A new dawn is dawning for the global trading order
(Bloomberg) – As a red sun rose over Lake Geneva on Friday morning, exhausted trade officials around the world celebrated that for the first time in recent memory, the World Trade Organization was no longer in place. crisis.
Backed by a successful set of narrow trade agreements, there is now a growing sense that once-taboo compromises between major trading nations are still possible, even in an era of growing protectionism and economic fragmentation.
WTO Director-General Ngozi Okonjo-Iweala admitted to being tired but was relieved there was something to show after being installed just over a year ago with a difficult mandate to fix an organization almost universally seen as inefficient.
It was a small, symbolic victory that rekindles hopes that this post-WWII bastion of peace and prosperity can still provide tools to tackle some of the most important challenges of our time – the Covid pandemic. -19, food inflation, environmental sustainability and warring neighbors.
“In these uncertain and troubled times, the value of global rules is more important than ever,” European Union Executive Vice President Valdis Dombrovskis said in a statement. “These provide legal and economic certainty and keep global value chains open and functioning.”
A compromise always possible
This week’s WTO talks have been remarkable because they have proven that the world’s governments can navigate huge political disagreements – such as the West’s opposition to Russia’s war with Ukraine – to achieve results that advance the cause of economic cooperation.
Trade commissioners took strategic action during the WTO’s six-day ministerial conference to put their national interests ahead of the common good. A key example was India, which abandoned its intransigent demands and reached a compromise on issues that had long plagued the WTO’s negotiating agenda.
There was also a quiet but critical compromise between the United States and China that settled the issue of Beijing’s ability to circumvent patent rights under the new WTO waiver on intellectual property.
“The vaccine waiver agreement is important because it shows that the United States and China are still capable of working together at the WTO and provides a formula for future collaboration,” said the Deputy Director General of the organization, Xiangchen Zhang, to Bloomberg in an interview.
U.S. Deputy Trade Representative Maria Pagan agreed, telling reporters “it’s extremely powerful when U.S. and Chinese delegates share the same ideas on an issue.”
Moratorium on e-commerce
While it hasn’t exactly dominated the headlines in a week of falling stocks and rising key interest rates, the failure of trade ministers to let the moratorium expire WTO on Digital Rights was a significant achievement. It will save one of the most dynamic sectors of the modern global economy from punitive restrictions on cross-border trade.
There were fears that if the 1998 WTO agreement expired this week, it could lead to higher consumer prices for cross-border purchases on Amazon.com, Netflix movies, Apple music and Sony PlayStation games.
As a result, the institution’s decision to avoid new digital tariffs marks a significant step forward for the Geneva-based trade body, whose mission is to reduce barriers to cross-border trade, rather than increase them.
“In the digital age, the e-commerce moratorium provides certainty and reduces costs for global supply chains,” UK International Trade Secretary Anne-Marie Trevelyan said in a statement.
Solution search mode
Admittedly, the package ministers delivered this week was by no means perfect. Some of the agreements – such as an agreement to reduce harmful fisheries subsidies – were incomplete and lacked the level of ambition the United States and others were seeking.
But the agreements include provisions that encourage members to find solutions in the coming months, which should instill in WTO members a real sense of purpose for the first time in half a decade or more.
It means WTO negotiators are leaving the negotiating table ready to engage in the next conversation – to resolve the institutional issues that have hampered the organization’s work for decades.
“The WTO has gained significant leeway to focus on reform in the weeks and months ahead,” said Wendy Cutler, former US trade negotiator and vice president of the Asia Society Policy Institute.
Going forward, a key test of the institution’s relevance is whether its members can overcome longstanding American frustrations and deliver on their promise to restore a “fully and well-functioning” dispute settlement system by 2024.
If successful, this effort could resolve the paralysis of the WTO’s appellate body – which until 2019 had the final say in international trade disputes – and make the organization fit for purpose again.
“It was great to see that we weren’t isolated in saying reform needs to be open, inclusive and transparent,” Pagan said. “I hope it will be a good conversation.”
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