The role of the WTO is increasingly threatened as de-globalization emerges from the US-China trade war, to the pandemic and the Ukraine crisis.
From June 12-15, the World Trade Organization (WTO) holds a ministerial meeting at a time when many crises and growing frictions are upsetting the world order. Those crises have prompted a massive rethinking of globalization.
Countries are increasingly turning their economic focus inward, seeking to protect and promote their own industries, rather than the open trading system that the WTO has designed.
If the WTO cannot reach consensus on even low-level outcomes such as easing fishing subsidies and maintaining the e-commerce tax ban, there is little hope it will be able to address the challenges. such as contributing to the fight against climate change or strengthening food systems as global hunger spikes, according to Politico.
“That’s why this is an important period for this system,” commented Rufus Yerxa, former deputy director general of the WTO, now with international trade consulting firm McLarty Associates. According to him, if the roles of the WTO are eliminated, it will be difficult to achieve the big goals in the future.
“I think it is important to see the WTO as part of the solution to the crises that we are simultaneously facing in the world,” said WTO Director-General Ngozi Okonjo-Iweala. “All these crises are happening at the same time that no one country in the world can solve. You need multilateralism. You need international cooperation,” she added.
However, recent crises such as Covid-19 and the war in Ukraine have further divided the globe. Rich countries are quick to produce vaccines, and low-income countries are not. The West tries to isolate Russia. The rest of the world is also taking a more contradictory, conflicting stance. The crises have also increased competition between the US and China, the world’s two top economies, following very different models of trade and governance.
US President Joe Biden has repeatedly described that rivalry as a battle. Finance Minister Janet Yellen advocates a new economic model that focuses on cooperation with “friendly” countries.
But Okonjo-Iweala warned last week that splitting the world’s economies and supply chains into political blocs would have disastrous consequences. Previously, the WTO estimated that dividing the world into two economic blocs would reduce global GDP by 5% in the long run.
“That’s quite an impressive number. I want us to be careful. This multilateral trading system was built over 75 years. It has lifted more than a billion people out of poverty. It brings peace through. interdependence,” said Okonjo-Iweala.
Many delegations refused to meet the Russian representative at the WTO meeting. However, the organization expects to still reach the proposed agreements as negotiators have devised many ways to solve that obstacle in the past few months.
“No doubt there will be some tension in the meetings. Hopefully this won’t stop us from doing our job,” Ms. Okonjo-Iweala said.
According to Rufus Yerxa, the WTO’s biggest challenge right now is to make governments realize that polarization will not make their own politics better in the long run, but will also increase instability.
The WTO has 164 members. At this organization, US-China tensions broke out during negotiations over a Covid-19 vaccine, in which the US wanted to exclude Beijing from an agreement on the production of shared versions of Moderna and Moderna’s Covid-19 vaccine. Pfizer. Washington is also lobbying countries to agree on a provision that would require WTO members to report annually on what they know about the use of forced labor in the fisheries sector.
Meanwhile, India’s pursuit in some negotiations could hinder efforts to reach an agreement. One of their demands could lead to an end to a 24-year ban on taxing digital goods like movies, software and video games.
Other members also fought over the modernization of fundamental WTO rules. Most countries support a “lean” WTO reform declaration that includes three elements: recognition of a broad consensus on the need for reform, the need for transparent and inclusive processes, and the need to address the need for reform. determine the interests of all members.
However, India and some other members favor a stricter, more prescriptive multilateral reform process that could amend the Marrakesh Agreement establishing the WTO. “It is an agenda that goes against and overturns what we negotiated 30 years ago,” said a WTO official.
That disagreement further illustrates how difficult it is for the organization to make progress in an institution that requires unanimity to function, and why members like the US and EU are increasingly preferring treaties between them. smaller groups.
The WTO has a history of failure at ministerial meetings, including the “mess” in Seattle in 1999 and Cancún in 2003. The group’s last ministerial meeting in Buenos Aires in 2017 was ended without any obvious results.
If trade ministers leave Geneva next week without a deal, that would spur “”a trend we’re starting to see, countries wanting to work with like-minded allies to establish rules,” said Wendy Cutler, a former senior US trade negotiator and now vice president of the Asian Institute for Social Policy.
Kelly Ann Shaw, a former Trump administration trade official who now works for the law firm Hogan Lovells, also agrees that if members can’t agree on the direction of WTO reform, it’s hard to think about achieving it. any other way.
Just days before the meeting, US Trade Representative Katherine Tai was cautious about the chance for big breakouts from the meeting. “There are a lot of important discussions that need to be carried out. I don’t know if we can make it to the finish line,” Ms. Tai said. However, she acknowledged the importance of the meeting and the need for further meetings.
The advances may be modest, but they will also provide a boost to a world that is becoming increasingly unstable. “If we invest in the WTO now and reassert its central role with more multilateral trade cooperation, expanding the agenda will become possible in the future,” Yerxa said.
Session An (according to Politico)