On January 16-17, 2024, the WITA Academy will host a virtual Intensive Trade Seminar on the World Trade Organization. The event is meant to explain the inner-workings of the WTO system, and is free to attend for government officials. Registration is required to attend, and information can be found here and below.
The World Trade Organization (WTO) will hold its 13th WTO Ministerial Conference (MC13) in Abu Dhabi in February 2024. There is much at stake and success is not guaranteed.
WTO Director-General Ngozi Okonjo-Iweala has identified the key areas that will require close attention if MC13 is to succeed and fulfil the promises of the 12th WTO Ministerial Conference (MC12) — food security, fisheries subsidy disciplines, the development dimension of trade, dispute settlement reform, intellectual property rights and e-commerce.
Each of these topics warrants attention — and each raises difficult issues.
Key issues include addressing purchasing power difficulties of the poorest communities, gaining additional acceptance of the WTO Agreement on Fisheries Subsidies and helping countries that lose support as they graduate from Least Developed Country status. Other issues include addressing the US conviction that the WTO Appellate Body jurisprudence is openly hostile to trade defence instruments, resolving the paradox of patents and meeting the twin goals of data security and data access in the promotion of digital trade.
But there is an overriding challenge facing MC13. The liberal trading order is under siege as world trade becomes increasingly weaponised through targeted government interference, with imports, exports and state-funded subsidies all utilised in the pusuit of other goals. The evidence is clear — the stockpile of G20 trade restrictions has grown more than tenfold since 2009.
Reset, Prevent, Build: A Strategy to Win America’s Economy Competition with the Chinese Communist Party
Following are excerpts are from a report by the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party.
For a generation, the United States bet that robust economic engagement would lead the Chinese Communist Party (CCP) to open its economy and financial markets and in turn to liberalize its political system and abide by the rule of law. Those reforms did not occur.
Since its accession to the World Trade Organization in 2001, the CCP has pursued a multidecade campaign of economic aggression against the United States and its allies in the name of strategically decoupling the People’s Republic of China (PRC) from the global economy, making the PRC less dependent on the United States in critical sectors, while making the United States more dependent on the PRC. In response, the United States must now chart a new path that puts its national security, economic security, and values at the core of the U.S.-PRC relationship…
…The strategy that follows is guided by three pillars:
First, the United States must reset the terms of our economic relationship with the PRC and recognize the serious risks of economically relying on a strategic competitor that harnesses the power of the Party-State to compete economically. While economic exchange with the PRC will continue, the United States government and the private sector can no longer ignore the systemic risks associated with doing business in the PRC or allow companies’ pursuit of profit in the PRC to come at the expense of U.S. national security and economic resilience…
…Second, the United States must immediately stem the flow of U.S. technology and capital that is fueling the PRC’s military modernization and human rights abuses. General Secretary Xi has made plain his intent to “resolutely win the battle of key and core technologies” and build the People’s Liberation Army (PLA) into a “great wall of steel.” At present, U.S. capital, technology, and expertise aid that effort. They support the PLA’s modernization, the CCP’s predatory technological goals, and genocide. The United States must change course. To quote Dr. Eric Schmidt’s remarks at the Select Committee’s hearing, “Leveling the Playing Field,” “it’s never too late to stop digging our own grave.”
Third, the United States must invest in technological leadership and build collective economic resilience in concert with its allies. The best defense against the CCP’s predatory economic practices will fail if not paired with a proactive strategy to invest in America and increase economic and technological collaboration with likeminded partners. The United States must bolster its unique advantages in technological development by funding research, incentivizing innovation, and attracting global talent in critical areas. In addition, the United States needs to invest in workers, who must remain competitive for jobs of the future, including by helping workers acquire skills-based training and adapt to technological transitions.
The following excerpts are from Simon J. Evenett’s article “Can the World Trade Organization Act as a Bulwark Against Deglobalization?” from Asian Economic Policy Review.
The best that can be said about the current multilateral trade rule book is that, to date, many governments (of mainly small- and medium-sized economies) have chosen not to openly violate their commitments. Pressures to favor national interests have been channeled away from transparent forms of trade discrimination (such as import tariffs) to less transparent forms of selective intervention (corporate subsidies, government procurement measures, export controls, and the like.) This shift toward harder to detect and less closely observed commercial policy intervention may have created the impression of a system capable of deterring government steps that fragment markets. If that was the case, the public revocation of MFN tariff treatment for most of China’s exports by the USA shattered that illusion. China’s retaliation and the enduring breach of the MFN principle have not been lost on observers either…
…In principle, groups of like-minded nations could deter state-led deglobalization within the group – although that proposition ought to be evaluated on a case-by-case basis. Perhaps the expansion of membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) can secure an oasis of less-distorted trade among its members? But creating an oasis does not address the root causes of the growing impotence of multilateral trade rules evidenced in this paper. Still, should compliance with multinational trade rules weaken further, one option available to governments is to seek to substitute lost multilateral market access with an expanded and deeper network of regional trade agreements.
If multilateral trade rules cannot do the job of discouraging policy-induced deglobalization, what can? The decisive battles over unilateral policy will take place in national capitals. With intensifying geopolitical rivalry, we can reasonably expect that national security and foreign policy officials are likely to play a greater role in shaping commercial policymaking. Too many of the former cross-border commercial ties are said to be a source of risk, so little discouragement to deglobalize can be expected from that quarter. For these officials, trade policy is, at best, part of second order diplomacy, to be invoked symbolically and not because of any expectation that curbing trade will actually change a foreign government’s actions. One potential source of countervailing power comes from that part of the business community which has a significant stake in an open global trading system. Whether enough senior executives are willing to do so is an open question.
Mark Linscott is a former Assistant US Trade Representative for South and Central Asia, WTO and Multilateral Affairs, and Environment and Natural Resources.
In recent years, global trade relationships have shifted substantially, in many ways reversing a decades-long multilateral drive toward more open trade. I know how dizzying these shifts have been from my own experience as a US trade negotiator over the past three decades. It’s too early to tell whether these shifts are a temporary setback or, instead, a terminus for the multilateral trading system, but it’s not too soon to assess how US policies are faring amid these changes.
After World War II, a multilateral push toward freer and wider trade transformed the global economy. Tariffs and barriers fell, and more goods crossed more borders. It happened in phases, neither consistently nor all at once. A first phase started with the General Agreement on Tariffs and Trade (GATT), with the United States seeking to build up free markets to counter global threats posed by the Soviet Union. A more recent phase included the creation of the World Trade Organization (WTO) in 1995, and China and many of the former parts of the Soviet Union, including Russia, joining the multilateral trading system.
In the first two decades of the twenty-first century, however, as the WTO stumbled to negotiate new trade agreements, this trading system began to break down. Without multilateral progress, more nations sought to negotiate free trade agreements (FTAs). Now, industrial policies are proliferating and countries are focusing on “strategic” trade relationships, approaches generally at odds with the multilateral trading system first established in 1947. And this latest trend is not surprising given the vacuum left by the decline of the WTO and the disruptions in trade brought on by COVID-19 and Russia’s war in Ukraine.
The Biden administration has championed this new era, seeing it as a moment to reinvest in US manufacturing and better counter China’s economic clout. However, there has been blowback, and the chorus of critical voices aimed at US trade policies is large and growing. While much of this criticism is valid, as recent trade policies cast aside effective tools, such as FTAs, too cavalierly, there also have been earnest efforts to address pressing new realities.