G20 sealed landmark deal on WTO reform by ducking ‘taboo words’
BUENOS AIRES: Many delegates from the world’s 20 largest economies arrived at a summit in Argentina this week determined to clinch an agreement to reform the global trade system, pushed to a breaking point by tensions between the United States and China.
To do so, they had to bow to US and Chinese demands to drop some of the pledges that have become hallmarks of the Group of 20 industrialised nations, which represents two-thirds of the global population.
But they left with a communiqué committing for the first time to reform the dysfunctional World Trade Organisation (WTO), the body supposed to regulate global trade disputes.
“A number of words that we used to have always in G7 and G20 summit communiqués became kind of taboos,” a European official said on Saturday in the midst of the negotiations.
“We have American taboos and Chinese taboos.”
First among those taboos is ‘protectionism’.
The US administration has become sensitive to criticisms after President Donald Trump has imposed tariffs not only on US$250 billion of Chinese goods but also on steel and aluminium imports that hit several of his G20 partners.
As a result, for the first time since G20 leaders held their inaugural meeting in Washington in 2008, their communiqué did not contained a pledge to fight protectionism.
China, meanwhile, steadfastly opposed the inclusion of the usual calls for ‘fair trade practices,’ delegates said.
Beijing rejects criticisms from the United States, Europe and Japan for dumping, industrial subsidies, abuse of intellectual property rights and technology transfers, amongst other practices.
Even the word ‘multilateralism’ itself has fallen out of favour in a group designed to foster international cooperation.
Central to getting the United States to sign up to a phrase recognising the importance of ‘multilateral trading system’ was acknowledging that the system was falling short of its objectives, delegates said.
The United States is unhappy with what it says is the WTO’s failure to hold Beijing to account for not opening up its economy as envisioned when China joined the body in 2001.
To force reform at the WTO, Trump’s team has blocked new appointments to the world’s top trade court, which is rapidly running out of judges, meaning it will be unable to issue binding rulings in trade disputes.
He has even threatened to withdraw the United States from the global body.
“There was an attempt from a lot of the other countries ... to get the United States to commit to certain language with regard to the multilateral system,” said one senior US official.
“We commit to multilateralism where it works ... Is it achieving its intended objectives? In a lot of areas it’s falling short,” said the US official, who asked not to be identified because of the confidential nature of the talks.
The final statement said the group supports the “necessary reform of the WTO to improve its functioning”, allowing US officials to claim a victory.
While there were no details of the proposed reform, many delegates hailed a breakthrough in committing Washington to global solutions.
“For the first time China and the United States agreed to engage on the WTO,” said one delegate closely involved in drafting the communiqué.
“Given Trump’s earlier threats, to end up with the G20 saying it would work together on WTO reform is interesting.”
European Union officials said that a key step in clinching a deal was getting China and major emerging economies to commit to language on trade early this week.
“The idea was to bring the Chinese into the discussion almost immediately,” said a second European official. “After APEC, we knew it would be important for the Chinese to feel there was no ganging up on them.”
At the Asia-Pacific Economic Cooperation (APEC) summit in mid-November, leaders failed to agree on a joint communiqué for the first time in the group’s 30-year history. — Reuters