04 October 2024 – Peter Holmes is a Fellow of the UK Trade Policy Observatory and Emeritus Reader in Economics at the University of Sussex Business School.
The 2024 World Trade Organization (WTO) Public Forum was sure to be a fascinating occasion given the interest in the topic, inclusivity and green trade, and the stellar cast of speakers. But what of the future of the WTO itself? Many observers have come to feel that with the negotiating function and the Appellate Body (AB) both log-jammed, there wasn’t much for the WTO to do apart from hosting events like the Public Forum.
Despite the logjam in negotiations and the apparent death (certainly more than a very deep sleep) of the Appellate Body, the WTO is still delivering value to its members in its routine committee work. It continues to promote transparency etc, and Dispute Settlement Panels still operate, though more like the way they did in the GATT era. Among DS nerds there was sympathy for the idea put forward by Sunayana Sasmal and me[1] that concerns over judicial overreach could be assuaged if the AB (if there were one) could decline to rule if the law was genuinely unclear. But as several Indian experts told us, if there is no AB, it’s not an issue.
Meanwhile, I only found one panel focussing on how to restore negotiations: our very own CITP panel on “Responsible Consensus”, i.e. persuading countries not to use their power to block decisions. It didn’t generate a lot of optimism. India, as well as the US, attracted quite a lot of criticism for its vigorous use of its legal right to veto moves that could affect its interests – even where there was a big majority of supporters. India’s position was elegantly and forcefully explained and defended by Prof Abhijt Das, an old friend of Sussex. He argued that even where other states might want to agree amongst themselves, India had a right to object to Plurilateral deals which might affect them adversely even when no actual obligations were created for them. But, interestingly, despite the delight of seeing many old friends from Delhi, there was little open official Indian engagement. It was striking that the Indian Foreign Minister chose last week to visit Geneva, to consult with UN agencies, but he didn’t visit the WTO. And there was no visible official US profile. On the other hand, China’s CGTN was listed as a Forum sponsor and hosted a lecture by Jason Furman, former senior adviser to Barack Obama. On CGTN, the Chinese DDG Zhang Xiangchen stated how the public Forum, “is a platform for all to make their voices heard” and he “encourages more communication among stakeholders and calls on the active participation of developing countries for a balanced outcome.”
This echoed the message that WTO DG Dr Ngozi Okonjo-Iweala pushed in the sessions she spoke at. It was spelled out in the first ever WTO Secretariat Strategy document.
The WTO Secretariat as a body is seeking to do more than just service the wishes of the Member States. It is seeking to act as a facilitator, convenor and broker, in the absence of, and perhaps to recreate, the missing consensus. Inclusivity and sustainability were being pushed in sessions organised by the Secretariat. The message was that we cannot assume globalisation will benefit everyone without action being taken. This was the underlying theme: the Forum offered Public Diplomacy on behalf of the organisation. Was it just bland PR? One senior legal official told Sunayana and me that the WTO did seem to have found a way to create a new role and a new narrative for itself. The WTO had been very closely involved in the efforts to keep vaccine supply chains and some border crossings open during Covid, at the request of concerned parties and had brokered important agreements. It was “more important than ever”. The Secretariat is beginning to be more proactive and encouraging global dialogue.
Following these conversations, many of the observers we spoke to were somewhat sceptical, but not all. One of the UK’s leading trade specialists thought that this message of pro-active broader engagement was real and had been effective during the COVID period. Dr Ngozi has called for action on carbon pricing in an FT interview. If it could work, seeking to mobilise soft power rather than being the home of rulemaking and rule enforcement would be an excellent strategy. But there are pitfalls. Would it be too controversial in the face of division among members? Is there a risk that the Secretariat could be seen as overreaching its legitimacy in the same way as the Appellate Body? Can the WTO really survive without its key rulemaking and enforcing role? And what if Trump wins?
[1] https://blogs.sussex.ac.uk/uktpo/files/2024/02/Holmes_Sasmal_Not-Liquet-UKTPO-WP.pdf
Disclaimer:
The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or the UK Trade Policy Observatory.
Republishing guidelines:
The UK Trade Policy Observatory believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement. For online use, this should be a link to the original resource on our website. We do not publish under a Creative Commons license. This means you CANNOT republish our articles online or in print for free.
