Trade
Could restarting agricultural negotiations save Doha?
Author: Joanna Hewitt, Canberra
Political level interest in reforming and restoring the weakened rules-based trading system is overdue, as argued recently on East Asia Forum. Language from the APEC Trade Ministers and G7 Leaders meetings last month is only a start but more than had been possible before President Biden’s ‘America is back’ message displaced his predecessor’s ‘America First’ wrecking ball.
The time is right for serious follow up. Challenges to the trade rules and arbitration system are now existential. The World Trade Organisation (WTO) Doha negotiations remain stalled some 20 years since their launch and entrenched disagreements abound among the membership on old and new issues.
Some of the problems reflect dramatically changed geopolitical and economic weights as well as tensions between the world’s two largest economies, the United States and China. Others reflect failure of the rules to keep up with evolving realities like global value chains and the digital economy. The WTO’s arbitration system has also been unable to function in the face of a US block on Appellate Body appointments. And strong differences simmer over eligibility of some emerging economies for developing country concessions, on transparency around industrial subsidies, on forced technology transfer and on coercive trade practices.
If that weren’t enough for the impressive new WTO Director General, Ngozi Okonjo-Iweala, agricultural negotiations are paralysed. Agriculture is central to progress on Doha as well as contributing to the stalemate. Turned around the other way, movement on agriculture could help boost certainty in global markets and aid in economic recovery from the pandemic.
A detailed proposal aimed at getting parties back to the table on agriculture has been launched by an independent group of international experts. The ‘New Pathways’ group, of which I am a member, comprises former top staff of international organisations and think-tanks, senior trade negotiators and academics. None is bound by any current organisational position.
The proposal aims to shift member countries from rusted on positions and offers solutions to known problems in the 1994 Agreement on Agriculture. The ‘continuation clause’ in the Agreement has fallen foul of the Doha stalemate, leaving countries with high agricultural support and protection free from pressure or incentives to change tack. Moreover, some emerging economies, including China, have also embarked on costly agricultural support programs mimicking those of industrial countries, allowed under current rules.
The New Pathways proposal puts forward rules changes aimed at driving more efficient, and less wasteful, inconsistent and environmentally harmful policies. It takes the 1994 Agreement on Agriculture framework as its starting point and suggests reforms commensurate with the degree of trade distortion engendered by the policy settings of each country as well as their impact in world markets. It is a holistic package covering all three pillars of the Agreement — market access restrictions, domestic support measures and export competition.
Potential gains from proposed new rules would be considerable. They focus reform efforts on policies that cause the most damage to countries’ own economic resource allocation as well as damage to third countries through world markets.
Market access gains would be delivered through ambitious options for tiered tariff reductions. Loopholes in arrangements for safeguards against imports are tightened or removed. Similarly, options for Domestic Supportprograms would require major trimming and reshaping. More scope would be granted for farm payments targeted at environmental challenges like climate change, biodiversity loss and resource depletion. Less scope would be allowed for ongoing income support payments such as Europe’s Blue Box measures. Input subsidies, for example on fertilisers and energy, that encourage harmful intensification, would be constrained. On the other hand, more flexibility would be allowed for programs targeting food security and support for low-income households and for public stockholding of farm goods if purchased at below world price levels.
The pathbreaking 2015 Nairobi Agreement outlawing Export Subsidies would be consolidated and export restrictions limited.
This proposed rebalancing addresses longstanding grievances of developing countries who see continuing high spending (they cannot match) on farm supports in rich countries, and increasingly in some middle-income countries, while…
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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