Turbulent WTO comes of age

End of the road for eight-decade consensus that stitched divergent parts of the world together .

MC13, as the 13th” Ministerial Conference of the World Trade Organisation (WTO) is known by the Geneva “diplomatic set , ended last weekend. Most trade officials and delegations who were part of the six-day event would accept that the Abu Dhabi meeting was an inflection point for the body charged with making global trade rules by consensus.

Almost two decades after the end of the Uruguay Round, the WTO has come of age with the characteristically turbulent temperament of a young adult. Birthed as a successor to the General Agreement on Tariffs and Trade (GATT), some believe the WTO has reached its nadir. Having witnessed many of the deliberations in Abu Dhabi over the last week, it seems to me it is not the WTO that has come to the end of the line, but the nearly eight-decade-old post-World War 2 consensus that stitched divergent parts of the world together around a particular multilateral framework.

The lack of consensus on many matters at the WTO is symptomatic of a postwar multilateral consensus in crisis. At a time when globalisation has introduced international linkages to most aspects of our lives, multilateral institutions built in the postwar period have had a mixed record in mounting a truly co-ordinated international response to the many crises that have arisen from that interconnected world.

SA was a founder member of the GATT, which came into being on October 30 1947. It was a smaller entity of just 23 members then, rather than the 166-nation body it is now after Comoros and Timor-Leste joined last week. Despite growing isolation from 1960 onward, SA remained part of the GATT and following key domestic political crises continued to notify the body of shifts in import licensing measures the National Party government introduced in response to balance of payment challenges.

Speaking at the 50th anniversary of the GATT in Geneva in 1998, then president Nelson Mandela reflected on this history. Observing that apartheid SA had managed to “trade extensively” within the framework provided by the GATT, he suggested this was a lesson that “trade does not of itself and in itself bring a better world”.

A lot has changed since the 1990s, with the locus of production in key wage and capital goods shifting away from Europe, Japan and the US and towards key producer nations such as Brazil, China and India. Furthermore, as could be seen from remarks made by a US Republican legislator following MC13, the world is now in the throes of a technological war.

MISSED OPPORTUNITY

The decision not to extend the waiver on intellectual property rights on life-saving medicine (nor to extend this to diagnostics and therapeutics as SA, India and others have called for), was seen by Republican congressman Darin LaHood as a victory in the war to “protect US innovators from the Chinese Communist Party’s exploitation of US technology and intellectual property”.

This rather than, say, a missed opportunity to broker a seminal multilateral agreement that could ready parts of the developing world for the next global healthcare disaster.

The observed response to these kinds of political and even production shifts has been a combination of bloc-building through the use of bilateral agreements and other measures such as debt to “rebalance” global economic relations. All of these shifts frame what is possible and what might not be possible, in a way that WTO rules and their hegemony or restraining influence on domestic policy actions may have done in the past, but seemingly without a functional dispute settlement framework are unable to do now.

A global subsidy race to underwrite technological, industrial and military superiority is unfolding, led by the developed world, to claw back ascendancy, and it seems the WTO is not the go-to place to seek remedies for aggrieved nations and firms. One need only consider the unilateral imposition of import restrictions under the guise of climate policy, or unscientific uses of nontariff barriers and the large public outlays to secure critical minerals in many parts of the world, to understand why some rules might be needed. And that they need to be better enforced.

A look at the list of open disputes at the WTO gives one a sense of some live examples of the product markets and nation states where disputes have arisen. One of the more recent involves Ukraine’s objection to the imposition of import restrictions on its wheat by neighbours the Slovak Republic, Hungary and Poland, or US export restrictions on semiconductor components to China.

Our own complaint on the European regime governing the importation of citrus fruits into the eurozone also comes to mind. Or the squabbles between China and Australia affecting wine, barley and other exports from Down Under. Or the joint action Brazil, Guatemala and Australia have undertaken against Indian export subsidies on sugar.

It is certainly not a dispute settlement system that is short of disputes. The tersely written MC13 decision on dispute settlement reform, with its instruction to officials to “accelerate discussions” on issues such as appeal and review mechanisms and the accessibility of the dispute settlement framework, is unlikely to deliver by the end of 2024, as intended.

The debates on agriculture and fishery subsidies at MC13 further displayed how politically fraught these negotiations can be. The already publicised row between Thailand and India over public stockholding schemes (where governments buy grain staples for distribution, marketing or storage) at the Abu Dhabi convening signals concern not just by developed nations, but from among the net food exporting developing nations, over the use of such purchasing schemes as a springboard for export dominance in key product markets rather than a typical food security measure.

This row between two key rice exporters indicates that the concern in agriculture is wider in scope than developing nations’ worries about producer subsidies in the West, but also reflects fissures within the developed world. Unsurprisingly, no agreement was reached here. And those hoping for a breakthrough on fisheries subsidies to stem overfishing and rapidly depleting stocks in many parts of the world would have similarly been disappointed.

When Mandela addressed the WTO in 1998 he cautioned against powerful economies “applying unilateral measures”. He did so as he noticed the “elements of the ancient tragedy” that John Maynard Keynes saw at the Paris Peace Conference following World War 1. A tragedy where unilateral action by the powerful replaces meaningful multilateral consensus in an increasingly interconnected world.

Such unilateralism will undoubtedly reBalkanise trade relations and regulations into “boetie-boetie” and antagonistic relations between nations and blocs. Any indication that MC13 would be a turning point of the tide, against such a development, was sorely absent in Abu Dhabi.