The Future of the WTO: The Candidates Assess

The Future of the WTO: The Candidates Assess

The Director General’s chair at WTO headquarters in Geneva, Switzerland.
The Director General’s chair at WTO headquarters in Geneva, Switzerland. Denis Balibouse/Reuters

The World Trade Organization is selecting its next director-general at a time of rising stress on the system of global trade rules. Here’s how the candidates answered CFR’s questions.

October 2, 2020 10:00 am (EST)

The Director General’s chair at WTO headquarters in Geneva, Switzerland.
The Director General’s chair at WTO headquarters in Geneva, Switzerland. Denis Balibouse/Reuters
Current political and economic issues succinctly explained.

The World Trade Organization (WTO) is in the process of selecting its next leader at a time of turmoil in the world of global trade. Persistent questions over the ability of the WTO to drive forward new trade agreements and resolve ongoing disputes have intensified in the wake of the election of President Donald J. Trump, who has questioned U.S. membership in the body. Trump has launched a trade war with China over its alleged trade abuses, and wielded tariff threats against allies, including Canada and the European Union, in pursuit of what he considers better terms for the United States.

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Amid this uncertain future for global trade rules, CFR asked the five remaining candidates for WTO director-general (DG) how they would address these and other looming challenges. This page will be updated as responses are received.

Mohammad Maziad Al-Tuwaijri, Saudi Arabia

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Mohammad Maziad Al-Tuwaijri is an advisor to the government of Saudi Arabia, and from 2016 to 2020 served as the country’s minister of economy and planning [PDF].

1.   Restoring the negotiating function. 

The WTO has been criticized for its failure to reach any new agreements since its creation in 1995, save for the Trade Facilitation Agreement (TFA). What changes would you make to increase the potential for the WTO to efficiently conclude new agreements? Do you support so-called plurilateral agreements among smaller groups within the WTO?

Key roles of the DG include consulting with members to understand their trade priorities and sensitivities, and also discussing opportunities and identifying paths forward. It seems clear to me that the TFA and plurilaterals provide two negotiating models for progress at the WTO, in addition to traditional multilateral negotiations.

As DG, I would prioritize investing time and personal attention to clarify why certain members have chosen not to engage in plurilateral negotiations. As long as initiatives are open to all members and do not prejudice the interests of nonparticipants, and the results are applied on a most-favored-nation (MFN) basis, it seems that members could support this approach, especially because they would actually benefit from the results regardless of their participation.

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We should also take another look at the TFA—which was a very practical success because each and every WTO member was brought on board at its own speed based on commitments to provide technical assistance to make sure all members can actually implement and benefit from the results. We should not forget that the TFA was a single-issue negotiation, so there was little to no room for trade-offs, but success was achieved, and everyone wins. I believe that this approach has great promise for other sectors, and recall that in the case of the TFA and other WTO negotiations, the secretariat can play an important role by consolidating proposals for members’ reference and supporting their efforts to track progress in the negotiations.

My private sector and government experience has taught me that parties will come to the table when there is something interesting for them there. Members should move ahead where they can with whatever approach works, but they should also think big in terms of negotiations that cover the broadest possible set of issues that will move the trading system ahead in an inclusive manner.

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2.   Broadening the scope of the WTO. 

The United States has included the enforcement of labor and environmental law within its recent trade agreements, including the U.S.-Mexico-Canada Agreement (USMCA). Should the WTO add specific commitments to its rules for the enforcement of labor standards? Should it add specific commitments to promote environmental protection and discourage activities and policies that contribute to climate change? 

I think there is a general recognition that trade agreements can be broadened to include new issues as long as the balance of interests among parties is maintained in the process. In the context of USMCA, the parties developed a package that includes nearly free markets for goods, services, and investment flows in a very developed and unique economic relationship. In addition to the vastly different levels of development among WTO members, from what I have seen, members do not seem prepared to offer at the multilateral level the combination of tariff elimination, agriculture subsidy reform, investment liberalization, and development assistance that would be required to start a discussion similar to the USMCA context. 

That said, many countries have already committed to apply certain international labor and environmental standards, so enforcing them is not the main concern. It seems that many countries are hesitant to create binding rules in areas where standards of compliance and means of monitoring and enforcement are unclear, especially given the uncertainties in rules-based dispute settlement. However, as a matter of principle, there should be no reason why new issues cannot be discussed, as long as equal attention is given to issues of concern to all members and guarantees against enforcement uncertainties can be confirmed.

