Paths to WTO Reform

Remarks of Alan Wm. Wolff, Deputy Director-General, World Trade Organization

Graduate Institute, Geneva, 10 November 2020

The Evenett-Baldwin eBook launched today, Revitalising Multilateralism:  Pragmatic Ideas for the New WTO — Director-General, Edited by Simon J. Evenett and Richard E. Baldwin,⁽¹⁾ is both timely and much needed. 

This is not just because the next Director-General of the WTO is about to be named.  It is because what we have now, however valuable compared to the alternatives, is not working sufficiently well.  Corrective action is overdue. 

Shortly after I joined the WTO Secretariat just over three years ago, a senior French civil servant told me that the WTO was irrelevant to current problems and ineffective. She suggested the slogan “Make the WTO great again”.   I do not think that her judgment would likely have changed over these three intervening years, although in defense of the system I would point to the launch of the Joint Initiatives at the December 2017 Buenos Aires WTO Ministerial.  But that is not, in itself, enough.

The incoming WTO Director-General and the WTO's 164 Members should find the Evenett-Baldwin edited eBook very useful.  The Evenett-Baldwin introduction offers a clear-eyed assessment of where the WTO is today, becalmed in a rough sea.  The chapters that follow offer pragmatic suggestions as to what can be done — the doable.  My appetite is for the more forward-leaning end of the spectrum of choices.  The elements of a possible package for a COVID-19 response I sketched out in remarks ten days ago at Chatham House.  See: https://www.wto.org/english/news_e/news20_e/ddgaw_30oct20_e.htm. Those remarks went beyond a crisis response to address other major reform issues. 

The editors make the valid point that WTO Members need to question whether they share sufficient common purpose to address the issues that demand attention.  I believe that they do for many of the issues, but there are no casual assumptions to be made.  The Secretary General of the United Nations talked not long ago about the world suffering a Great Fracture, the potential of a world divided.  Many of the fault lines that he identified — geostrategic tensions, existential climate crisis, deep and growing mistrust, and the dark side of the digital revolution ⁽²⁾ — would, and if not responded to, will, run through the WTO.    

The praiseworthy Riyadh Initiative at the G20 Trade Ministers Meeting identified common purposes that all of the G20 Members agreed with.  It also implicitly pointed to a few purposes on which there was no unanimity.  The Initiative can be a point of departure for considering improvements in the world trading system, a basis on which to assess what issues can be resolved most readily and to understand those that will require a serious attempt at bridging divides.  

I participated in a recent online meeting of international organizations.⁽³⁾  One segment was devoted to “how to move the needle”.  To move the needle, to effect change, all three basic functions of the WTO require attention: 1) rulemaking; 2) dispute settlement; and 3) governance. 

“Moving the needle” to me requires that the WTO be widely seen as being relevant to the world’s current problems.  This is not to dismiss the pre-pandemic WTO agenda.  Far from it.  Updating the WTO to cover the world of digital commerce would be one way to demonstrate relevance, but this will take time.  Saving the world’s fish from undisciplined fisheries subsidies, a twenty-year endeavor is making progress, and Members are committed to bring this to a conclusion soon.  But clearly the most pressing business of governments in the world today is dealing with the pandemic and its economic effects. 

A sensible path forward would therefore be comprised of ten core elements (the listed sub-items are non-exclusive):

1. Crisis management — for this pandemic (but consider means to prepare for future crises) — the two objectives with respect to this crisis:
   1. Making sure that trade fosters and does not impede access to medical supplies, equipment, medicines and, when available, vaccines.
   2. Supporting the economic recovery:
      1. Adopting a standstill and roll-back of trade restrictions.
      2. Codifying best trade-facilitating practices.
      3. Expanding the coverage of duty-free treatment under the Pharmaceutical Agreement, with an additional section on medical supplies.
      4. Updating the ITA, including especially for medical equipment.
      5. Convene key actors to restore trade finance.
2. Expanding the rules to cover the Digital Economy
3. Acknowledging stewardship of the planet:
   1. Concluding an agreement to discipline fisheries subsidies.
   2. Reviving the Environmental Goods Agreement.
   3. Exploring means to deal with plastic pollution and promote the circular economy (to reduce waste).
   4. Considering how a carbon tax should relate to the rules of the trading system.
4. Assuring food security and updating the Agreement on Agriculture to deal with market access and subsidies (domestic support).
5. Promoting peace through accessions of conflict-affected countries and pioneering reforms through all accessions; leveling up the obligations of current Members to deliver equitable sharing.
6. Reducing inequality — be seen to deliver fairness with a new social contract for trade
   1. Empowering women in trade.
   2. Spreading the benefits to micro, medium and small enterprises.
   3. Seeking to address income inequality, making the system work better for labor, understanding that domestic policies are key.
   4. Providing for workable trade remedies where needed.
   5. Disciplining industrial subsidies.
   6. Foster economic development, particularly for the least-developed countries.
   7. Create more opportunities for the young.
7. Expanding the opportunities for trade in services.
8. Engaging more directly with the private sector and civil society.
9. Exercising leadership:
   1. Leaders, foreign ministers, finance and trade ministers, must see to implementation of their declarations, and need to educate their peoples on the value of the trading system. 
   2. Improve governance:
      1. Installing a new Director-General.
      2. Improving the structure of governance by Members.
      3. Broadening the role of the Secretariat:
         1. To initiate.
         2. To monitor.
         3. To provide analyses.
         4. To increase accountability with WTO disciplines.
10. Building the area of common ground to preserve and enhance the multilateral trading system.  While all of the steps recommended would have this effect, recognizing that:
    1. Renewed vows are needed to serve agreed common purposes, principles and values.
    2. Regional and bilateral preferential trade agreements need to be reviewed to determine if they are more trade creating than trade diverting in order for them to be found WTO-consistent.
    3. The WTO's role in fostering economic development needs to be clarified.

I have not touched upon WTO's own fault lines. The status quo is unsustainable, so the choice is to move forward or move back.  A strong case can be made that serious progress on WTO reform, long overdue, should — perhaps must — be made during the COVID 19 crisis.  The Evenett-Baldwin introduction ends with two valuable lists: eight imperatives that could form the basis for finding common ground among the diverse 164 Members of the WTO, and a suggestion of six confidence building measures to inject new life into the WTO.  The Members could well reflect on these and begin a broader set of deliberations of reaching out to prepare for the future of the WTO.  Together with the introduction, the chapters of the Evenett-Baldwin eBook, contributed by many well-respected experts on the WTO, provide something of a Michelin Guide Vert to the possible route forward.  A new DG should not leave it behind when she undertakes this journey.