We talk about saving the world from COVID-19. We also need to talk about saving global bodies like the World Trade Organization. Last week’s announcement of the early departure of WTO Director-General Roberto Azevedo creates an opening for some reassessment of its future role.
Once considered a paramount achievement in global institution-building, the WTO has been in difficulty since the Doha Round of negotiations collapsed over a decade ago. Endless squabbling among governments over its agenda and the recent paralysis of its dispute-settlement system as a result of U.S. stonewalling has only made things worse.
Now comes COVID-19, unleashing new tensions in international trade. On the one hand is the need to keep supply chains functioning and not close off trade with protective measures that could unravel decades of trade liberalization that on balance has been a boon to the world at large. As Azevedo said recently, “Keeping markets open and predictable … will be critical to spur the renewed investment we will need. And if countries work together, we will see a much faster recovery than if each country acts alone.” That is absolutely correct as a statement of principle.
On the other hand, despite the WTO’s principled commitment to liberalization, its rules do allow countries to take unilateral protective action in time of crisis. Provided they are not enacted as disguised restrictions on trade, nothing in the WTO Agreement prevents governments from managing trade to protect the health of their citizens, even if it means some closing of borders or preferences for domestic goods and services that in normal times would not be allowed.
WTO members also have the right to take action necessary to protect essential security interests in an international emergency. No one could plausibly argue that this pandemic does not qualify as just such an emergency. It therefore allows some protectionism under WTO cover.
Given this tension between open markets and the right to take trade-restrictive measures, what is the future of the WTO in all of this? It may be trite to say opportunities are often born of crises but it’s also true. In this case, COVID-19 has stimulated a slew of ideas about how to revitalize the WTO in a post-pandemic world.
The WTO itself recently suggested how it could be given new life. In an “information note,” it examined the global impact of social distancing, lockdowns and other measures on the ramp-up of online shopping, social media use, internet telephony and teleconferencing, and streaming of videos and films. All of this has resulted in spikes in both business-to-consumer and business-to-business sales, especially in medical supplies, household essentials and food products.
While being careful not to get ahead of negotiations, the note hints at how the WTO could enable fast and secure cross-border movement of goods and services that would help economic recovery and job creation after the pandemic, including through “greater international co-operation to facilitate the cross-border movement of goods and services, narrow the digital divide, and level the playing field for micro, small and medium-sized enterprises.”
The Centre for International Governance Innovation (CIGI) in Waterloo, Ont., recently published a series of papers examining the challenges facing the WTO in this terribly different business world. All the papers ask the same question: is the WTO capable of making itself relevant in the age of e-commerce and the new frontier of online business?
Crisis does breed opportunities. Keeping markets open will require collective political will, accommodation and a strong measure of good faith. Let’s not have illusions about governments suddenly finding that faith and rising to the occasion, especially given the Trump administration’s antagonism toward the WTO. But the COVID-19 crisis is an historic opportunity for leadership of the kind that produced the Bretton Woods system after World War II.
There is a glimmer of progress in Geneva, as a group of countries including Canada continues work on an e-commerce negotiating text before the next WTO ministerial meeting, though that has been postponed because of the pandemic. Moving ahead on e-commerce would lift the WTO out of its current torpor and help promote coherence and efficiency in what seems likely to be a vastly changed commercial world when this pandemic eventually ends.
Lawrence L. Herman, a former Canadian diplomat, is counsel at Herman & Associates and senior fellow of the C.D. Howe Institute in Toronto.