2. The WTO works organizationally but lacks credibility — that’s uniqueness for the net benefit.

Does the WTO work as an international regime? From a rationalist perspective, the answer is a qualified yes. A core function of the institution is transparency, and as such a good starting point in discussing its effectiveness as a regime is with a rationalist analysis of the extent to which it increases the efficiency of international cooperation. The WTO’s primary function, from an efficiency perspective, is to improve property rights in the issue-area of international trade. The rules of the international trading system, the core of the WTO, are in effect specifications of property rights, and the DSM is a mechanism for clarifying and adjudicating these rights. The specification of these property rights is not perfect, but it is clearly better than what had gone before (better in the sense of more efficient, not necessarily fairer). In this sense, the WTO, as a regime, has been remarkably successful (although the current politicization of the DSM undermines that conclusion somewhat). It has also had some success at decreasing transaction costs and at improving information flows, but this success has been more muted. Trade negotiations carried out under the WTO’s auspices retain high transaction costs, in that they can last decades and employ thousands of people, although this process is probably more efficient than holding a large number of bilateral trade negotiations. The WTO improves information flows by collecting and publishing trade statistics, although this often duplicates information available elsewhere.

From a reflectivist perspective the answer is also a qualified yes. As suggested earlier in the chapter, the WTO and its predecessor the GATT have been enormously successful at institutionalizing the idea of rule-governed trade as a fundamental and widely accepted norm of the international political economy. And the DSM has come to be accepted as the core adjudicative body in the realm of international trade. But there are threats to the WTO’s role as the legitimate core of the international trading system stemming from the failure of the Doha Round of negotiations and the broader deadlock in multilateral trade negotiations. The lack of progress has led many of the world’s major trading powers to focus on regional and bilateral trade agreements instead. At a certain point, the increasing diplomatic focus on regional and bilateral agreements will inevitably threaten to undermine the concept of global cooperation and of nondiscrimination that the WTO was designed to legitimate (e.g., Bhagwati 2008).

As a final note on IO theory and international trade, the rapidly expanding network of both bilateral and regional trade agreements, all designed to fit within existing WTO rules but each one different from the others in its details, suggests the limits of both the institutionalist and regime approaches. The drift of activity on the trade front away from the WTO and toward smaller-scale agreements suggests the potential value of understanding international trade cooperation agreements and institutions as a regime complex or a network rather than a set of discrete institutions. This kind of approach would help us to understand both how the smaller-scale agreements differ from each other and how they connect with each other.