The Road to Abu Dhabi

This week’s column is about the forthcoming World Trade Organization (WTO) 13th Ministerial Conference. I begin with some history and conclude with comments on what is on the table in Abu Dhabi.

In the 1950s and 1960s, trade negotiations were simpler. The main issue was tariffs, and negotiaors understood that when a negotiation is about a number, agreement is easier. (I say zero, you say 100, and there is probably a number somewhere in between we can agree on.) In the late 1960s, as tariffs became less significant, other topics—dumping, subsidies, and other unfair practices; regulatory policies; intellectual property protection; and government procurement, to mention a few—were put on the table as well. Those proved harder to resolve because they were a reflection of countries’ legal systems and the way they chose to organize and regulate their economies.

The nature of the organization also changed. What started out as a club of mostly developed countries with a handful of developing countries, has become an organization of 164 members, with two more to join next week (Timor-Leste and Comoros). That means many more developing country members who have become much more assertive over the years. This became evident after the launch of the Doha Development Agenda in 2001, which was ostensibly intended to address developing country concerns. The Doha Round’s failure exposed the WTO’s dilemma. Rich countries, which created the system and maintained it for its first 60 years, are facing more vocal opposition to trade liberalization at home (though still a minority) and are increasingly unwilling to meet poorer country demands for more market access and more “policy space”—time to postpone making concessions of their own. They have demanded that the emerging economies, particularly the BRICS (Brazil, Russia, India, and China) take on more responsibility for maintaining the system. Those countries have refused and instead have demanded more concessions from the rich countries.

The result has been an impasse. Everybody wants the benefits, but no one wants to pay the costs. The result is that the WTO has produced only one comprehensive multilateral agreement since its 1994 founding (the 2015 Trade Facilitation Agreement). The 12th Ministerial produced two more agreements on fish and vaccines. Neither went as far as their proponents wanted, but both set the table for next week and provided some grounds for optimism. The vaccine issue, which was whether to extend an intellectual property waiver beyond the vaccines themselves to ancillary medical equipment, appears, thankfully, dead. The fish, however, remain alive for the time being, and ministers will grapple with extending subsidy limits to those that contribute to illegal, unreported, and unregulated fishing and to decide the extent and nature of any exceptions that some developing countries have been demanding—agreements that eluded them two years ago.

The three other big issues appear to be extension of the moratorium on e-commerce taxation, reform of the dispute settlement system, and progress on agriculture trade. The first is, I hope, a top priority for the United States, not only because it affects so many of our digital companies, but because of it impact on small and medium-sized enterprises in developing countries. For a more detailed explanation of why this is so important, see a recent Scholl Chair commentary by Meredith Broadbent, “Extend the WTO E-commerce Moratorium on Customs Duties on Electronic Transmissions.”

Dispute settlement reform appears to be not yet ready for prime time, despite a mandate from the last ministerial to reach agreement on it in 2024, which most WTO members considered to be next week but which the United States has argued means by the end of the year. Here the lack of U.S. leadership has been particularly noteworthy. We forced the issue initially by objecting to new appointments to the Appellate Body, putting it out of business, but we have failed to be very clear about what we would like to see in its place. It is a fair point that the other members often ask for U.S. leadership and then complain when we provide it, but past administrations were skilled at “leading from behind”—persuading others to put forward our ideas. The Biden administration doesn’t seem as practiced at that.

Agriculture continues to be the most complicated and controversial issue the WTO considers. It exemplifies the rich-poor conflict described above, with the developing countries demanding more access to rich country markets and tighter limits on their subsidies, while at the same time refusing to do anything about their own subsidies and limits on access to their markets. In addition, the immediate issue is India’s demand for a permanent solution to “public stockholding” measures, which permit countries to exceed the WTO-agreed limits on subsidies if their purpose is to maintain adequate stocks of food domestically. India claims making this exception permanent is necessary for them to insure there is adequate food for their population. Most other countries, including the United States, have argued that India does not use the exception for that purpose but instead uses it to subsidize exports, harming other countries. At this point, India appears to be pursuing its usual tactic of objecting to nearly everything else in order to get what it wants.

Despite these difficulties, there is an air of optimism in Geneva, although Ambassador Tai poured a bit of cold water on that by recommending “pragmatism.” That could well be the most realistic approach, but it can also be interpreted as “let’s settle for less,” which hardly gets the session off to an ambitious start. Regardless, we should all expect the ministerial to crash and burn at least once and then to last longer than scheduled so members can pick up the pieces and avoid embarrassment by finally agreeing to something.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.