The World Trade Organisation is in the news mostly for the wrong reasons nowadays. Many people regard it as an ineffective policeman of an outdated rule book that is unsuited to the challenges of the 21st-century global economy. WTO members generally agree the organisation urgently needs reforming to remain relevant.

Recent months have brought further challenges. The WTO’s appellate body, which adjudicates trade disputes among members, effectively ceased functioning last December amid disagreements regarding the appointment of new judges to the panel. In May, director general Roberto Azevedo announced he would step down at the end of August, a year before his term was scheduled to end.

Whoever Azevedo’s successor is will face a major challenge. Since its establishment in 1995, the WTO has failed to conclude a single round of global trade talks, missing an opportunity to deliver mutual benefits for its members. The Doha Development Round, which began in November 2001, was supposed to be concluded by January 2005.

Fifteen years later, WTO members are still debating whether the Doha process should continue. Some think it has been overtaken by events, while others want to pursue further negotiations.

The WTO has so far delivered disappointingly few other notable agreements, apart from the Trade Facilitation Agreement, which came into force in February 2017, and the 2015 decision to eliminate all forms of agricultural export subsidies.

Meanwhile, some members have worked together on a raft of much broader regional trade deals that cover pressing issues such as the digital economy, investment, competition, the environment and climate change.

The Doha Development Round, which was intended to modernise the WTO’s rule book, covers very few of these topics. Even some of the organisation’s existing rules can easily be circumvented, thereby upsetting the balance of rights and obligations among members.

The Doha Development Round, which was intended to modernise the WTO’s rule book, covers very few of these topics. Even some of the organisation’s existing rules can easily be circumvented, thereby upsetting the balance of rights and obligations among members.

During the current Covid-19 crisis, for example, some countries have imposed questionable export controls on medical supplies and food products to mitigate shortages.

But despite these challenges, the WTO has not been a failure. Rather, it has built upon the successes of its predecessor, the 1948 General Agreement on Tariffs and Trade. The rules-based multilateral trading system that began with GATT has contributed immensely to global economic growth in the past seven decades by reducing average tariffs and steadily eliminating non-tariff barriers.

As a result, living standards have improved in most countries. Moreover, rules-based global trade has helped to underpin peace and security, because trading partners are more likely to resolve differences through negotiations than through armed conflict.

Nonetheless, WTO members today recognise the need to reboot the organisation for the 21st century. Developed countries believe they have shouldered the burden of trade liberalisation for far too long and that developing countries should shoulder more obligations if they are in a position to do so.

Least-developed and low-income developing countries, meanwhile, say WTO rules are hampering their efforts to grow and modernise their economies.

In the past two decades, international trade has become a bogeyman for critics who blame it for the economic woes some countries face. But trade is not a zero-sum game; rights and obligations can be balanced, as the evolution of global and regional trading rules since 1948 has shown.

The question facing the WTO and its members now, therefore, is how to make progress and reach mutually beneficial agreements.

All members should participate in this endeavour because that is the only way the organisation can regain its credibility and carry out its rule-making function. New negotiations must take account of members’ varying levels of economic development and aim – as ever – to reach fair and equitable agreements.

Other crucial priorities for the WTO include enhanced transparency in the form of timely notifications of countries’ trade measures and an effective dispute-settlement system that commands the confidence of all members.

A moribund WTO does not serve any country’s interest. An effective, rules-based international trade system is a public good, and failure to revive it will undermine governments’ efforts to pull the global economy out of the recession caused by the Covid-19 pandemic.

The WTO has an irreplaceable role to play in transforming countries’ economic prospects and the lives of people around the world. Although the current crisis has brought the organisation’s deteriorating health into sharp focus, its further decline is not inevitable.

In a world economy already imperilled by Covid-19, we must apply the antidote – members’ political will, determination and flexibility – needed to revive it.

Source: South China Morning Post

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