MC 13 – The next test for multilateral trade relations – read this exciting blog by Dr. Patrick Low and Goerge Riddell.

Patrick Low and George Riddell¹ 

The Thirteenth Ministerial Conference of the World Trade Organization (WTO) will take place next week in Abu Dhabi (26-29 February). Given the relative stasis that the WTO has lived through over the last three decades or so, expectations of concrete results from the ministerial meeting are at best modest.² Negotiating successes enjoyed by the institution since its establishment almost three decades ago have been sparse. 

The WTO’s Doha Round of multilateral trade negotiations, launched in 2001, aimed at further reducing trade barriers and writing or reforming various trade rules. The negotiations ran aground and were never completed with WTO Members in 2015 at the Tenth Ministerial Conference agreeing to disagree whether it was worth continuing. This disagreement persists today with certain countries. 

The WTO has, however, scored some negotiating successes over the years, including the establishment of a new agreement on trade facilitation, the elimination of export subsidies on agricultural products, tariff reductions on information technology products, a partial agreement on fishery subsidies, the reform of rules on domestic regulation in trade in services, and the continued renewal of the 1998 moratorium on customs duties on electronic transmissions. 

But the reality is that the WTO’s ability to fulfil its key functions, which include negotiations, the monitoring and administration of internationally binding trade agreements, and settling disputes, has been flagging. The negotiating function has been severely weakened, the dispute settlement function is in serious disrepair, and the unchallenged disregard of WTO obligations by various governments increasing in recent years. 

How far can MC13 go in rejuvenating the WTO? The challenge of confounding downbeat expectations will be considerable while avoiding the temptation to paper-over deep divisions with claims of success. Ministerial meetings are only able to formally launch new trade negotiations if the ground has been prepared. Typically, however, they seek to close stand-alone decisions on specific issues that are important to the incremental forward movement of the institution. 

One MC13 result is already in the bank. This is the accession to the WTO of two new members, Comoros and Timor Leste, which will increase the total membership of the organization to one hundred and sixty-six. Other than this, issues on the agenda include dispute settlement reform, a waiver of intellectual property rights on diagnostics and therapeutics associated with COVID-19, and a continuation of the work programme on digital trade (referred to in WTO parlance as e-commerce). Linked to the digital trade issue is the moratorium on customs duties on electronic transmissions referred to earlier, which has come up regularly for renewal since the original 1998 decision. 

¹ Patrick Low is a former Chief Economist of the WTO and a member of the Board of the Trade Negotiations and Investment Forum (TNIF). George Riddell is Director of Trade Policy and Strategy at Ernst and Young and a member of the Advisory Board of TNIF.

² The WTO replaced and modernized the General Agreement on Tariffs and Trade (GATT) in 1995. The GATT presided over multilateral trade relations for almost five decades, starting in the late 1940s as part of the post-World War II establishment of international institutions, including the United Nations, the International Monetary Fund and the World Bank. 

Among other issues on the MC13 agenda are the completion of negotiations on fishery subsidies, aspects of trade in agriculture, the perennial challenge of agreeing upon differentiated rights and obligations under the WTO among countries at different levels of development (often referred to as special and differential treatment), trade and industrial policy, and trade and technology transfer. 

In addition to the above-mentioned areas where discussions and perhaps decisions may be expected among all ministers at MC13, there are a number of other matters of more recent vintage that may find their way onto the agenda which a subset of the WTO membership have chosen to take forward. One such issue relates to the discussions that have been going on since MC12 on trade and environmental sustainability. Linked to this is an ongoing dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade. Another topic addresses issues relating to trade and gender. There has also been work addressing the challenges facing micro, small and medium-sized enterprises (MSMEs) in international trade. 

Mention has already been made of challenges associated with the relative rights and obligations of members linked to their respective stages of development. This is an issue that has frustrated and held up many negotiations over the years in the WTO and the GATT before it. It remains to be seen how this issue will play out in the MC13 outcome. 

An additional systemic matter facing the WTO relates to what have come to be called Joint Initiatives. These are negotiating initiatives that are launched by a subset of members to address an issue of shared interest. The initiatives generally proceed on the basis of the assumption that the benefits of any such negotiating outcomes will be enjoyed on a non-discriminatory basis by all members, regardless of whether they adopt the obligations resulting from negotiated outcomes. This approach is consistent with the WTO’s foundational principle of non-discrimination (known as the most-favoured-nation principle). 

The rub comes from the fact that the WTO takes decisions on a consensus basis. The consensus principle has frustrated many a decision, especially where consensus operates like a veto in order for certain members to extract commitments on other issues unconnected to the subject matter addressed by the Joint Initiative. When a JI is complete and it is time for adoption, the absence of consensus can stymie the result. This is currently preventing the adoption of decisions on regulatory reforms in services (mentioned earlier) and a more recently completed JI agreement on Investment Facilitation for Development. 

These challenges facing the WTO, combined with the non-functioning of key aspects of the WTO’s mandate already referred to, and a perceived lack of enthusiasm in some quarters for promoting progress multilateral trade cooperation, it is not surprising that a pall of modesty afflicts expectations of vigorous results. 

If, for example, MC13 only managed to bless the already-negotiated accessions of Comoros and Timor Leste and to renew the moratorium, this would be a modest result indeed. We shall know the answer to this at the end of February.