Photo: FABRICE COFFRINI/AFP/Getty Images
Next week marks the beginning, finally, of the 12th World Trade Organization (WTO) Ministerial Conference (MC12). I say finally because they are usually held every two years, and this one was originally scheduled for June 2020, but Covid-19 got in the way, and then did so again last December. It looks like the third time will be a charm, but to mix metaphors, it is entirely possible the organization could strike out anyway.
The stakes are high. The WTO was established in 1994 as a successor to the General Agreement on Tariffs and Trade (GATT). In the 28 years since, it has produced only one large multilateral agreement—the Trade Facilitation Agreement in 2015, which obligated states to take a number of actions at the border and behind the border to make trade easier. That was a good agreement, but it is small compared to the much more ambitious, but failed, Doha Round. That failure, coupled with the demise of the Appellate Body, the last step in the WTO’s dispute resolution process, has raised questions about the organization’s relevance and utility in a global economy that has gotten much more complicated over the past three decades.
While multilateral organizations rarely implode, they can, through failure to achieve their objectives, become irrelevant and eventually be superseded by new entities better fit for dealing with contemporary problems. There is growing concern that if the WTO cannot get back on track, that may be its fate. While some argue that the path to restoration requires reform of the organization, I think the answer is simpler. The WTO needs to have a successful negotiation. It needs to demonstrate to its 164 members that it remains capable of addressing global trade problems through multilateral negotiations.
MC12 presents a number of opportunities to do precisely that. The most important is the negotiation on fisheries and fishing subsidies, which has been going on for more than 20 years. During that period the situation has become critical—the UN Food and Agriculture Organization recently reported that global fish stocks considered to be within “biologically sustainable levels” declined from 90 percent in 1990 to 65.8 percent in 2017, and it is no doubt worse now. We are in the midst of a crisis of overfishing, caused in significant part by government subsidies—more than $35 billion in 2018. Haggling continues over which subsidies should be prohibited or restricted, how long countries should have to comply with the new rules, better reporting requirements, and the extent to which there should be special treatment for developing countries. Since the worst offender, China, classifies itself as a developing country, the latter issue is extremely important.
This is a classic global commons issue. Will countries be willing to put aside their short-term parochial interests in protecting their fishing industries in order to do something for the common good? Recent news from Geneva was mildly optimistic, but 20 years of failure still leaves me skeptical, and the United States’ late insistence on including a forced labor provision has not made the talks any easier.
The second opportunity is the vaccine waiver issue, which I have discussed before. Recent reports suggest this one is getting worse rather than better. The U.S. insistence on language that clearly excludes China from waiver eligibility, while being the right policy, may have created an impasse.
The third opportunity is on agriculture, which is the least likely to get very far. Goals have been reduced so that the proposals are not much more than agreement not to restrict exports to the World Food Program—which two or three countries have blocked for the past two year—and a set of issues to be decided by the time of the next ministerial in two years. Here, the primary culprit is India, which has for years insisted on being allowed to subsidize public stockholding of crops in excess of WTO limits, a change that would blow a hole in the already weak rules. The classic Indian strategy, which it seems to be employing here, is to block everyone else from getting anything until India gets its way. I would not bet on the parties agreeing even to these modest goals.
Finally, there is the question of the U.S. role. Historically, officials from the U.S. Trade Representative Office have worked diligently, often behind the scenes, to bring the members to positive outcomes. That does not seem to be the case this time around. Our positions on all three of these issues seem to be pushing the parties farther away from agreement rather than closer. The United States is not wrong on substance—ending forced labor in fishing would be good, as would clarifying China’s vaccine waiver status—but those positions may make reaching agreement more difficult. Like everybody else, the United States has to balance its policy priorities against broader global commons interests that can only be met by reaching an agreement. This time, however, the stakes are higher because the future of the WTO is at risk in addition to the specific issues under discussion. Failure would be bad for the fish and the farmers, but it would also be bad for a rule-of-law-based global economy.
When I was much younger, I had a T-shirt that was popular at the time—a picture of a sled dog with the caption, “Lead, Follow, or Get out of the Way.” Right now, it is not clear the United States is doing any of those.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
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