Hopes for outcomes from a WTO 13th Ministerial Conference occurring against the backdrop of significant tensions in multilateral trade were low.
Observers correctly cautioned expectations management with the US clearly unwilling to spend political capital to overcome impasses and India spoiling for a fight on virtually every issue up for negotiation. Upcoming elections in both, and elsewhere, did little to encourage the expenditure of political capital on flexibility or compromise for the sake of delivering wins for multilateralism.
The Conference outcomes disappointed but did not surprise many of those who were watching most closely. For more casual observers however, it likely did just enough to allow the WTO and the multilateral trading system to once again retreat into being objectively significant but rarely thought of.
Things did not quite fall apart, but how much longer can the centre hold?
The most significant SPECIFIC development for business
The business community welcomed an extension for two years of a moratorium on border taxes charged on electronically delivered goods and services.
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Opponents of the extension ultimately accepted an extension through to the next Ministerial Conference at the end of 2025, albeit with language that will put them in a slightly stronger rhetorical position to oppose yet another extension thereafter. There was a general sense among negotiators that this may be the moratorium’s last lifeline.
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Businesses and investors that believe they may be significantly impacted by the imposition of border taxes on digital transmissions should begin making their concerns heard to the opponents of the waiver (most prominently India and Indonesia) and encouraging other governments to prepare to unilaterally or plurilaterally swear off such taxes, and define their scope, in the likely event the WTO moratorium expires in two years.
The most significant GENERAL development for business
The Conference was not so obviously and manifestly a failure as to imperil the general stability of the rules-based trading order.
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Elections in major economies later this year or geopolitical eruptions could still imperil the status quo, but the Ministerial did enough to be merely very disappointing but not system-ending, in its lack of outcomes.
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Viewed more optimistically, members did at least rhetorically express their support for the system and mandate ongoing reform work. Fears that reform would be abandoned in a symbolic back turning on the WTO did not eventuate, and members were able to agree a Ministerial Declaration (albeit a very safe and somewhat anodyne one).
For civil society
Disappointment as attempts to expand the agreement on fisheries subsidies fell over at the last hurdle, as did efforts to reflect environmental issues more fully in the WTO’s mandate, processes, and work streams.
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The fisheries subsidies deal would have significantly expanded on a previous agreement which merely disciplined subsidies on illegal fishing, to tackle the most pressing issue: subsidies fueling the mass harvest of overfished stocks – including those far from the fishing fleet’s national waters.
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Keeping the WTO from meaningfully engaging on environmental policies that impact trade, and trade policies that impact the environment, won’t prevent these policies – just deny smaller states their most representative and accessible vehicle to query them.
For FANS OF THE wto AS AN INSTITUTION
The joy of welcoming Comoros and Timor-Leste into the fold, mixed with disappointment as a somewhat quixotic attempt to negotiate back into existence its highest arbitration function (the Appellate Body), and agree some procedural reforms to dispute settlement, led to little more than a decision to ‘keep working on this’..
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Despite engaging on the detail, the US still appears disinclined to restore a binding form of dispute settlement that can rule its trade policies to be in breach, at least not before 2024 electoral cycle runs its course.
Those seeking a silver lining
Can look to the entry into force of the Agreement on Domestic Regulation in Services and the official conclusion of the Investment Facilitation for Development Agreements, as well as environmental initiatives like the Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade.
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These processes included less than the full WTO Membership and have their detractors, but collectively demonstrated an appetite for progress, and even some liberalization, among significant subsets of the world’s economies.
Finally, those seeking a single takeaway from all this could be forgiven for despondency, but in truth very little has changed.
There is important work to be done in Geneva, especially in the oft-neglected regular work of managing trade policy friction at a micro-level. This will only become more potentially significant as environmental, industrial and geostrategic concerns drive more policies, and more friction.
However, the primary tool for preventing disruptive, unpredictable trade policies is to make a strong case against them in capitals. Winning that argument in capital opens the door to pushing for a reinvestment in a system which will robustly discipline such behaviours across the entire global economy.
With even some of its architects now flirting with protectionism, industrial policy and trade diversion, expecting the argument to be won at the WTO and imposed on capitals rather than the other way around is a more distant dream than ever.
Throughout the week, Jan Walter (Akin) and Joan Okitoi-Heisig (GTP), provided updates from the ground, you can follow their journey on our MC13 Updates YouTube Playlist.