WTO seeks ‘positive momentum’
Trade organization’s deputy head says China ‘ has a big role to play’ in cooperative push for reforms
The World Trade Organization wants its members to work more closely for reforms and modernization, according to its deputy head.
At the two-day G20 Leaders’ Summit, which begins on Nov 30 in Buenos Aires, Argentina, leaders were expected to agree on WTO reform plans — improving on the unsuccessful attempts to reach a consensus on the topic at the Asia-Pacific Economic Cooperation forum in mid-November.
Leaders gathered in the Argentine capital also were looking to President Xi Jinping and US President Donald Trump to improve the tone of global trade relations.
“It needs to be inspired by the political leaders. A positive signal from the G20 would definitely strengthen confidence in the world economy,” says Karl Brauner, the WTO’s deputy director-general.
Brauner, a lawyer before turning to a career in trade policy, says he always seeks solutions and settlements through dialogue. “I think any platform where a conversation could take place should be used,” he emphasizes.
“We, the WTO, are a forum where these conversations can take place. I would like to see those who have issues with one another sit down and talk. ... As the forum for the negotiations on these issues, we provide the venue, but the inspirations should come from the top.”
Brauner’s areas of responsibility include dealing with the WTO’s dispute settlement system as well as administration and general services, including budget and finance and human resources.
“The WTO has grown from a small number to 164 members currently (of which 117 are developing countries or separate customs territories). There is some concern with certain developments among members. And there are reform proposals coming from the European Union, for example, and also Canada, on some very specialized issues,” he says.
“I think this is a very good development, if those who would like to have a reform discussion could join forces and create a positive momentum,” Brauner says.
A week before the G20 Summit, Wang Shouwen, vice-minister of commerce, said at a news conference that Beijing backs reforms to enhance the authority and effectiveness of the WTO, which is facing “profound crisis”.
The Chinese government has stressed that such reforms must uphold the organization’s core values of nondiscrimination and openness, protect the interests of developing members and uphold the decisionmaking mechanism.
Beijing unveiled five proposals to support these three principles, aimed at defending the dispute settlement regimen, avoiding abuse of the national security exception clause to impose tariffs, and preventing unilateral action by members.
Brauner says: “We want to uphold multilateralism, and we can see China is sponsoring certain reform proposals. China is a very important economic power in the world, and China should also have an intellectual input in what is happening by way of reforms, which is welcome.
“There is no doubt that China has a big role to play. China is also No 2 in the contributions to the budget of the WTO, and has overtaken Germany — the traditional No 2 contributor, now the No 3,” he adds.
In 2017, China contributed around $18.8 million (16.6 million euros; £14.7 million) to the consolidated budget of the WTO’s Secretariat and the Appellate Body Secretariat.
According to the 2018 WTO budget, China’s contribution will rise to nearly $19.3 million, which will account for 9.8 percent of the total budget.
Before joining the WTO, Brauner was director-general for external economic policy at the German Federal Ministry for Economics for 12 years. He was responsible for export promotion and export controls, as well as Germany’s bilateral economic relations outside the European Union.
From his perspective, the EU, which is now working with China, the United States and others, has established itself as a coordinator between key members of the WTO.
“The EU is playing the role as a bridge. This could be and should be helpful,” he says, adding that the most urgent task now is to prevent the withering away of the WTO’s Appellate Body, which is responsible for resolving disputes, a core function of the WTO.
The body is supposed to have seven judges, but there currently are only three, and if the vacancies cannot be filled soon, the organization’s dispute settlement regime will be jeopardized.
The EU, the world’s largest trading bloc, announced on Nov 26 that it and 11 other WTO members, including China, Australia, Canada and Mexico, will present a joint proposal for changes to overcome the current deadlock in the Appellate Body. The proposal will be presented to the entire membership at the meeting of the WTO General Council on Dec 12. The EU is also proposing reinforcement of the Appellate Body’s independence and impartiality and improvement of its efficiency.
In response to calls by some European stakeholders for members to seek alternative approaches to overcoming hurdles, Brauner says multilateral agreements are unquestionably better, because they will cover all 164 members and provide a better basis for legitimacy.
“The plurilateral agreements are negotiated only among a smaller group of membership. But they are allowed in the WTO if they follow the principles of most trade recognition.
“We are now in a situation where, after the ministerial conference in Buenos Aires (in December last year), we have four joint initiatives, which are promoted by smaller groups of members ... But they are open to the full membership. And we can only hope that they will produce some outcomes that attract more than the original numbers,” Brauner says.
“All reforms eventually hinge on the good cooperation of the players in the WTO. So it would be an illusion to think that we tweak a few rules here and sharpen a few definitions there, and this is our reform and then things work,” he adds.
“What we need is the willingness to cooperate. And if the willingness to cooperate is generated among the major players in the world economy, this would clearly be very helpful,” he adds.
In addition to collaboration between members, he also calls for urgent action from the global business community. “I think it is clear from history that the Uruguay round (of trade negotiations) was successfully concluded because the businesses actually ran up to the politicians and said: ‘Do this, finalize it.’”
In terms of the future agenda, Brauner highlights e-commerce as a growing force in global trade, with huge potential to drive inclusive growth for world economies, and developing countries in particular. “Members are working to find rules to facilitate e-commerce. E-commerce is also looked upon as an element of development, of helping developing countries to have easier access to the world market,” he says.
On the margins of the WTO ministerial conference in Buenos Aires in December last year, a new initiative titled Enabling E-commerce was launched by the WTO, the World Economic Forum and the Electronic World Trade Platform.
The initiative, which aims at driving public-private dialogue on e-commerce, brings together leading voices from governments, businesses and other stakeholders to address challenges and find solutions for a more inclusive e-commerce landscape in the years ahead.
“Businesses have an enormous say. And we need this engagement from businesses now. Encouraging the businesses to play a role is also very important,” Brauner says. “All that we are doing now, eventually, is ... for the people’s benefit.”
“China is a very important economic power in the world, and China should also have an intellectual input in what is happening by way of reforms, which is welcome.” KARL BRAUNER WTO’s deputy director-general
WTO deputy director-general Karl Brauner says he expects that China will have its own input in the WTO reform.