Quotes of the Day

Supachai Panitchpakdi, the unfailingly polite Thai technocrat who is director-general of the World Trade Organization (WTO), gave a speech in New York City earlier this month to mark the 10th anniversary of the Geneva-based organization. "It's probably fair to say that our image could use a bit of polishing," he said, with typical understatement. Over the past decade, the WTO, whose role is to oversee and uphold the rules governing world trade, has served as a punching bag for pretty much anyone with a grievance about the state of the world economy. Free-market advocates have derided it as toothless. Some developing countries have slammed it as undemocratic and biased in favor of the West. And starting in Seattle in 1999, when thousands of protesters virtually shut down one of its ministerial meetings, bashing the WTO has become a rallying cry for antiglobalization groups protesting causes from pollution to poverty.

But that may all be changing. The 148-nation organization is in the midst of delivering a one-two punch that should floor its critics — left and right, north and south. Earlier this month, the WTO's Appellate Body, a seven-member panel that rules on trade disputes, decided that the U.S. practice of subsidizing its cotton growers violates international trade rules, and ordered Washington to stop the practice. Next month, the WTO is scheduled to issue a final ruling on the European Union's practice of subsidizing its sugar exports. The body is expected to order the E.U. to stop this practice, too, which Australia, Brazil, Thailand and others see as distorting fair trade. (The WTO made a preliminary ruling to that effect last August, but the E.U. appealed.) What's remarkable about the two decisions is that the cotton and sugar subsidies are precisely the kind of developed-world practices that the WTO's left-wing critics denounce. For decades, the subsidies — together worth about $3.7 billion a year — have encouraged U.S. cotton growers and European sugar farmers to dump their surplus on world markets, making it impossible for developing countries to compete. By nullifying these subsidies, the WTO has managed to gain the grudging approval of people who normally oppose it. "It's a good sign that the rule of law is getting stronger," says Céline Charvériat, who heads the Geneva office of the British charity Oxfam.

The very fact that Oxfam has a Geneva office at all is evidence of the growing clout of the WTO. This will surprise the organization's many free-market critics, such as polemicist Ilana Mercer and the Auburn, Alabama-based Ludwig von Mises Institute, who've derided it as a paper tiger. But some of the world's most powerful companies and countries clearly take the WTO seriously. Earlier this year, the U.S. and the E.U. pulled back from the brink of a dispute over government subsidies to aircraft manufacturers Airbus and Boeing; fearing a public spectacle — and a harsh verdict from the WTO — they withdrew their mutual complaints and agreed to negotiate a bilateral settlement. In all, over the past decade, some 325 international trade disputes have been brought to the WTO by its members, and about half of them have been resolved without litigation. That's no paper tiger; that's a wholesale change in the way the world does business.

Of course, a lot of work remains to be done to prove that the world's trade system can really benefit everyone. There are two critical tests ahead. Will the U.S. and the E.U. actually get rid of cotton and sugar subsidies? If they don't, both sets of critics will argue that they told us so — and the paper tiger label could stick. Can the WTO's 148-member governments finalize a new trade accord at this December's meeting of trade ministers in Hong Kong? Given the competing national interests, the risk is that there won't be a deal at all, or there will be a bad one. Such an outcome would be the fault of the governments who fail to negotiate a new agreement, but the WTO is likely to get the blame. Supachai has his own ideas about how to improve the WTO: enlarge membership to include Algeria, Russia, Saudi Arabia and more than 20 other countries, and beef up the secretariat to give it more powers and more money. If he really wants to give the WTO's image a polish, though, Supachai should accelerate more tough rulings — and consider being less polite.

• PETER GUMBELL
• Recent rulings put the embattled WTO on the same side as its critics