The World Trade Organization’s ability to tear down barriers to commerce, ensure stability through global accords and enforce the rules came under renewed criticism following a chaotic and contentious meeting of its top officials.
The 13th ministerial conference in Abu Dhabi last week laid bare an uncomfortable truth: For an organization that needs all 166 member countries to agree, the WTO again struggled to muster even a small win. Those are only getting messier and harder to pull off in an era of two armed conflicts, widening geopolitical gulfs and a realignment of the trading ties that bind the postwar economic order.
Meetings in the capital of the United Arab Emirates — positioned both geographically and geo-economically between US-European Union and China-Russia alliances — were dominated by disorder and confusion, according to several participants, who asked not to be named speaking about the private talks. They’re rarely jovial affairs, but hopes were quickly dashed that this year would be a turning point toward unity.
As talks headed for a sixth day near midnight Friday, ministers could only agree on a measure they’ve maintained since 1998 — extending a moratorium on tariffs on digital commerce. In doing so, the WTO salvaged an accord that businesses warned would splinter the global Internet if it lapsed, and navigated past opposition from India, South Africa and Indonesia.
But only barely. Minutes before a tentative e-commerce deal was announced, European Union officials warned reporters to brace for a negotiating round to end in a full-blown collapse of the multilateral trading system’s cooperative spirit.
“It’s incredibly frustrating to see the WTO unable to move forward,” said Tiffany Smith, vice president of global trade policy at the Washington-based National Foreign Trade Council. “The endless brinkmanship over the moratorium crowds out the ability to make progress on a broader agenda of important issues and undermines the viability of the WTO as a useful forum for trade ministers.”
The target of Brussels’ and Washington’s frustration was India’s Trade Minister Piyush Goyal, who arrived midway through the schedule of events and, some western officials say, showed little flexibility. He asserted publicly that the world’s most populous nation was “not blocking anything,” saying he was defending the interests of the poor against rules long designed to favor the rich.
India, along with Indonesia and South Africa, had been pushing to lift the moratorium on customs duties on electronic trade, arguing they are losing tariff revenue on everything from software downloads to e-books and streaming movies.
Such tactics showed how the power balance in the global economy is shifting to Asia.
Fisheries, Agriculture
But practically speaking, they contributed to the failure of progress sought by other WTO members on measures to curb subsidies that lead to overfishing and contribute to volatility in global grain markets.
MC13, as the meeting was nicknamed, also featured some uncommon alliances. Brazil and India found themselves on opposite ends of a debate on public stockholding, a reversal from 20 years ago. That’s when they formed an alliance that was broadened to become one of the WTO’s greatest divisions between rich and developing nations.
And China was strongly in favor of continuing the digital trade tariffs moratorium that some other large emerging markets opposed — aligning itself with the US and EU positions on the issue.
“Traditional developed-developing lines no longer apply the way they did,” said Kelly Ann Shaw, a partner at law firm Hogan Lovells who served on the Trump administration’s trade and economic team.
WTO Director-General Ngozi Okonjo-Iweala acknowledged that they “didn’t achieve all we wanted to” but sounded relieved about averting a total collapse.
‘Just Enough’
The US Chamber of Commerce, the loudest voice for American businesses, said the UAE meetings “showed governments demonstrating just enough political will to move it forward.”
Also left unresolved was something India called its top priority — a fix for the Geneva-based institution’s comatose appellate body, part of a dispute-resolution system that the US wants reformed not revived. But expectations for this to be the first of the WTO’s serious reform ministerials were dashed by day two.
Among the sparks that flew were comments made by Thailand’s ambassador to the WTO, Pimchanok Vonkorpon Pitfield, during a closed-door meeting Tuesday.
She questioned the demand of some nations seeking relaxed subsidy rules on public stockholding for food security while allegedly accusing them of exporting grain bought on such predetermined prices to capture market access, people familiar with the matter said.
Pitfield received applause from some of the other countries in an apparent expression of solidarity, fueling outrage from Indian representatives who found her tone disrespectful to the world’s most populous nation.
India’s foreign affairs ministry raised concerns with its Thai counterpart over her remarks. New Delhi said her remarks seemed to reflect her personal rather Thailand’s position on the issue.
The Thai government later sent a letter of apology to India, though it was unclear whether Pitfield was disciplined or not. Indian officials who asked not to be identified said she had been recalled after her remarks.
The global trade-policy agenda is unlikely to get any smoother in the short term, with elections in more than 60 nations this year seen spurring more protectionism and inward focus, and the impact of wars from Ukraine to Gaza disrupting the flow of goods and services.
Election Season
India is heading toward elections likely in April, and Prime Minister Narendra Modi’s Bharatiya Janata Party is expected to win a third term. So Goyal’s agricultural-subsidy stance at the ministerial, according to at least one participant, had political overtones because farmers — some of whom have been protesting in recent weeks — form a significant voting bloc.
Another campaign on the minds of WTO officials was the US election in November, in which Donald Trump is trying to unseat President Joe Biden.
Trump threatened in a 2018 interview with Bloomberg News that he’d pull the US out of the WTO if it doesn’t shape up. More recently, he’s been traveling America promising a 10% tax on all imports, or a duty of at least 60% on all imports from China –- proposals without precedent in the history of the multilateral trading system and ones that would effectively leave the WTO in ruins.
As trade ministers were leaving Abu Dhabi on Saturday, Trump was gearing up for a rally in North Carolina, where he said countries that put tariffs on US products will be met with the same treatment.
“I will pass the Trump Reciprocal Trade Act,” he said as a New York Times and Siena College poll showed him ahead of Biden. “If China or any country makes us pay a 100 or 200% tariff, we will make them pay a reciprocal tariff of 100 or 200% right back.”
Such rhetoric has some WTO members starting to worry.
For Malaysia, which counts China and the US among its top trade partners, the preparations including seeking to diversify trade relationships through regional initiatives like the one known as CPTPP, an Asia-Pacific deal that Trump withdrew the US from in 2017, and RCEP, an agreement that includes China, and negotiating with blocs including the European Union.
“There’s concern that there will be an escalation of trade barriers,” Zafrul Aziz, Malaysia’s trade minister, said in an interview last week. “One has to factor that in.”
