Trade
Searching for leadership at the 12th WTO Ministerial Conference
Author: Dmitry Grozoubinski, Graduate Institute, Geneva
The World Trade Organization’s (WTO) 12th Ministerial Conference (MC12), originally scheduled for Nur-Sultan in December 2019, is now slated for December 2021 in Geneva. With less than six months to go, it remains uncertain where the leadership and compromise required for meaningful outcomes will come from.
Ordinarily occurring every two years, MC12 has taken four, delayed first by the wise decision to avoid the Kazakh winter, then by the pandemic.
A worldwide trend towards discriminatory and protectionist measures has continued in the meantime. Development, business, consumers and investors have suffered as trade has become less predictable, less liberalised and easier to weaponise around political objectives.
The United States, once the self-identifying champion of the rules-based order, was an antagonistic force at the WTO for four years under the Trump administration. President Joe Biden has somewhat improved the tone, but the US position is still one of extreme scepticism toward the international trading system. With the United States yet to even confirm a WTO ambassador, few expect US leadership at MC12. Fewer still expect it to offer concessions to get multilateral deals over the line or end the Appellate Body appointments blockade.
Chinese President Xi Jinping’s 2017 Davos address was interpreted by many as a sign that China was about to step up to global trade leadership. This has largely not materialised — made unlikely by China’s position that its WTO accession commitments represent the full extent of liberalisation it should be expected to make, and by its suspicion toward WTO reform conversations centred on new disciplines on state capitalism.
The European Union is likely to advocate for progress in areas such as the environment, gender and climate change. It is also a key player in many plurilateral initiatives. However, a bloc of 27 will always struggle to maintain the flexibility and agility shepherding multilateral negotiations to conclusion requires.
The election of Ngozi Okonjo-Iweala as WTO director-general has sparked hope that her drive, energy and star power might kickstart a renaissance — expectations she has tried to manage. She has been relentlessly active on a number of fronts, and a reform of the WTO Secretariat is in progress. Yet her authority is severely limited and can’t replace genuine engagement from members.
In the absence of leadership from major players or movement on central WTO mandate issues, it has fallen to middle powers to try to energise momentum in other areas.
Commendable efforts by the Australia-convened Cairns Group has seen dialogue on the agricultural domestic subsidy reform project, a key issue of contention since the Doha round. But still there seems little chance of progress here. An outcome would require significant commitments on subsidy limits from the United States and the European Union, at least tokenistic liberalisation from India and China, and either exemptions for or significant changes by small yet committed subsidisers like Switzerland and Norway.
Talks on disciplining subsidies for harmful fishing practices are contentious but advancing, and a modest landing zone could emerge at MC12.
Plurilateral progress could also surface at MC12 in areas like e-commerce, investment facilitation and services domestic regulation. Soft law plurilateral initiatives that relate to gender or micro, small and medium enterprises could also advance given they are relatively inoffensive and do not create binding trade rules. Yet these plurilateral negotiations, while progressing, are still controversial.
Embraced to varying degrees by most members, the lack of consensus inherent in the plurilateral process is being denounced by some as contrary to the spirit of the WTO. Should any sub-group negotiations bear fruit, India, South Africa and other opponents are likely to sour any potential victory, if moves like a refusal to extend the e-commerce moratorium don’t do so.
The WTO is under pressure to deliver consensus outcomes related to COVID-19 pandemic management and recovery. A proposed TRIPS waiver for COVID-19-related goods would free governments from international obligations to protect patents on vaccines and other medical goods. Sparking heated debate about its usefulness, the proposal by India and South Africa has gained global traction including in-principle US support. Some speculate a deal could be reached by the conference or sooner.
Despite US backing, a deal could be elusive. The…
Trade
Self-Reliance and Openness: Core Principles of China’s Third Plenary Session
The Third Plenum communique from the CCP indicates a prioritization of stability and compromise in response to China’s economic challenges. It highlights the concept of Chinese-style modernization and establishes political guidelines for balancing regulation and market forces.
The CCP’s Third Plenum communique signals a focus on stability and compromise in the face of China’s economic challenges. It emphasises Chinese-style modernisation and sets political directions for balancing regulation and market forces. While not as groundbreaking as previous plenums, it acknowledges the importance of market mechanisms and technological self-reliance, aiming to address issues like high youth unemployment and private sector uncertainty. The communique seeks to navigate the complexities of global competition and domestic innovation, potentially reshaping global supply chains and trade dynamics. Overall, it presents a pragmatic blueprint for China’s economic future.
Source : Self-reliance and openness central pillars of China’s Third Plenum | East Asia Forum
Trade
Trade Prevails Over Political Persuasions in China-Germany Relations
China and Germany maintain a strong bilateral relationship, rooted in economic cooperation despite ideological differences. Recent visits and agreements focus on expanding trade and addressing mutual concerns, navigating challenges while nurturing ties.
Evolving Bilateral Ties
China and Germany share a strong bilateral relationship, rooted in history since 1972. This connection has seen moments of cooperation intertwined with periods of tension. German Chancellor Olaf Scholz’s April 2024 visit underscores Germany’s commitment to fostering this partnership, reflecting a mutual interest in maintaining economic ties despite ideological differences.
Economic Pragmatism
As the second and third largest global economies, China and Germany’s economic interdependence is crucial. Germany emerged as China’s primary trading partner in 2023, with trade values reaching €254.4 billion (US$280 billion). In response to global scrutiny, Germany has taken a balanced approach, emphasizing economic stability over political discord. This was evident during Scholz’s prior visit in November 2022, where his diplomatic tone contrasted with broader EU sentiments.
Facing Challenges Together
Despite increasing public skepticism in Germany regarding China’s global influence and human rights issues, both nations continue to seek common ground. Their October 2023 Joint Statement highlights intentions to pursue cooperation in areas like carbon neutrality and open markets. To navigate these complex terrains, Germany can utilize its institutional frameworks to enhance dialogue, while also considering supply chain diversification to reduce dependency on China. The intertwining nature of their economies suggests that, despite challenges, both countries will continue to prioritize their substantial trade relations.
Source : Trade trumps political persuasions in China–Germany relations
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
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