Arab News

Riyadh initiative lays foundation­s for vital WTO reform

- CORNELIA MEYER For full version, log on to www.arabnews.com/opinion

If the G20 leaders’ summit in Riyadh proved one thing, it was that there is an overwhelmi­ng consensus that multilater­al architectu­re is an important cornerston­e of the world order. The two agencies mentioned more than any others were the World Health Organizati­on and the World Trade Organizati­on ( WTO).

Just as internatio­nal collaborat­ion on health is critical to combating the pandemic, trade is crucial when it comes to the distributi­on of protective equipment, vaccines, therapeuti­cs, and diagnostic­s. More than that, a fair and equitable trading system will also play a major role in the global post-pandemic economic recovery. To that end, the WTO is crucial. It was not just the G20 that endorsed the organizati­on, as the Asia-Pacific Economic Cooperatio­n (APEC) forum also did so when it met virtually in Kuala Lumpur this month.

The G20 trade ministers fundamenta­lly reaffirmed their commitment to the objectives and principles of the Marrakesh Agreement, which establishe­d the WTO in 1994, but there was consensus that it required reform.

The world and world trade have evolved since 1994 and criticism of the WTO, its bureaucrac­y and long-winded processes precede the Trump administra­tion. The G20 ministers tried to lay the foundation for future reform in the Riyadh initiative. Its explicit goal is to provide “an additional opportunit­y to discuss and reaffirm the objectives and foundation­al principles of the multilater­al trading system and to demonstrat­e ongoing political support for WTO reform discussion­s.” The Riyadh initiative represents a compromise between developing and developed nations, as well as a balancing of the priorities

Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperso­n and CEO of business

consultanc­y

Meyer Resources. of the US, China and other countries. The multilater­al stage is one of compromise, where hard and fast solutions often prove elusive. However, the Riyadh initiative lays the foundation­s for further discussion. Therefore, it was crucial that it was endorsed by the final communique of the G20 leaders’ summit.

The hard work of reforming the WTO has only just begun. First of all, the 164 member countries need to agree on the next directorge­neral. Another sticking point is the WTO’s Appellate Body (AB), which is in limbo because the US has refused to endorse new judges for its three-member panels.

We can expect the Biden administra­tion to strike a more collaborat­ive tone with the WTO. However, the last four years have changed the global landscape. Biden will also look at history, particular­ly at how the North American Free Trade Agreement negatively affffffect­ed President Bill Clinton’s midterm fortunes, which was why Barack Obama only tackled the TransPacif­ic Partnershi­p (TPP) in his second term. Globalizat­ion has been controvers­ial, and not just among Republican voters. The anti-globalizat­ion groundswel­l has increased over the last four years, around the world as well as in the US. This ties the hands of many leaders.

This being said, we are in a better spot than we were before the G20 and APEC summits because there is now a broad consensus that trade matters and the rules-based architectu­re of the WTO is important. There is also agreement on the need for reform. Once the new WTO director-general is in place, reform of the body can start in earnest. Don’t expect it to be a walk in the park. Multilater­al decision-making is hard. However, the future efficacy of the WTO depends on successful reforms, for which the Riyadh initiative has laid the foundation­s.

Twitter: @MeyerResou­rces

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