This is a guest post from professor Martin Edwards
This has been a difficult time for the WTO. Stories of the deepening crisis in the Dispute Settlement Body, and the looming threat of a President who has threatened to pull the US out have all been headlines in recent months. This year coincides with the 30th anniversary of the Trade Policy Review Mechanism, so this is a perfect time for a stock-taking on what the empirical research on TPRM tells us. It is well worth recalling Brett Williams’ recent observation that TPRM evolved into something that was very different from what was originally proposed. While TPRM is far from perfect, there are some welcome signs in findings from scholarly research, suggesting grounds for optimism even in these very trying times.
1. TPRM engages the membership
One way to think about TPRM’s value as a tool is to evaluate the extent to which peer review is participatory. The dialogue on trade disputes is largely conducted by developed countries with each other. TPRM does not follow the same practice. A recent study suggests that TPRM discussions are increasingly democratic, as almost all member countries either participate in the peer review through submitting questions by themselves (80%) or as part of a group (an additional 13%). Rising powers are particularly active, with China, Brazil, and India each more active than Japan. These authors evaluate the factors that predict engagement in TPRM, and find that those members with high trade exposure, democracies, and countries with a large number of memberships in international organizations are more likely to participate in the peer review.
The most recent trade policy review for the United States from last December underscores the inclusive nature of the peer review process. Thirty-nine countries and the European Union submitted over 1,700 questions to the US, and an additional 27 countries made statements during the review, including two representing country groups (Central African Republic on behalf of the LDC group and Thailand on behalf of ASEAN). More than half of the countries that made statements were classified by the World Bank as either low-income or lower-middle income countries.
2. Member countries are treated the same in the TPRM
Studies of international organizations often find that geopolitical influences shape their behavior. We might expect the Trade Policy Review Mechanism to work the same way, treating larger countries differently from smaller ones. One way to study this is to exploit the design of the mechanism itself, as both the country being reviewed and the Secretariat issue reports on the country that form the basis for the review. Understanding the extent to which these reports say the same thing, then, can tell us something about the degree to which WTO monitoring is shaped by geopolitical influence.
In my recently published book, I perform this exact exercise. Countries are certainly tempted to present a positive self-image in peer review even when they are violating trade rules. I find that the Secretariat does in fact speak truth to power, even with the US and the EU. The most recent Trade Policy Review of the US recounts the recent record of countries filing disputes against the US in response to its trade actions against them. While it is not critical of member countries, it does not overlook the shortcomings of even its most powerful members.
3. TPRM can make a difference under some conditions
Answering the question of “does TPRM work?” is not easy. The mechanism is designed to reveal information rather than enforce policy changes. Countries are named and shamed in the TPRM by their peers, but this does not always occur evenly across all countries and times. Nevertheless, some quantitative evidence suggests that WTO members show improvements in some metrics of governance over time.
A strong test of whether TPRM makes a difference requires that we consider the effects of the review process on a country’s willingness to impose anti-dumping or countervailing duties. In tests of pairs of developing countries, I found some evidence that countries are more willing to impose these duties on other countries in the years following a trade policy review. This suggests that the timing of the review might serve as a mild deterrent against opportunistic behavior.
4. Information from TPRM doesn’t travel as far as we would like.
Thinking about TPRM as an informational mechanism rather than as an enforcement tool raises questions of how this information is used and disseminated. In order to generate policy change, we would ideally want the findings from these reviews to be reported in the media and receive attention in domestic political debates. Evaluating China’s Trade Policy Reviews between 2006 and 2016, I found little evidence that they were referenced on Capitol Hill in congressional discussion, and little evidence that these reports were addressed by the media. Future progress in making TPRM more influential lies in making sure the messages from the review are more readily disseminated to politicians and the public. Given that the WTO is competing with domestic think tanks for the same market, this is a tall order.
5. What should we be concerned about moving forward?
We should be mindful of two institutional constraints placed on TPRM by the WTO itself. The first is that of the calendar. The WTO is addressing a backlog of needed reviews by slowing its pace. Under the old system, the frequency with which countries were reviewed was a function of their size: large economies every two years, and then four and six. This system has now been moved to every three, five, and seven years. While this will reduce the backlog, it also means that there is less multilateral monitoring of a deepening trade crisis between the US, China, and Europe.
The second is a lack of review of the TPRM by the WTO. The mechanism is reviewed every five years by member countries, but these evaluations are conducted by the members, and are largely pro-forma. After 30 years, it is time for a more in-depth assessment of TPRM. Other international organizations use internal staff resources to carefully take stock of their critical procedures. The IMF, for example, is engaged in such an enterprise right now, evaluating both surveillance and conditionality. This sort of detailed assessment is needed, and it can make the difference between whether the TPRM’s next anniversary is cause for celebration or concern.