Jessie Madrigal-Fletcher October 4th, 2024
Posted In: UK - Non EU, UK- EU
Tags: WTO
27 September 2024 – Ana Peres is a Lecturer in Law at the University of Sussex and a member of the UKTPO.
Lawyers, economists and political scientists are increasingly using a new term to frame discussions on current trade relations and policies: geoeconomics. This means that countries are intervening in strategic economic sectors not primarily for profit but to ensure autonomy, build resilient supply chains and secure access to valuable capabilities. Such approach contrasts with the ideals of free trade, market access and interdependence that shaped international trade for decades. These traditional ideals, even when supported by a so-called ‘rules-based system’, always posed challenges for developing countries to meet their objectives. So, what does geoeconomics mean for developing countries? Unfortunately, it threatens to sideline them even more.
Consider one of the main areas where geoeconomic strategies are at play: the development of clean technologies. Governments are implementing industrial policies to secure access to critical raw materials, an input for electric batteries, and to protect domestic production of electric vehicles (EVs). Such policies often require substantial subsidies. Recent discussions at the WTO Public Forum highlighted that a clear distinction between “bad” and “good” subsidies is not only desirable but essential to deal with many of the new and standing issues in the organisation. Beyond the question of their legality, we need to consider which countries have the financial resources to engage in this new wave of industrial policies – and what happens to those that do not. For instance, the UK’s former Conservative Secretary of State for Business and Trade, Kemi Badenoch MP, stated that the UK government would provide “targeted support (…) looking at what we can afford (…)”. If the UK, as a G7 economy, is concerned about affordability, developing countries face even greater challenges in this context.
An analysis of the proposed “Clean Energy Marshall Plan” suggests that a Harris administration in the US could use industrial policies to make developing countries dependent on US exports of clean technologies. Chinese foreign direct investment (FDI) to Latin America is shifting to “new infrastructure” sectors, such as energy transition. The EU signed a memorandum of understanding with Chile to promote sustainable raw materials value chains. All these developments reflect the geoeconomic trend, by prioritizing autonomy, resilience and access for wealthy countries, at the expense of those objectives for poorer countries.
Resource-rich developing countries are not defenceless in this geoeconomic world. For instance, Chile is one of the world’s largest suppliers of lithium (around 80% of all EU imports). The Chilean government’s response, creating the National Lithium Strategy to strengthen control over its reserves and maximise their benefits, offers a glimpse of one path resource-rich developing countries may follow. Similarly, Southeast Asian countries like Indonesia and Malaysia are trying to capitalise on the EV industrial policies of the US and China.
These examples show the power dynamics underlying international trade flows. While geoeconomics brings power and politics to the fore of current trade relations, it does not introduce them to the existing trade order. The process leading to the creation of the WTO and the surge of free trade agreements during the 1980s and 1990s reaffirmed the rule of law as central to promoting trade liberalisation. A rules-based framework should favour the stability and predictability of the global trading system, enabling countries to negotiate new topics and settle trade disputes. However, even in this ‘traditional’ WTO-led approach, law and power are closely linked. Restricting the role of power in trade agreements and institutions does not eliminate it from trade rules and negotiations. Developing countries have long struggled to have their voices heard in trade rulemaking and negotiations. For them, it has always been political.
The novelty of the geoeconomic framework is the recognition that economic and geopolitical powers are intertwined in policymaking. Governments are implementing policies beyond trade, covering areas like environmental protection, defence, health, and digital technologies. Geoeconomics shows how states use their economic and political power to achieve domestic goals and assert or maintain global leadership.
While geoeconomics is useful for describing the current context, it has not yet adequately addressed the position of developing countries. Like many frameworks applied to international trade, geoeconomics explains trade relations and trends from the perspective of the main players. In this case, the US, China and, to a lesser extent, the EU. Tensions between the US and China are driving a new division between allies and adversaries. This raises important questions: who decides which countries are friends or foes? Can – or should – developing countries take sides? What are the potential consequences? Could developing countries leverage the conflict between the world’s two largest economies to strengthen their positions? What will happen to developing countries that are not resource-rich? These will become defining questions for developing countries in the era of geoeconomics.