3.   U.S. complaints. 

What is your response to the United States’ criticisms of the WTO, including its failure to address alleged unfair Chinese trade practices, the alleged overreach of the Appellate Body, and the self-identification of developing countries to qualify for preferential trade treatment? If you see any of these complaints as having merit, how would you address them? 

My approach as DG would be that when any country raises complaints, they must be given merit and be taken seriously. The DG can never discount concerns raised by members of the organization. On some issues, secretariat staff can helpfully consolidate positions raised by members and compile historical experience for their reference. On other issues, the process and resolution remain totally in members’ hands.

Each of the issues raised in your question can be resolved under existing rules or by negotiating new rules. In every case, the solution begins with discussion and deliberation among members. I believe that the DG can play an important role in some of these discussions, and can use the office to develop an understanding of problems and solutions, whether by holding one-on-one, informal conversations, convening small groups of like-minded members, or hosting Green Room sessions with a representative cross-section of members. In the end, where the current rule book falls short, negotiation is the only path to solutions.

4.   The role of tariffs. 

The Trump administration says the WTO has locked the United States into an antiquated system that allows other countries to have higher tariffs. Do you agree with this assessment? How would you respond to a U.S. president that continues to unilaterally apply tariffs?

Here again, negotiation is the best way forward. Although the current tariff structure was agreed by all members when the WTO came into force, there was an expectation that members would reduce tariffs over time through successive rounds of negotiations. The WTO trading system provides for tariff reduction, and members will need to consider whether and how to negotiate on tariffs. Members that recently acceded to the WTO are especially aware of the difference in bound tariff rates.

Historically speaking, some countries have applied unilateral tariffs to express dissatisfaction with the existing situation, and this has led to negotiations and improved rules. However, certain tariffs today seem to be applied to address national security issues and other enforcement objectives rather than to address other countries’ relatively higher tariffs. As DG, I would support negotiations to address all areas of disagreement, including tariffs and rules, but again, every negotiating party should have something to gain through active participation.

5.   The future of trade. 

What are the most important twenty-first century trade issues for the WTO to focus on and how should it go about doing so? 

Clearly, e-commerce and digital trade are the leading topic as an important twenty-first century trade issue. In recent years, it has become clear that the e-commerce and digital trade are not only important services themselves, but also that they have become indispensable as platforms and facilitators of so many other aspects of truly globalized trade, including the empowerment of youth and women and their integration into global trade. 

The critical role of e-commerce and digital trade under the circumstances of the COVID-19 pandemic has underscored just how important these services and platforms are for our societies. As countries emerge from the pandemic, it is important that we remember how essential food and medical supplies were delivered and that we continue to encourage the most efficient and effective use of innovative technologies. 

The emergence of digital platforms raises a second twenty-first-century issue, regarding trade in services across platforms where the global economy is realistically accessible by anyone with access to the internet. In many of the poorest countries, entrepreneurs use the internet to advertise and sell goods worldwide, but infrastructure and finance limitations still apply to trade in goods that do not apply to digital trade in services. Therefore, it is essential that all countries work together to create a legal framework for services traded on digital platforms, in addition to goods.

Another emerging issue is the importance of micro, small, and medium-sized enterprises  (MSMEs) and the need to ensure that they can access and compete in global markets on a level playing field. MSMEs are the number-one driver of employment for women and youth and of innovation in most countries, and as such, members should support the Joint Statement Initiative on MSMEs. 

Separately, and in addition to addressing new issues, I would like to observe that it is just as important to reaffirm and strengthen the basics of the twentieth-century trading system that made it such a success. Under the current Saudi presidency of the Group of 20 (G20), on September 22, 2020, trade and investment ministers issued a communique that recognized the Riyadh Initiative on the Future of the WTO, which identifies common objectives and shared principles of the WTO in order to provide political support for negotiations in Geneva. The Saudi Chair’s Summary of the Riyadh Initiative will be transmitted to all WTO members through the General Council, which should be an impetus for them to recommit to serious efforts to launch negotiations and to take up specific proposals that will ultimately lead to the adoption of new rules that address twenty-first-century issues while providing incentives to negotiate the necessary reforms and improvements to existing rules, including on the dispute settlement system.

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