Why so much gloom following the World Trade Organization’s latest ministerial conference?

Title – Why so much gloom following the World Trade Organization’s latest ministerial conference?

By – Professor Simon J. Evenett, Founder of the St Gallen Endowment for Prosperity Through Trade

Heading into the WTO’s 13th ministerial conference (MC13), there were legitimate grounds for optimism, with limited downside risks and some upside potential within reach. 

But last week in Abu Dhabi, WTO members failed to reach agreements on new fisheries regulations and on the way forward on agricultural reforms. Moreover, WTO members won’t now discuss (let alone rein in) subsidy-driven industrial policies. This indicates a lack of readiness among many governments to consider new limits on their domestic spending programs. 

Global challenges often require simultaneous restraint or retrenchment, yet there remains insufficient appetite to pursue these paths at the WTO. Opportunities to identify better industrial policy practices and understand the nexus between trade and development were overlooked. 

Consider the following contributing factors:

·       Voters: Upcoming elections in many of the world’s largest economies cast a long shadow over the WTO’s 13th ministerial conference (MC13). 

·       Farmers’ Discontent: Rising frustration among agricultural stakeholders emerged as a common theme among countries at all income levels.

·       Big Tech Backlash: Negative sentiment towards the US technology sector complicated negotiations that were perceived as favouring their interests. 

·       Expectations: For better or for worse, the WTO’s last ministerial (MC12) was hailed a massive success. But history shows these biennial meetings tend not to deliver successive standout achievements. 

On the upside, businesses worldwide rallied to stop the imposition of customs duties on electronic transmissions. Additionally, some of the initiatives launched at the WTO’s 2017 ministerial conference are starting to yield results, including an agreement to facilitate cross-border investment.

When it comes to cooperation on domestic regulations with cross-border implications, groups of countries showed they are willing to forge ahead at the WTO. Although some governments may grumble about setting precedents, progress in a number of areas has been possible. 

These days “boring” matters like investment regulations, domestic services regulation, and technical barriers to trade don’t capture public attention as much as subsidies do. An optimist might say that this provides sufficient room for diplomats to forge new, cooperative approaches. 

In conclusion, MC13 showed that the WTO is better (though hardly perfect) at holding the line on existing agreements, such as the customs duty moratorium on electronic transmissions. The Abu Dhabi ministerial also showed that members are still keen to cooperate on certain regulatory issues, even if negotiating away market access impairments remains out of reach.

Going forward, it is crucial for the WTO to message sensibly to make sure the level of achievement at MC13 does not become the new baseline.