During the Cold War, the polarisation of global powers led third world nations to advocate for a New International Economic Order. They understood that their interests were sidelined in the global debate driven by ideological and political conflicts between the two superpowers. At the WTO Public Forum, the possibility of “third nations” or “middle powers” guiding multilateral trade efforts was raised, as an alternative to overcome the stalemate created by the clash between the US and China. However, such a heterogeneous group will have to find common ground if they move forward without the two biggest world economies. That is no easy task. This is why including developing countries in discussions about the geoeconomics of trade is so important today – to ensure their concerns are not overlooked or marginalised as they once again risk being caught in the middle of power struggles that threaten to leave them powerless.
Disclaimer:
The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.
Republishing guidelines:
The UK Trade Policy Observatory believes in the free flow of information and encourages readers to cite our materials, providing due acknowledgement. For online use, this should be a link to the original resource on our website. We do not publish under a Creative Commons license. This means you CANNOT republish our articles online or in print for free.
Jessie Madrigal-Fletcher September 27th, 2024
Posted In: UK - Non EU, UK- EU
Tags: Geoeconomics, WTO
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13 March 2023
Emily Lydgate is Reader (Senior Associate Professor) in Environmental Law at University of Sussex School of Law, Politics and Sociology and Deputy Director of the UK Trade Policy Observatory
The UKTPO is pleased to re-publish this TaPP Network Workshop Summary, an output of a TaPP workshop in January with speakers Geraldo Vidigal (University of Amsterdam), Emily Lydgate (UKTPO/CITP), Ilaria Espa (USI/WTI), and Greg Messenger (TaPP/University of Bristol). Rather than a blog, this note summarises views of panel participants and the authors. It provides useful insights on the latest developments in this area and policy recommendations for the UK in navigating the new subsidies race between the US and the EU. (more…)
Cosmo Rana-Iozzi March 13th, 2023
Posted In: Uncategorised
Tags: Climate policy, Emissions, Emissions Trading System, Environment, EU, European Union, trade, Trade agreements, trade dispute, trade negotiations, trade policy, UK economy, UK Government, USA, WTO, WTO rules
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11 March 2022
Michael Gasiorek is Director of the UK Trade Policy Observatory and Professor of Economics at the University of Sussex Business School
President Biden announced today that the US, the EU, and the G7 countries (which includes the UK) will be suspending Russia’s Most Favoured Nation (MFN) status at the World Trade Organization (WTO). In this blog we look at what this actually means for the UK and what the potential trade implications are for the UK. (more…)
Cosmo Rana-Iozzi March 11th, 2022
Posted In: UK - Non EU
Tags: MFN, NATO, Russia, UK economy, Ukraine, WTO, WTO rules
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13 January 2022
L. Alan Winters is Professor of Economics and Founding Director of UK Trade Policy Observatory and Bernard Hoekman is Professor of Global Economics, European University Institute and Fellow of the UK Trade Policy Observatory
It is widely accepted that international economic relations depend upon a smoothly functioning multilateral trading system. That trading system, institutionally underpinned by the World Trade Organization (WTO), can both stimulate economic activity and help to promote international cooperation in spheres such as climate change and migration. However, the WTO is becoming less relevant to a world in which services account for a growing share of trade, interest in environmental regulation (notably on CO2 emissions) is growing, and digital technology is reshaping our lives.
These issues impinge directly on international trade and thus fall within the broad remit of international rulemaking in the WTO. However, decision making in the WTO typically requires consensus from all the Members, which is difficult to achieve when Members have different ideas about what the appropriate rules for dealing with such challenges are. Thus, not only has it become difficult for countries to agree on how to move forward, but these differences are creating new tensions in the global trading system.
One solution that would help to overcome the impasse is to facilitate those within the WTO who want to change particular rules to proceed among themselves by signing so-called ‘plurilateral’ agreements. The WTO foresees two types of plurilateral agreements, depending on whether what is agreed applies on a discriminatory or non-discriminatory basis. (more…)
Charlotte Humma January 13th, 2022
Posted In: UK - Non EU, UK- EU
Tags: Open Plurilateral Agreements, World Trade Organization, world trading system, WTO
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10 December 2021
Michael Gasiorek is Professor of Economics and Director of the UK Trade Policy Observatory at the University of Sussex and L. Alan Winters is Professor of Economics and Founding Director of UKTPO
China acceded to the World Trade Organisation twenty years ago. Yet despite being a member of the international trading club for two decades, China’s ‘role’ in the trading system continues to generate controversy across a range of areas such as the alleged support to state-owned enterprises boosting their international competitiveness, restrictions on foreign direct investment in China and the ineffective intellectual property protection in China. In addition, and sometimes conflated with trade, there are technology-related security concerns and human rights abuses, notably with regard to the Uyghurs. The Covid-19 pandemic has also raised worries in some quarters about the vulnerability of supply chains, including over-reliance on particular suppliers such as China in critical sectors. (more…)
Charlotte Humma December 11th, 2021
Posted In: UK - Non EU
Tags: China, Chinese exports, human rights, WTO
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5 September 2019
Guest blog by Professor Yong-Shik Lee is Director and Professorial Fellow of the Law and Development Institute and Hiram H. Lesar Distinguished Visiting Professor in Law, Southern Illinois University School of Law.
