Countering global challenges
Trade is a tool that can and should improve people’s lives, and in the face of converging global crises, cross-border cooperation is more essential than ever
The world is struggling with multiple, interlocking challenges: rising geopolitical tensions, the continuing health and economic impacts of the Covid-19 pandemic, the war in Ukraine and its consequences for food, fertiliser and energy prices – and rampant climate change that is making all these problems worse.
Inflation is squeezing households everywhere, most painfully in poor countries. The World Bank estimates that as many as 95 million additional people have been pushed into extreme poverty by the crises of the past two years – reversing two decades of steady progress. The World Food Programme estimates 200 million more people than in 2019 now face acute food insecurity. As central banks tighten monetary policy to fight inflation at home, the risks are rising: of financial crises in debt-laden developing economies, and of a global hard landing.
Most of these challenges are cross-border in nature. Effective responses demand international cooperation. But despite the fact that such cooperation is in the self-interest of all countries, it has been sorely wanting. And so, even though trade has much to offer as a force multiplier for efforts to address pandemic disease, climate change, food insecurity and supply-side productivity, expectations for a breakthrough at the World Trade Organization’s 12th ministerial conference this past June were low.
Agreements made
Nevertheless, after six days of nearly round-the-clock negotiations, the WTO’s 164 members came together and defied expectations to deliver several important agreements responding to the pandemic, food security concerns and the sustainability crisis in our oceans. Multilateral agreements at the WTO require consensus, so these agreements included Ukraine, Russia, the United States, China, the European Union, Japan, India, Pakistan, South Africa, Brazil, and Caribbean and Pacific island states. It was multilateralism at its finest: members rose above bilateral tensions to tackle real problems, including challenges of the global commons.
The new WTO accord on curbing harmful fisheries subsidies is the global trade body’s first agreement to put environmental sustainability at its core. By banning subsidies that contribute to illegal, unreported and unregulated fishing, as well as fishing in the unregulated high seas and in overfished stocks, it will take pressure off marine fish stocks, half of which are overfished.
The intellectual property compromise reached at MC12 will help efforts to expand Covid-19 vaccine production in Africa, Latin America and elsewhere, in turn making future global vaccine supplies more resilient. Members also pledged to keep cross-border trade open and transparent for medical supplies and components.
On food security, members accepted a long-standing proposal to exempt WFP humanitarian purchases from export restrictions, saving the agency time and money as it delivers relief to millions of vulnerable people. They also pledged to make trade in food and agricultural inputs more predictable, which should dampen price volatility.
Responding to concern from businesses big and small, WTO members preserved predictability in the global digital economy by extending a long-standing moratorium against levying customs duties on cross-border electronic transmissions.
And with an eye to the future, members collectively recognised that the WTO needs an update, and launched a reform process with a mandate to improve all of its functions and to ensure fully functional dispute settlement by 2024.
In sum, at a time when there is much talk about economic decoupling – though the actual data tell a different story, with global trade, including between leading geopolitical rivals, at record highs – governments of all stripes cooperated to shore up the WTO.
Fit for purpose
Yet the task of reinvigorating and revitalising the WTO, and ensuring that the organisation remains fit for purpose in a changing world economy, remains incomplete. G20 leaders can use their Bali Summit in November to instruct trade ministers and officials to keep pushing forward.
Most immediately, leaders could call on each other – and their own governments – to take the legal steps necessary for the new fisheries subsidies agreement to enter into force. And they can strongly endorse the negotiation of a second wave of rules dealing with overcapacity, overfishing and other tough issues.
They could urge members to meet the December deadline for deciding whether to extend the compromise on trade-related aspects to intellectual property rights beyond vaccines to therapeutics and diagnostics.
Leaders could call for a breakthrough in talks on reforming WTO agriculture rules, so that the multilateral framework responds better to concerns about distorted incentives, food security and livelihoods, against the unavoidable backdrop of climate change and water scarcity. And they could underscore the importance of fixing dispute settlement in time for the 2024 deadline.
Away from the margins
Finally, G20 leaders could remind the world that trade can and should be used to build greener economies and to bring more countries and communities from the margins of the global economy to the mainstream. Trade is, after all, a tool – a tool for improving people’s lives.
