Perspectives, WTO crisis and reform

Perspectives: There are hopes for the World Trade Organization

The recent compromise reached by the US, EU, India and South Africa over Intellectual Property and COVID-19 vaccines is neither perfect nor guaranteed to succeed but it is a reminder that agreements are possible in the World Trade Organization. Despite the remaining serious challenges to the trading system, signs of negotiation progress need to be welcomed.

There was a certain degree of surprise in the trade world last week when the US, EU, India and South Africa agreed a compromise proposal on waiving intellectual property rules for COVID-19 vaccines. The prevailing assumption had been that the differences would be too great, that India would be unconstructive, and that the EU would struggle to reconcile differences between members.

The speed of international discussion on intellectual property and vaccines already lags well behind the pace of vaccine development. The first proposal for a waiver to TRIPS rules from India and South Africa came in October 2020, just before the first vaccine rollouts, with a revision signed by more countries tabled in May 2021. It was also in that month that US president Joe Biden voiced general support for the EU, but despite European Parliament pressure, the EU rejected the approach in June.

As recently as November last year a compromise was deemed unlikely. With signs that the pandemic might have peaked, such a move might have offered political embarrassment whilst not resolving any practical issue.

Despite this month’s breakthrough, progress is not guaranteed by the 12th ministerial conference in June. This not least because of the approach adopted by WTO DG Ngozi Okonjo-Iweala of seeking an agreement first among a small group.

Countries not involved in discussions such as the UK and Switzerland expressed disappointment at the outcome, and the exclusion of China from the benefits may also be a problem. Both pressure groups that wanted a broader waiver and pharmaceutical groups concerned about the future impact it might have on their business have been critical.

Nonetheless, given the concerns about the robustness of the world trade system almost any agreement is welcome.

Areas of progress

A Covid IP waiver has been alongside fisheries subsidies the area in which there is considered most likely to be agreement at June’s ministerial. Back in November it was looking like the latter subject would require negotiations between ministers.

Coming on top of agreement on the Services Domestic Regulation plurilateral the outlook for the WTO perhaps looks slightly better than was the case a year ago. The WTO plurilaterals website hosted by the Geneva Trade Platform shows a number of other initiatives in which proposed ministerial statements have been agreed, namely Micro Small and Medium Enterprises, Trade and Gender, Plastics Pollution, and Fossil Fuel Subsidy Reform.

This however only offers a glimmer of optimism. There is still no evident sign of progress on  the restoration of the WTO’s Appellate Body, major issues such as agricultural subsidies remain stuck, and the action on vaccines will be widely seen as coming somewhat late.

Meanwhile, new difficulties are added after Russia’s invasion of Ukraine and related issues arising from that regarding Russia’s status.

WTO and other initiatives could dovetail each other

That WTO members are able to agree with each other on a variety of issues remains one of the positive aspects of the current world trade politics. While this can happen in a range of settings, the WTO remains a crucial one, as seen in the number of ongoing initiatives.

Probably the most important of the initiatives is the e-commerce plurilateral agreement where agreement seems some way off – but participants have been relatively hopeful. It could be argued that the growth of digital trade-related agreements outside of the WTO, the latest between the UK and Singapore, supports the WTO plurilateral process.

Similarly, the Trade and Environmental Sustainability Structured Discussions – TESSD – at the WTO will hopefully be complementary to the proposed New Zealand led Agreement on Climate Change, Trade and Sustainability also know as ACCTS. It might be useful to more formally make links between these initiatives to showcase that there are trade policy discussions on many of the most pressing issues.

None of this guarantees widespread adoption of new agreements. But these are positive steps which should be built upon.

Remaining gap between trade policy discussions and real-world complexities

Though one can detect some causes for optimism in Geneva – this should not be overdone. Even if all the initiatives under discussion reach conclusion, even if the Appellate Body was to be restored, they would still not address many of the most pressing issues facing those engaging in real-world trade.

Overcoming challenging regulatory differences, particularly for smaller companies or developing countries, remains highly problematic. This is likely to become an even greater challenge as the EU and other adopt ever more stringent rules relating to sustainability.

For larger companies, the prospect of global political and policy fragmentation, in particular a decoupling of China from the EU and US, is becoming an ever-greater concern.  The depth of the EU and US commitment to a multilateral trading system in the wake of Russia’s invasion of Ukraine looks questionable.

There is a risk indeed that coalitions of the willing create a far more complex global trade ruleset to be navigated. This could be further exacerbated by a consumer-driven values agenda that differs between countries.

The challenges to the future of the WTO and for those engaging in trade remain great therefore. But that shouldn’t stop us welcoming genuine signs of progress.


 David Henig runs the column ‘Perspectives’ on the politics of global trade for Borderlex. He is also a UK director at the think tank ECIPE.

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