WTO can be changed through change in culture rather than rules

Economic times, July 14, 2022

A lot can be changed at the WTO without a change in rules, just through a change in culture and how we do things, according to WTO Deputy Director-General Anabel González

“We need to redouble our efforts to raise awareness about the importance of the WTO, and the role of freer and fairer trade in raising living standards for the common man and woman” said Pradeep Mehta, Secretary General, CUTS International, leading public policy body of India. He was making introductory remarks at a webinar organised by CUTS to discuss the future of the WTO.

The programme, titled “Future of the WTO or WTO of the Future?” and the second of a series following the recently concluded 12th Ministerial Conference of the WTO (MC12) saw a number of distinguished panellists addressing the way forward for WTO reform, and how far MC12 was a stepping stone towards a WTO fit for the future. It was moderated by Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission of India.

González recognised three factors which were instrumental for the success of MC12 – the perseverance and role of WTO Director-GeneralNgozi Okonjo-Iweala in leading from the front, the pragmatism shown by Trade Ministers, and an across-the-board willingness to compromise. She observed that a few “common sense, actionable and forward-looking principles” were the need of the hour, which could guide the work of WTO reform going forward. Importantly, she noted that a “fully functional global trading system needs a fully functional Dispute Settlement System”.

Anabel cautioned that reliance NSE -0.04 % on a uniform approach to all negotiations at the WTO risked driving negotiating activity outside the institution. She recognised the value of consensus decision-making, but also said it was difficult to achieve and may not be suitable for each and every trade-related issue.

Tim Yeend, Associate Secretary, Department of Foreign Affairs and Trade, Australia observed that plurilateral agreements (agreements involving less than the full WTO membership) are very much a part of the multilateral system, particularly when done in an inclusive manner. Such agreements provide an easier environment to find negotiated solutions, and ultimately serve to drive multilateral consensus in the long run. Australia has been a strong proponent of plurilateral Joint Statement Initiatives (JSIs) at the WTO, particularly on issues such as electronic commerce.

He also noted the need to adopt creative approaches to WTO dispute settlement, including the Multiparty Interim Appeal Arbitration Arrangement (MPIA) which is currently in force and counts Australia amongst its participating members. MPIA has been conceptualised as an interim procedure till the time the WTO’s Appellate Body remains incapable of deciding appeals.

On agriculture, he observed that it remained challenging to make progress on legacy issues, and its time to go beyond cliches.

Simon Evenett, Professor of International Trade, University of St. Gallen, Switzerland, emphasised on the need to ensure that the momentum from MC12 did not unravel, similar to what had happened after the Bali Ministerial Conference in 2013.On the waiver of Trade-Related Aspects of Intellectual Property Rights (TRIPS) obligations for Covid-19 relatedpatents, Simon raised questions about the extent to which it was a meaningful way forward.

He also stressed that the trade impasses at the WTO were not a result only of the developments which occurred in Geneva, but were also spillovers from domestic trade frictions in countries. There is accordingly a need to build support for trade multilateralism at home, which would then generate positive tailwinds in Geneva.

Victor do Prado, Senior Fellow, Brazilian Center for International Relations, noted that at every Ministerial Conference, there are a set of imponderables. He recognised that MC12 was a very important and welcome stepping stone, but also said that the real test lay in what the WTO could deliver at the next MC13. Victor touched upon various pressing issues relating to WTO reform, including transparency, plurilaterals and dispute settlement.

Stephen Olson, Senior Research Fellow, Hinrich Foundation, stated that we need to adjust expectations of what the WTO can and cannot accomplish. In his opinion, many of the outcomes at MC12 only constituted “agreements to talk about talking”. While he acknowledged the crucial role of the WTO, he lamented that it could no longer act as the global trade referee because its rule book was outdated.

Hamid Mamdouh, Senior Counsel at King & Spalding LLP, highlighted the increasingly complex nature of trade policy issues, especially those involving regulatory matters such as digital trade. He pointed out that there is today a “faith deficit”in the business community with the working of the WTO, which must also be addressed when speaking about WTO reform.

Importantly, Hamid lay great emphasis on the need for a return to fundamentals, underlining that the greatest success of the WTO has not been in terms of trade liberalisation or market opening, but in guaranteeing predictability and stability through a rules-based system.

Summarising the discussion, Ahluwalia opined that MC12, though not an outstanding success, was not a failure. By succeeding in some areas and keeping the ball in play in others, the WTO remains relevant. He also observed that consensus decision-making led to resultant failures to arrive at decisions, suggesting a relook at the rule.

In his opening remarks earlier, Ahluwalia mentioned the pivotal role of the U.S. as a “benign hegemon” in maintaining trust in the global trading system. He observed that as the U.S’ relative economic strength eroded over time, an equally benign hegemonic grouping did not rise to take its place, which was a factor in reduced trust in economic globalisation overall.

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