“The focus in the past year has been on Europe where it appears that policy responses to the financial crises have been, for the most part, ad hoc and specific to each country’s situation at the time. While the crises were contained, and prevented from becoming a global crisis, there has not been much progress in establishing global financial safety nets. IMF reform has not kept pace with changes in the global economy, and will not for the foreseeable future, undermining its credibility vis-à-vis developing countries. However, in the last year, it has performed well in its new role as a lender to European countries. The EU, however, is under increasing strain – not only as a monetary system but support is dwindling in certain key Member States, notably the UK, for the customs union in general.”

“Global economic governance in the trade area is at a low ebb. The WTO has lost its primacy as a multilateral institution, its heyday has past, and it is not certain whether it will be able to regain its former authority and stature. Structurally, it is now impossible to negotiate multilateral agreements in the WTO – membership is too universal and interests are too diverse, the organization is simply too big, it has become a victim of its own success. The only way for the organization to continue is to allow for plurilateral agreements, for the establishment of a management or executive body, and for a committee structure representing different groups of members to be established. However, the membership cannot agree to even agenda of meetings much less important institutional changes or the need for institutional reforms.

Many WTO members, including the emerging economies, are actively negotiating preferential trade agreements (bilaterally or plurilaterally) and international investment agreements with partners in their regions as well as abroad. This phenomenon is widespread. What is new is that major economies are now negotiating ‘new age’ trade, investment and economic agreements with each other and some plurilateral agreements across several continents are starting to emerge (such as the TransPacificPartnership – TPP, which is intended to be a precursor to a wide customs union of the Pacific). Some observers predict that if the EU – US Transatlantic Trade and Investment Partnership negotiations are successful, Canada and Mexico may join in that agreement as well as other countries. Still others speculate that if the WTO continues its decline, perhaps eventually there will be an impetus among some countries to put a web of PTAs together into a new, different configuration.

This is pure speculation but it demonstrates what dire straits the WTO is in at present and how it is being challenged by the proliferation of PTAs and the inability to take decisions within its own internal structure.

Whether all of these PTA negotiations will be successful, in particular, the TPP and TTIP, remains to be seen. Even if the negotiations are concluded, these agreements would need to be implemented and approved under the respective constitutions of the partner countries. In the case, of the TPP, for example, approval would be required by the US Congress and the Japanese Diet. In the case of the TTIP, constitutional approval is required by the US Congress and in the EU under the Lisbon Treaty by the Member States as well as the European Commission and the European Parliament.

What is clear is that incoherence and inconsistency is increasing in the trade and investment fields with the proliferation of trade and investment agreements. There are presently around 350 PTAs notified to the WTO, 3,200 international investment agreements, and many more of both types of agreements under negotiation. The policy focus, especially of key players such as the European Union, the United States and Canada, formerly committed multilateralists, has changed dramatically in the past few years. They are now pursuing unilateral and bilateral trade and investment agendas, which have greatly increased the complexity and incoherence of international economic governance while at the same time the incidence of global trade and investment disputes has increased significantly.”

“My comments are restricted to climate change. No progress has been made as yet on the multilateral front. What is more worrying is that because the prospect of a multilateral agreement is remote, many countries are taking unilateral measures to combat climate change but some of these measures may have perverse effects on trade with developing and developed countries also producing renewable fuels.

In some cases, the policy responses by governments are not well-thought out – some renewable fuel subsidies have serious environmental and food security consequences as well as trade effects. These measures are being increasingly challenged in the WTO, which is not well-adapted to the climate change/renewable energy policy conundrum. The PTA negotiations, while dealing with a wide range of behind-the-border regulatory issues, also do not specifically address these issues although some do have chapters on the environment. The WTO Doha Round also does not cover climate change or renewable energy per se, although subsidies and market access are issues which could potentially incorporate discussions related to renewable energy and environmental measures.

The one silver lining on the horizon is the fact that the US and China (Presidents Obama and Xi) have signalled that they are moving ahead bilaterally on climate change. This is a very important new development. With leadership from these two powers, things could change in the multilateral UNFCCC negotiations next year. There is still hope for multilateral negotiations.”