Under siege
WTO must rally support for multilateralism
There was little to cheer about at the end of the two-day mini-ministerial of the World Trade Organization (WTO) that saw representatives of 50 WTO member-countries coming together in New Delhi to “create a meeting of minds”. Nearly all countries expressed concern about the serious threat to the WTO posed by unilateral trade actions in a pointed reference to recent US import tariffs. Addressing the media at the end of the ministerial, WTO Director-General Roberto Azevêdo warned of a potential global trade war as different nations retaliate against the US actions. But it was disappointing to see the open admission by the WTO that there was very little it could do to remedy the situation. Mr Azevêdo said the WTO was not the sheriff of international trade and the trade body did not take a stance, though he was very concerned about the US measures. This was a signal that the WTO may not even have much fight left in it to defend multilateralism in trade.
This may not be without reason as almost every day, the WTO has to deal with an increasing number of complaints from countries across the world threatening to take retaliatory action against the US. For example, latest reports suggest that the WTO’s Council for Trade in Goods, slated to meet later this week, has 15 potential trade conflicts to resolve on its agenda, several of them involving heavyweights like the US, China, and the EU.
Mr Azevêdo, then, is in a distinctly unenviable situation. While the immediate trigger has been the US action, the fact is it is incumbent on all WTO members to stay invested in the wisdom of a multilateral approach. This applies the most to the biggest players, including the US. If they pull out and stop accepting WTO norms as binding, the smaller trade partners will naturally opt out because each country has its own obligations to its people — for example, India and the issue of agricultural stockpiling for reasons of food security. If the biggest economies pass a vote of no-confidence against a multilateral body like the WTO, its sustainability could be under threat. The timing could not have been worse for the WTO as many have questioned its viability even as the Doha Development Round continues to drag on endlessly.
As it is, the WTO has made limited progress over the past two decades for numerous reasons — be it the one-sided nature of the original agreements, the North-South divide, or the aggression of emerging economies on subsidies, agriculture and food security at successive ministerial meetings. Concerns have also been expressed over attempts to paralyse the WTO’s dispute settlement mechanism. The US has repeatedly blocked a selection process to fill three vacancies in the highest adjudication entity for trade disputes and analysts have warned that failure to resolve the deadlock could render the appellate body nonfunctional by as early as December 2019. Still, instead of throwing in the towel, the WTO should rally support for multilateralism as all countries need mutually agreed discipline on market access, customs duties, etc.