The future of WTO: Revitalizing multilateral trade cooperation
Published 12 January 2021 | 10 minute read
There is no hiding the fact that WTO members differ greatly in their expectations on how the WTO should function. Yet considerable progress can be made in revitalizing multilateral trade cooperation in the near-to-medium term by capitalizing on both the appointment of the new WTO Director-General and the ramifications of the Covid-19 pandemic for the world trading system. Here is how.
Don’t overdo the pessimism – there is plenty of good trade policy news away from Geneva
We have no illusions that revitalisation will take time. Still, a number of key building blocks are in place, not least the sense that the current stalemate and frictions serve no one’s interests. Away from Geneva there are many instances of governments engaging in trade cooperation –whether bilaterally, regionally, or in other formations, such as the Ottawa Group. Even in Geneva, work continues on the Joint Statement Initiatives and the Covid-19 pandemic has brought together groups of WTO members that have made declarations concerning their trade policy intent. Put simply, governments haven’t lost the knack for trade policy cooperation. Nor have governments stopped integrating their economies into the world economy, as Richard Baldwin and I document in our new eBook, Revitalising Multilateralism: Pragmatic ideas for the new WTO Director-General.
Not withstanding these positive developments, there is no hiding the fact that WTO members are different places when it comes to:
- signing new binding, legally enforceable trade obligations;
- their acceptance of the WTO dispute settlement system introduced in 1995; and
- the very purpose of the WTO.
Going forward, WTO members should proceed on two tracks. The first involves collectively identifying a new common denominator for the WTO that will define, in broad terms, the organisation’s purpose and trajectory in the decade ahead. In parallel, on a second track potential confidence-building measures would be developed and some adopted. Doing so would signal to all that the WTO is the place where governments can solve policy problems and where they lend each other support in normal trading conditions and, in particular, during times of crisis.
Identify a new common denominator concerning the very purpose of the WTO
What do we want to accomplish with multilateral trade cooperation orchestrated through the WTO? To us, this is the central question as it speaks to the purpose of the WTO, now and in the future. Elaborating on that question in the manner below differs from – but may complement – the approach taken recently in the Riyadh Initiative on the Future of the WTO. That Initiative sought common ground among G20 members on “common principles” and “foundational objectives”, whereas our approach would be open to every WTO member and would focus minds on what this organisation is actually for. In our eBook we identify eight imperatives for the WTO we’ve heard in recent years. Not all are compatible. Governments must stop beating around the bush and find a common core that will define the WTO’s path forward.
Execute confidence-building initiatives in the near term
To kickstart revitalising multilateral trade cooperation, however, a series of confidence building initiatives are needed. These initiatives don’t require bare knuckled negotiations over binding commitments, rather the goal is to channel the cooperative and reforming spirit mentioned at the start of this section into greater collaboration among WTO delegations in Geneva, supported by a re-motivated WTO Secretariat. Such confidence building measures should include the following:
- Discussions about solutions to common problems including those arising from arising from Covid-19 (e.g. resilience of supply chains) and steps to better to manage trade frictions arising from different types of capitalism.
- Negotiation of a Memorandum of Understanding on facilitating trade in medical goods and medicines that could later form the basis of a fully-fledged binding accord.
- Engagement with other bodies whose decisions seriously implicate cross-border commerce, including GAVI and others working on the production and distribution of a vaccine as well as the steps taken by other bodies to revive sea- and air-based cross-border shipment.
- A joint study of next-generation trade issues, including the trade-related aspects of the digital economy and the relationship between commercial policies and climate change.
- A review of the practices and operation of the WTO during crises, with an eye to ensuring extensive and sustained participation of members, stronger links and inputs to and from national capitols, and other pertinent organisational matters. The goal would be for the WTO membership to adopt a crisis management protocol.
Purposeful, pragmatic steps towards noble goals
Archbishop Desmond Tutu, that tireless campaigner against Apartheid, once remarked that “there is only one way to eat an elephant: one bite at a time”. After a decade of drift and backsliding, the task of revitalising multilateral trade cooperation may seem daunting. It may seem even more so after the disruption of the Covid-19 pandemic and the attendant slump in world trade.
Yet, in the same emergency lies the seeds of revival – especially, if trade diplomats can demonstrate the relevance of the WTO to national governments fighting this pandemic – ideally through an accord that eases the cross-border shipment of needed medical goods and medicines. Step by pragmatic step, the WTO can regain its centrality in the world trading system.
Ultimately, the pandemic affords the opportunity to reframe discussions on multilateral trade cooperation. Discussions between governments need to draw lessons from the second global economic shock in 15 years so as to rebuild a system of global trade arrangements capable of better tackling systemic crises and, more importantly, better able to contribute to the growing number of first-order challenges facing societies in the 21st century. Doing so will require revisiting the very purpose of the WTO.