In the last eighteen months, President Trump has re-introduced the use of national security arguments to restrict the USA’s international trade for commercial reasons. I recently warned[1] that the US use of security arguments to justify its additional tariffs on steel and aluminum imports would create a dangerous precedent, and shortly after that, another major trading nation has indeed followed this precedent. (more…)
Charlotte Humma September 5th, 2019
Posted In: UK - Non EU
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15 July 2019
Dr Michael Gasiorek is a Senior Lecturer in Economics at the University of Sussex and Julia Magntorn Garrett is a Research Officer in Economics at the University of Sussex. Both are Fellows of the UK Trade Policy Observatory.
A favourite band (of at least one of the authors of this blog) from the 1980s was the Cocteau Twins (See, or rather listen to…Sugar Hiccup) – well-known for the dreamy unintelligibility of their lyrics. Which of course leads to the dreamy unintelligibility of some of the promises being made around Brexit. Supporters of Brexit have argued that the UK need not be overly concerned with a ‘No deal’ Brexit. This ranges from positions that ‘No deal’ would not be “as frightening as people think” although there would be “some hiccups in the first year” (David Davies), and that although there may be “some disruption” Britain would “survive and prosper without a deal” (Jeremy Hunt), to arguments that the idea that ‘No deal’ would have a negative impact were “a fantasy of fevered minds” (Jacob Rees Mogg). (more…)
Charlotte Humma July 15th, 2019
Posted In: UK- EU
Tags: agri-food trade, agriculture, Brexit, manufacturing, No deal, tariffs, UK economy, WTO
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26 June 2019
Erika Szyszczak is a Research Professor in Law at the University of Sussex and a Fellow of UKTPO
The Dispute Mechanism Systems (DMS) in many trade agreements have lain dormant because countries preferred to use the World Trade Organization (WTO), with its Appellate mechanisms, as the forum to resolve international disputes. This may change in the coming years as the confidence in, and reliability of the WTO, is slowly paralysed by the disruptive attitude of the United States. One question that emerges is whether the use of EU dispute resolution mechanisms offer a faster and clearer approach towards dispute resolution and might serve as a model for future regional trade treaties. (more…)
Charlotte Humma June 26th, 2019
Posted In: UK- EU
Tags: Brexit, dispute mechanisms, Trade agreements, WTO
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19 September 2018
Dr Emily Lydgate is a lecturer in Law at the University of Sussex and a fellow of the UK Trade Policy Observatory.
In its Chequers White Paper, the UK government has proposed that, in order to facilitate a frictionless border, it will operate a dual customs regime known as a Facilitated Customs Arrangement (‘FCA’). By replacing rules of origin checks at the EU-UK border with internal monitoring, the FCA requires firms to establish ‘robustly’ the destination of their products to ensure that correct duties have been applied, and then, if they wish, to seek rebates if they have been overcharged. Past UKTPO blogs have addressed logistical challenges and strategic downsides of this ‘Fantastically Complicated Alternative’ (see also Does the Chequers Agreement provide any steps to Brexit heaven?)
But would it be compatible with the rules of the World Trade Organization? The precise details of the FCA’s operation remain unclear. Barring a dispute, it’s not possible to settle the question definitively, but the FCA does prima facie pose a risk of WTO non-compliance. We presume that the UK government has undertaken some analysis of this, and that it covers (at least) the following issues. (more…)
Charlotte Humma September 19th, 2018
Posted In: UK- EU
Tags: Brexit, Chequers Agreement, Customs Union, Free Trade Agreement, Irish border, Rules of Origin, Single Market, WTO
