Battling to define success after the WTO summit
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It’s just over three days after World Trade Organization ministers reached an agreement as dawn broke over Lake Geneva, and I’m sure some of those in attendance are still catching up on their sleep. There has since been a veritable banquet of hottakes from which to choose. Among the more thoughtful and optimistic are: this thread by academic and former WTO official Nicolas Lamp and this one on the issue of piscine guru Alice Tipping’s fishing subsidies. In today’s chapter, I talk to Ngozi Okonjo-Iweala, the director-general of the institution, who was very combative in declaring the ministerial a success, and muse on a few topics about how negotiations work and what they mean. mapped waters looks at trade between the UK and the EU on the sixth anniversary of the Brexit vote. Thoughts, tips, questions: email@example.com or click reply to this email.
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Modest rate, but ministers come back for more
It’s all about expectations, of course. If you believed that a failed ministerial conference would kill the WTO outright — especially if you were genuinely afraid that India and its allies would end the 24-year-old moratorium on taxing digital commerce – last week was a heroic breakout. Conversely, if you really thought the WTO would clear the undergrowth of intellectual property protection (IP) surrounding the production of Covid-19 vaccines and treatments, you would view the outcome as worse than nothing.
Friday night I spoke to Okonjo-Iweala, who had quite a bit to say about those intellectually involved in the failure of the WTO. “People predicted a total failure for this conference,” she said. “When you deliver, the incentive is to minimize that as much as possible. † † there is an industry of negativity against the WTO that must stop.”
Okonjo-Iweala has failed to popularize itself with health activists in particular, who supported India and South Africa’s original proposal for a full exemption in the WTO agreement on IP over IP. “You would never get the 100% exemption,” she said. “It wouldn’t happen because this is an issue where you had members on opposite sides and by the nature of the organization, when that happens, members have to negotiate.”
In some ways, to channel Zhou Enlai, it’s too early to tell the summit’s success. The decision to go for a limited outcome on fishing subsidies was portrayed as a temporary tactical pull-out from a full-blown deal that affected the overcapacity of the fishing industry in general. The idea is that governments can come back for another try at the next ministerial meeting, which is likely to be held next year.
The Trips issue also has a built-in deadline, with negotiators to look to IP for tests and treatments, as well as vaccines, within six months. It’s not going to be easy: the US (which has those activists) tapped now has peddled her for two years with his alleged support for an exemption) will oppose extending its coverage to antiviral treatments at the behest of his pharmaceutical industry. Speaking of the US, the secretary also pledged to try to fully restore the dispute settlement process — still hampered by the US blocking appellate appeals — by 2024.
The old-fashioned view is that this small approach of doing problems individually on different timelines doesn’t work. Governments need big bargains (the “single enterprise” principle) to exchange concessions in one area for profits in another. Unfortunately, as we saw with the late and unblemished Doha Round, there are so many parts to a full negotiation that the complexity of constructing compromises outweighs the flexibility.
WTO leaders and negotiating chairs have recently tried to keep the topics separate. Okonjo-Iweala told me, “Sometimes all this leverage and cross-links between results in the past has led to the failure to achieve something, because then everything just doesn’t work and collapses. I was really determined from the start that this wouldn’t happen and I tried to discourage members from linking one to the other.” Santiago Wills, the Colombian ambassador to chair the fisheries talks, argued last week that an urgent issue of the global public environmental welfare should not become entangled in more routine matters of trade.
This didn’t quite work out. India arrived and waved its threat to end the moratorium on digital trade to get its way on the entirely different issue of giving its farmers production-disruptive subsidies in the name of building buffer stocks of food (it’s an intriguing question whether Delhi would have gone through and killed the moratorium had other governments tried to bluff it). “India is very clear about what it wants. † † and will use the results to try and get what it wants,” Okonjo-Iweala told me. “That’s what the members do. India is quite open about it.”
Geopolitics are also currently in favor of Delhi using that leverage. The advanced economies do not want to drive India closer to Russia by alienating it, and both they and India itself are seeking a strategic counterbalance to China. Australia and the UK are in the process of concluding rather flimsy bilateral agreements with India that have more to do with strategic than economic considerations.
One last point. Much commentary, of course, includes this ministerial and indeed the overall functioning of the WTO along with the future of globalization. Certainly, a collapse last week would have given the doomsayers of globalization more material to work with. But remember that during the great wave of globalization from the late 1990s until the global financial crisis in 2008, the WTO achieved essentially nothing except a series of failed ministerial meetings (Seattle 1999, Cancún 2003, Geneva 2008). In the real world, trade took off like a flying salmon. At the WTO, we had to watch the doomed Doha Round helplessly flutter about like a dying cod stranded on the deck of a subsidized fishing trawler.
Trade is not the same as the WTO, and the WTO is not the same as trade. The WTO is not even necessarily representative of trade policy. India’s Commerce Minister Piyush Goyal immediately took off on Friday from being uneasy about every issue and brightly exposing the injustices of the rich countries in Geneva. bilateral talks with the EU, EU Trade Commissioner Valdis Dombrovskis declared his “partner in crime” (an unlikely bunch of thugs to be honest) and did a photo op with some Indian mangoes† Striking attitudes at the WTO do not equate to wanting to see the global trading system burn. Frankly, that’s a good thing.
In addition to this newsletter, I write a trade secret column for FT.com every Wednesday. Click here to read the latest news and visit ft.com/trade secrets to see all my columns and previous newsletters.
This Thursday marks the sixth anniversary of the UK’s referendum on its exit from the EU. Downing Street stressed this week that it was “too early to pass judgment,” but that didn’t stop my colleagues George Parker and Chris Giles, the FT’s political and economic editors respectively, from doing a comprehensive review today. to give.
The map above tells a story. Despite the pound losing 10 percent of its value after the referendum result was announced, there was no further increase in British exports. The country was just hit by inflation due to rising import costs.
The second point to note is that the trade did not fall off a cliff initially. But that happened in early 2021, not because of new tariffs between the EU and the UK, but because of the friction created by the introduction of strong border controls. (Jonathan Moules)
The head of Maersk, the world’s second-largest shipping group, says he doesn’t see global trade turning back.
The FT editors believe that the WTO is on life support, but the world still needs it.
Doug Irwin of Dartmouth College and the Peterson Institute states that: globalization has helped all countries get richer.
Bill Reinsch of the Center for Strategic and International Studies Investigates Complaints from Congress removed from trade policy†
Trade Secrets is edited by Jonathan Moules