of developing countries are left out of this process of consultations which are in reality full-fledged negotiations. If the subject is an important one, the chairman sometimes makes an interim report in the formal meeting. These reports are generally very brief, saying that the consultations are going on, often without giving the details of the main issues involved and the conflicting stands of various countries.

In the meantime, pressures are built on the developing countries that had been opposing the proposal. Depending on the intensity of the opposition, the pressures may be applied on the delegations in Geneva or even bilaterally in the capitals. The usual technique of winning over the opponents one by one is also applied. And finally the hardcore opponents are left with the option of either keeping quiet or withholding consensus in the open meeting. Very often they do not want to incur the political cost of formally opposing a decision at the end, if they are left alone or are in a very small group. The decision is thereby taken in the open meeting by consensus.

Behind the scenes

In this process, a very large number of developing countries do not have the opportunity of participating in the negotiations which are held behind the scenes in small groups. They are faced with the final result in the open meeting at the end, and they do not have enough courage or motivation to put in a clear opposition or an effective reservation at that stage even if the particular decision is not fully in their interest. They do mumble a few words of protest sometimes, but do not come round to withholding consensus formally.

In this manner, even though each country has a vote in the WTO and has a right in decision-making equal to that of any other country, a large number of developing countries are left out of the actual negotiations. Their lack of agreement with the decisions eventually reached is evidenced by the bitter critical statements which some of them have been making after important meetings of the WTO. Some recent examples are the statements made after the Ministerial Meetings in Singapore and Geneva.

In these small-group consultations and negotiations off the stage, generally the Quad countries (the US, the EU, Canada, Japan) are always present. Switzerland as the host country is also usually invited. Besides, either Australia or New Zealand, if not both, gets included. Thus the developed countries are almost fully represented. But among the one hundred or so developing countries, hardly five to 10 get a place in these informal discussions and negotiations. Thus the scale is very much tilted against the developing countries, not only by way of economic and political weight, but also, quite ironically, by the weight of numbers.

From the angle of developing countries, the decision-making process is very much non-transparent and non-participative, as an overwhelming number of them are associated only in the beginning, when the proposals are initially made formally, and at the end, when the conclusions have already been worked out. They do get bound by the obligations imposed by these decisions without having participated in the actual negotiations. This is no doubt a very unsatisfactory situation from the angle of developing countries.

Naturally the consequences have been quite adverse to their interests, as the obligations are heavily tilted against them. If a similar situation continues in future, they are likely to lose more. 1999 and the few years thereafter are likely to be filled with sensitive and difficult negotiations in the WTO which may have a significant impact on the economies of the developing countries. (Third World Resurgence No. 108/109, Aug-Sept 99)

Bhagirath Lal Das was formerly India's Ambassador and Permanent Representative to the General Agreement on Tariffs and Trade (GATT). Later, he was Director of International Trade Programmes in the United Nations Conference on Trade and Development (UNCTAD).

The above article is an excerpt (Chapter 5) from the author's paper entitled Strengthening Developing Countries in the WTO. The paper, part of a series on trade and development published by Third World Network under its 'TWN Trade & Development Series', was prepared under the Project of Technical Support to the Intergovernmental Group of Twenty-four on International Monetary Affairs (G-24). It will also be published in UNCTAD, International Monetary and Financial Issues for the 1990s, Vol. XI.