While some may have been disappointed by the recent COP26 in Glasgow, Scotland, it has delivered on many promises, creating expectations for the next major global gathering – the World Trade Organization’s all-important 12th Ministerial Conference (MC12), to be held in Geneva from Nov. 30 to Dec. 3.
The first meeting of WTO trade ministers in four years, the talks will test the political skills of the new WTO director-general, Ngozi Okonjo-Iweala, in getting consensus on a range of contentious issues. Restoring the organization’s diminishing relevance and showing it can be responsive to today’s pressing global issues (trade and climate change being at the forefront) represents a daunting challenge
American leadership on these fronts is critical, with the U.S.-China relationship shaping many of the possible outcomes at the meeting. A promising development is the recent agreement by the two countries to co-sponsor a declaration at MC12 on environmental sustainability, possibly adumbrating U.S.-China co-operation in other areas.
Taking geopolitical factors into account, including the COP26 results, what can we expect from MC12? While some in the business community may see the meeting as removed from day-to-day market activity, international business relations will be impacted by its outcomes. MC12 has a packed agenda, but here’s an overview of five major things to watch for.
Climate change and environmental sustainability
After COP26, it would be hard for trade ministers to not deal with climate change and worldwide efforts to get to net-zero carbon emissions. High-level resolutions should be expected – possibly agreements on how to facilitate trade in green goods and carbon-free technologies. A group of countries, co-chaired by Canada’s WTO ambassador Stephen de Boer, has been formulating an ambitious trade and sustainability work program, including restarting the stalled negotiations on an environmental goods agreement. Potential progress here has also been boosted by the recent China-U.S. agreement.
Structural change and institutional reform
Some say reforming the WTO is an existential issue. But a breakthrough here faces a substantial roadblock that revolves around the Appellate Body – the standing group that hears appeals in disputes between WTO members – with the U.S. continuing the previous Trump position that the body has far exceeded its mandate and refusing to agree to new appointments, leaving the dispute settlement system dysfunctional.
The meeting will probably agree on some kind of resolution calling for continued discussion around reform, but the paralysis likely won’t be resolved, also inhibiting reforms in other areas of the organization. So, more talk but not much concrete action on this item.
Medicines and the pandemic
Trying to find consensus on improving trade in vaccines and medicines presents some difficulties. A disagreement has been raging for the past 18 months over a joint India-South Africa proposal for a blanket WTO patent waiver under the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement for COVID-19 vaccines. As an alternative, the EU proposed permitting compulsory licensing of selected patented vaccines and treatments. There remains much disagreement here, with many governments and civil-society groups saying that the EU option is far too narrow. Even with the majority of WTO members supporting the waiver idea, there seems little prospect that differences can be overcome.
On a narrower front, there does seems to be consensus on issues such as reducing tariffs on pharmaceutical goods, prohibiting export restrictions on critical medicines, and increased transparency and co-operation in vaccine production and distribution. Any movement toward agreement on these supply chain issues will be a step forward, even if short of coming together on the TRIPS waiver proposal.
Digital trade and e-commerce
Negotiations on a new agreement facilitating e-commerce were launched at the last WTO ministerial four years ago and now seem to be getting closer to resolving major issues. It’s a complex subject area, but hopefully remaining areas of disagreement can be narrowed before the Geneva meeting – though reports indicate that there is still a way to go before an agreed-upon package can be announced. But with pressure on countries to show meaningful progress, the MC12 should offer a bridge to a final deal early next year, which would be another win for the WTO’s credibility.
Subsidies and agriculture
Disciplining trade-distorting subsidies has long been a mix of unfinished business and unrealized expectations at the WTO, progress stymied by the entrenched domestic interests involved. It’s related to deep-seated difficulties on lowering fossil-fuel subsidies or making headway on disciplining state-owned enterprises (SOEs).
One area of promise is that negotiations to limit fisheries subsidies (which have been going on for years) seem to be getting close to the finish line. If achieved, it would curtail countries such as China from providing vast subsidies to their fisheries sectors, which has caused unsustainable harvesting, decimated stocks and seriously depleted global food supplies – all of which is devastating for developing countries. If a deal is reached, it will be a boost to the WTO, helping to realize an important part of its sustainable development agenda and help counter the damaging battles that have been raging around structural and institutional reform.
What is clear from all this is that the status quo at the WTO is not sustainable. If the organization is to continue to underpin the global trading system, MC12 will have to deliver meaningful results. As Ms. Okonjo-Iweala herself has said, “for the WTO to succeed, it must change – it has to update its rulebook, fix its dispute-settlement system, resolve differences on outstanding issues and respond to the trade challenges of the 21st century.” The world is looking on.
Lawrence Herman, a former Canadian diplomat, is international legal counsel at Herman & Associates and a senior fellow of the C.D. Howe Institute.