Riyadh initiative lays foundations for vital WTO reform
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.
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