As the end of year 27 approaches since the WTO commenced operation, the struggle for relevance in a significantly changed world continues for the organization that is supposed to be the negotiating forum for international trade rules and for ensuring compliance with such rules. The current Director-General of the WTO has been working with Members to try to achieve positive results by the 12th Ministerial Conference scheduled to commence on November 29. The jury is out on whether WTO Members will be able to find sufficient common ground to permit a successful Ministerial.
While there has been broad agreement by WTO Members that reform is needed, there is no agreement as to what reform is needed as the 164 WTO Members have long since lost a common vision of the mission of the WTO. The lack of a common vision has been complicated by the rise of nonmarket economies like China and the abandonment of market principles by many either in sectors or more broadly.
A consensus system for decision making stifles rapid movement in addressing new challenges/opportunities and has permitted delay to characterize all aspects of the business undertaken at the WTO. For businesses, the WTO is not where pressing new issues get resolved or even addressed as a general matter.
Rules on electronic commerce are being pursued by a group of willing Members with questions and challenges presented by those not wishing strong rules to be pursued on a plurilateral basis. The same is true for other plurilateral initiatives of potential importance to updating the rule book.
The only multilateral negotiation ongoing, on fisheries subsidies, has dragged on for 20 years and remains mired in an effort by many to escape the disciplines being proposed to save marine life in the oceans.
Efforts from the Doha Development Agenda to continue reform and liberalization in agriculture have had some successes in terms of curbing export subsidies but has not been able to deliver significant liberalization through tariff reductions and have faced pressure from India and others to roll back the liberalization agreed to in the Uruguay Round through special rules on some topics. It is unclear that Members will actually find the desire to move agriculture forward by the 12th Ministerial.
The many trade challenges flowing from climate change are not yet central to the efforts of the organization but will increasingly occupy governments and companies and will complicate ensuring the relevance of the WTO moving forward.
While the COVID-19 pandemic has presented challenges to the operation of the WTO in terms of in person meetings and presented challenges and opportunities to have trade rules facilitate movement of medical goods versus compound trade problems flowing from efforts to control the pandemic, the effort by India, South Africa and others to get a broad based waiver to TRIPS obligations during the pandemic has generated little forward movement in terms of getting more vaccines to low- and middle-income countries while occupying a lot of band width in terms of Member energies at the WTO.
As is increasingly clear, while there have been production issues for some companies and while India’s need for vaccines in country led to its cutting off exports to COVAX and many countries, vaccine production in 2021 will exceed 10 billion doses (UNICEF’s COVID-19 Vaccine Market Dashboard visited on September 15, 2021 showed 6.077 billion doses as having been distributed by that point with capacity to produce vaccines at 4.5 billion in the first half of 2021 and 8.6 billion in the second half of 2021). In late June 2021, the International Federation of Pharmaceutical Manufacturers and Associations presented information at a WTO event that COVID-19 vaccine production in 2021 would likely be 10-12 billion doses. Similarly, the CEO and Founder of Airfinity prepared estimates for the WTO which showed global production could reach 11.856 billion by the end of the year. See WTO News, COVID-19 Vaccine Supply Chain and Regulatory Transparency Technical Symposium, June 29, 2021, https://www.wto.org/english/tratop_e/trips_e/technical_symposium_2906_e.htm (talking points of Ms Laetitia Bigger, Vaccines Policy Director, International Federation of Pharmaceutical Manufacturers and Associations and presentation of Mr Rasmus Bach Hansen, CEO and Founder, Airfinity.
Thus, the pressing issue for getting the world vaccinated is getting vaccine doses produced distributed to markets in need. That need has not and is not likely to be met through efforts at large scale waivers from TRIPS obligations which will not change the reality on the ground in 2021-2022.
The WTO along with the WHO, IMF and World Bank have held various events and issued joint statements seeking greater production, addressing production bottlenecks and getting expanded investments in areas of the world with limited supplies. Many governments and many manufacturers have provided some level of cooperation in expanding production and shipments to low- and middle-income countries. See, e,g,, International organizations, vaccine manufacturers agree to intensify cooperation to deliver COVID-19 vaccines, 16 September 2021, https://www.wto.org/english/news_e/news21_e/covid_16sep21_e.htm.
On dispute settlement, the two tier system embodied in the Dispute Settlement Understanding has unravelled as a range of important concerns raised by the United States over the last two decades have not been addressed meaningfully by WTO Members, leading to U.S. blockage of replacing Appellate Body members over recent years and the inability of the Appellate Body to consider appeals once the number of members declined below 3. While many WTO Members continue to seek a restart of the Appellate Body, it is clear that there will be no restart without serious reform. Such reform is unlikely to be achieved in the short term. The European Union which has been one of the challenges in terms of meaningful DSU reform has been making statements that they are now ready for fundamental reform. See, e.g., Financial Tribune, EU Calls for Urgent WTO Reforms, September 18, 2021 (“Dombrovskis said he was ready to consider a major shake-up of the WTO’s dispute settlement system, news outlets said.”), https://financialtribune.com/articles/international/110329/eu-calls-for-urgent-wto-reforms. So while the EU’s apparent changing view will be helpful, it is not clear if it will be sufficient to change the dynamics in Geneva.
There is a lot of work going on in Geneva with efforts to conclude the fisheries subsidies negotiations and achieve some resolution on the TRIPS waiver issue by the Ministerial in late November. There has also been progress made in various plurilaterals but questions have been raised as to whether plurilaterals can occur within the WTO if there is not consensus to include. The reform proposals on issues like industrial and agricultural subsidies, state owned enterprises, eligiblity for special and differential treatment and many others will not be resolved by the Ministerial and will not likely be part of an agreed agenda going forward. Agriculture and dispute settlement will be unlikely to see significant (agriculture) or any (dispute settlement) movement by the Ministerial.
Thus, while the jury is out on whether the WTO will remain relevant in a rapidly changing world, the challenges the WTO faces are daunting and the odds don’t favor success in today’s environment. Being an optimist, I am hopeful that the above analysis will prove wrong and the 12th Ministerial will start the process of a more relevant WTO. Here’s hoping.
This is my first post since May 17. I have been taking care of personal business the last four months and had included a note in the “About” page indicating my next post would be in September.