UK WTO & 3rd countries, WTO crisis and reform

United Kingdom finds its role as ‘critical friend’ of World Trade Organization

UK Ambassador in Geneva Julian Braithwaite – at a meeting in the WTO in 2020.

The United Kingdom has stepped into the complex world of WTO politics with the announcement that it is set to join the Ottawa Group – a loose coalition of nations seeking reform of the Organization – after months of working behind the scenes making its post-Brexit mark in Geneva.  London’s chairmanship of the G7 this year offers a platform for Britain to play a ‘bridging role’ in bringing the Appellate Body back on its feet.

The UK’s accession to the now 14-strong group was confirmed following a call between International Trade Secretary Liz Truss and her Canadian counterpart Mary Ng on Monday (22 March).

The move has no institutional significance, but it sends an important signal that the newly-autonomous country is happy to line up and be identified alongside the European Union and others in the pro-reform camp within the WTO community.

Perhaps not coincidentally, seven of the other 13 members of the Canadian-led group – Australia, Canada, Chile, Japan, Mexico, New Zealand and Singapore – are also members of the Comprehensive and Progressive Agreement on Trans-Pacific Partnership, the bloc to which the UK is currently negotiating accession.

WTO ‘is under strain and needs to be reformed’ – Truss

In a speech at a Group meeting this week, Truss sought to position Britain as a ‘critical friend’ of the organisation.

“We need to face up to the fact that the WTO has failed to keep pace with the opportunities and challenges of 21st century trade, and it is crucial we reform the WTO,” she said.

“The WTO is under strain and the rules of global trade need to be reformed: it is vital that we work together to ensure that the twelfth WTO Ministerial Conference [in Geneva at the end of this year] secures the real change we all want to see,” she added.

Truss said the question of WTO reform would be ‘at the heart’ of discussions on trade in the G7 – a group which the UK presides over this year.

A dedicated ‘Trade Track’ within the G7 will focus on seeking consensus on the way forward for the WTO, as well as addressing the issues of trade and health, digital trade, and trade and climate policy. The first such G7 Trade Track session is scheduled for next Wednesday (31 March).

But what exactly is the UK’s line on how the WTO should be reformed? And is it any different, in practice, from that of the EU which it finally left at the end of last year?

Providing a G7 ‘bridge’ on Appellate Body reform

On the evidence of Truss’s comments this week, the differences are limited and rather subtle in scope.

Unlike the EU – and like the US – the UK is not among the 23 WTO members who have signed up to the Multiparty Interim Appeal Arbitration Arrangement (MPIA).

This is the interim system whereby parties can bilaterally agree to submit dispute settlement panels to arbitration while the WTO’s Appellate Body remains functionally hamstrung.

Truss is seeking to position the UK as a potential bridge between the scepticism expressed by the US on the Appellate Body issue – and on which the Biden administration’s view does not differ greatly from that of its predecessor – and the views of the progressive would-be reformers.

“We need to get the WTO dispute resolution system fully working again, and it is very important that the ‘big’ players do not get to set the rules. It is critical that the WTO dispute settlement is binding, enforceable and impartial,” she said in her speech to Ottawa Group members.

“We should recognise the concerns raised by parties regarding the Appellate Body, but we must also have a roadmap agreed for how the WTO can resolve the current impasse. The UK will use the G7 Presidency to seek common ground on this issue.”

Trade and Health initiative highlights EU-UK Covid-19 spat

The Ottawa Group members do not currently have a unified position on how the WTO should be reformed. Its highest-profile initiative thus far is its Trade and Health initiative, which seeks to impose limits on how and when export restrictions on medical supplies may be restricted.

On this point, Truss took the high moral ground.

“Turning to Covid, we have seen the failings of our global trade system exploited during the pandemic by nations raising barriers to trade, which the UK completely rejects. The need to keep free trade flowing has never been greater.”

In comments which can scarcely fail to be taken as a barb towards the EU and its recent decision to restrict sales of Covid-19 vaccines to the UK and other non-EU states. Truss said: “We must avoid beggar-thy-neighbour polices – this is a global challenge we must work together to overcome.”

The UK is also at odds with the EU over data flows and data protection. As noted last year, Britain’s line on digital trade is rather closer to that of the CPTPP countries than to that of Brussels, where data privacy is the primary concern.

UK backs JSIs, fish subsidy curbs, and reform of farm support

But the UK has firmly planted its flag in the corner of the WTO Joint Statement Initiatives under which plurilateral negotiations are under way on e-commerce, on domestic services regulation, and on micro, small and medium-sized enterprises.

“The United Kingdom does not share the view that the work of the Joint Statement Initiatives is inconsistent with the rights and obligations of Members or the appropriate functions of the WTO,” said the UK’s soon-to-depart WTO Ambassador, Julian Braithwaite, in a recent riposte to criticism of the process from India and South Africa.

“These JSI discussions have brought much-needed energy and dynamism to the WTO, enabling a significant proportion of the Membership to make vital progress on areas where new rules and commitments are urgently needed to update the global trading system,” Braithwaite added.

As for the one multilateral negotiation which is currently under way in Geneva – on curbing subsidies to fisheries – the UK is clearly sufficiently confident in its ability to justify its brand new, and largely untested, fisheries management regime to allow it to take a strongly pro-conservation line thus far in the misfiring negotiations.

And on agriculture – where consensus on a new global agreement at WTO level is an even more distant prospect – the UK is similarly positive in the line it has taken in WTO negotiations thus far.

“The United Kingdom fully supports the establishment of a fair and market oriented agricultural trading system,” a British official told a recent negotiating session.

Achieving a reduction in farm subsidies “will ultimately require uncomfortable contributions from WTO members proportionate to each member’s contribution to the problem,” he added.

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