As Okonjo-Iweala makes history, is WTO still relevant?

Celebrating the WTO’s 25th anniversary in January 2020, the then WTO Director-General Roberto Azebêdo wrote that the rules-based international trading system, of which the WTO manages, has both led to unprecedented growth in global trade and economic development, and it has also prevented trade wars and served as a forum for global collaboration. He also alluded to a number of challenges facing the WTO and the global trading system, some which are existential, others that can be addressed if countries recognize the long-term benefits of WTO participation and commit to upholding the current, rules-based system.

Most critically, since December 2019, the WTO has lacked a functioning Appellate Body, meaning it has lost its ability to settle trade disputes. Other issues involve countries enacting trade barriers or others, such as the U.S., who have sought to maneuver around established rules and by doing so, have threatened the viability of the institution. In 2019, government imposed trade restrictions “affected $747 billion in global imports”. The Trump administration’s justification of steel and aluminum tariffs based on national security grounds could embolden other countries to enact protectionist policies. The Biden administration, simply by supporting multi-lateral organizations, will allow the global trade environment to recover some of its predictability.

Despite a decades-long failure to reform trade rules to better suit 21st century economies, important achievements have occurred: agreements on agricultural subsidies and negotiations on preserving the world’s fisheries have continued to progress. Countries have also worked to define new rules on trade in services and make the trading system more inclusive.

Both Mr. Azebêdo and Ms. Okonjo-Iweala see the WTO as a public good to be strengthened and as a necessary tool for economic recovery from the Covid-19 pandemic. They are not alone: The E.U., China, and 14 other WTO members had in March 2020 devised a temporary fix to the Appellate Body. Not only do proposed alternatives to the WTO pale in comparison, it is also thought that the problems facing the world – from climate change to digitalization – require “global solutions”.

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