As much as the WTO has accomplished, the WTO’s 13th Ministerial Conference (MC13) in Abu Dhabi this week is an important inflection point for the multilateral trading system. The WTO came into being in the period of the post-Soviet break-up. Geopolitics were upended. There was hope that trade could help paper over political frictions and bring longstanding outliers into the orbit of a rules-based system. Since then, support for the global trade body has steadily weakened as some of the biggest players have subverted both the letter and spirit of the rules. Meanwhile, politicians in various quarters have taken the expedient route of politicising trade, rather than investing in domestic policies to cushion against trade-related job losses.
Despite this negative wave, it is important to not lose sight of the fact that the WTO rules are the enduring bulwark of the existing multilateral trading system for goods, services and agriculture. As imperfect and hampered as they may be, they remain important. The WTO Director-General and WTO members are to be commended for their efforts to deal with the trade impacts of the global pandemic, reach an initial agreement on fisheries subsidies and achieve adoption of principles for domestic regulation of services. Reform of the WTO as an institution has been difficult, but efforts are being made despite budget pressures. The WTO continues to navigate a path forward in the plurilateral negotiations on e-commerce and investment facilitation.
It is now critical that the importance of the WTO and its ongoing 13th Ministerial is not downplayed or ignored, and that it sees success in retaining member support. WTO members from developed and developing countries alike must cooperate to demonstrate they can produce results and chart a constructive future so the WTO system can meet the challenges of 21st century trade, especially in the global digital economy.
According to the latest WTO estimates, global exports of digitally delivered services have more than tripled since 2005, growing an average 8% a year to $3.8 trillion in 2022. Even microenterprises now use social media for marketing, online platforms for sales and digital services for payment.
Over four years of intensive effort have gone into WTO negotiations on e-commerce and digital trade. The diversity of the 90 participants in this negotiation, including Australia, Singapore, Japan, the EU, the US, China, some ACP countries, Latin American countries, the Kyrgyz Republic and Lao DPR, reflects how mainstream digital trade has become. However, these negotiations have been knocked back by the US’ abrupt withdrawal last year from its longstanding support for some key provisions, including on cross-border data flows and disciplines on data localisation and forced disclosure of source code.
It is hoped that in Abu Dhabi, there will be a call for greater impetus in these negotiations to finalise what can be agreed on, and signal convergence to resolve critically important core issues such as data flow, localisation, and source code issues.
Ministers at MC13 must also ensure the rug is not pulled out from underneath the global digital economy by failing to extend the WTO e-commerce moratorium—which enables the cross-border flow of digital transmissions without customs duties. As the numerous studies conducted by the World Bank, WTO, OECD, IMF, UNCTAD, ITC and academics in the last year have clearly established, the costs of imposing tariffs would outweigh any miniscule benefits. It would be MSMEs–not “big tech”–that would be hit the hardest. Suddenly permitting the imposition of discriminatory tariffs at the border will significantly erode the WTO’s credibility, given its main mission is to facilitate trade. It will undermine the hard-fought global taxation reform efforts in the OECD to avoid discriminatory charges on digital services.
WTO Director-General Ngozi Okonjo-Iweala is doing her utmost to make a strong push on WTO institutional and dispute settlement reform, more work on sustainability, and extension of the WTO e-commerce moratorium. WTO members, businesses and NGOs need to rally behind these efforts so that MC13 is a progressive step for global growth and development. Political leaders must unite to give their backing to the WTO and, especially, support extension of the WTO e-commerce moratorium.
Since the WTO was founded in 1995, the trade landscape has grown more integrated and complex. Fair and balanced multilateral trade governance is now more necessary than ever, and solutions must be the goal. In the increasingly fractured world of today, if the WTO collapses, it will not be possible to recreate.
The authors are co-convenors of the Global Services Coalition.
Christine Bliss is President of the Coalition of Services Industries, US
John Cooke is a Co-chair of the Liberalisation of Trade in Services (LOTIS) Expert Advisory Group, CityUK
Jane Drake-Brockman is a Director of the Australian Services Roundtable
Pascal Kerneis is a Managing Director at the European Services Forum
This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.
Support our work here.
For permission to republish, please contact outreach@gatewayhouse.in
©Copyright 2024 Gateway House: Indian Council on Global Relations. All rights reserved. Any unauthorised copying or reproduction is strictly prohibited.