Is Most Favored Nation Status obsolete?

The top two contenders for the director-generalship of the WTO are from Mexico and Brazil.  Given that the Doha Round has been stalled for decades, it will be interesting to see if the end of Pascal Lamy’s leadership will bring any real progress in trade talks.

Herminio_BlancoI’m not sure whatto make of Mexico’s candidate, Herminio Blanco.  Blanco is an well-respected economist that has worked for many years in the Mexican government.  The issues that give me pause are:

(1) He was crucial in Mexico’s signing 32 Free Trade Agreements, the most of any country in the world.  All of these agreements are of course “outside of the WTO.”

(2) Along the same lines, he argues that the WTO “can break a deadlock in global trade talks if it adapts to a flurry of bilateral trade initiatives and overhauls itself.”

(3) Possible conflict of interest issues.  For instance, a Reuters article notes that he has advised the Mexican government on its participation in the Trans Pacific Partnership, another agreement outside of the WTO.  When asked, Blanco says he “sees no conflict of interest.”

I don’t necessarily have a problem with bilateral or regional trade agreements, I just think it is curious that the man running for the top job at the WTO is doing so on a campaign to increase participation in these agreements, which run counter to the MFN idea and the WTO in general.

For a great “fly on the wall” analysis of the breakdown of the Doha Round, I’d highly recommend Paul Blustein’s excellent (and excellently titled) Misadventures of the Most Favored Nations: Clashing Egos, Inflated Ambitions, and the Great Shambles of the World Trade System.  He presents a strong argument that the increasing number of trade agreements outside of the WTO undermine the organization and make it less likely that multilateral talks will be successful.  

One thought on “Is Most Favored Nation Status obsolete?

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