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MC12: Is this the final chance for the WTO to be strengthened, reenergized, and reformed?

Updated: Jun 13, 2022

A Position Paper by Arne Mielken, CEO of Customs Manager Ltd. in the wake of the 12th WTO Ministerial Conference



Global Trade as part of the solution

Many customs and global trade experts, like myself, are in favour of the WTO and its predecessor organisations. As a result, we are worried about the WTO's future, and we hope that MC12 will reaffirm its members' commitment to the WTO and enhance the institution. My colleagues and I are certain that, if asked, we could assist Trade Ministers to come up with imaginative solutions to current problems. We cannot wait to solve them and global trade has to be part of the solution: The global challenges we face are not mere irritations, they are emergencies for us all. War, climate change, cost of living crisis, inflation, and pandemics are affecting the lives of all citizens, businesses and the global trading system. Because of this, we must act rapidly to preserve and strengthen the core principles of our global trading system and ensure its relevance in an increasingly digital age. Either the WTO plays its vital part in this, or it should step aside!


So, is the WTO still the right body to help tackle these challenges?

We think so. At least as long as there is no better alternative! Today, the World Trade Organization (WTO) continues to be the only worldwide international organisation in charge of regulating international trade today. The WTO is also the only organisation to promote free trade and fair-trade principles. And this is not just high-level talk! It has practical consequences on the ground: As a consequence of the work of the WTO, companies can realistically anticipate similar laws and low tariffs, reducing costs and friction and making it easier for firms to join new and global markets. According to a recent study, the way the WTO works has also shown to be beneficial SMEs, in particular, may benefit from global value chains because of their ability to participate in them.


Experience and Reach

Moreover, it provides a plethora of knowledge. Since 1995, nations have discussed, negotiated, and reached agreements. A total of 164 countries are members of the World Trade Organization, which covers almost all global business (about 98 percent). You don't give up on anything so easily.


Key standing concerns

The major concerns addressed by the WTO in the past are as important now as they were then:

  • To guarantee that commerce flows smoothly between nations and that no country's trade policies unjustly harm the economy of other countries.

  • Enforcing fair trade regulations to ensure that all nations follow the same set of norms.

Equality of nations

Furthermore, the following issues are critical for global commerce and peace, and they can only be adequately addressed at the WTO level:

  • How can we ensure emerging nations' access to global markets?

  • What can we do to encourage innovation and competitiveness in our industries?

  • How should all nations be allowed to participate in global trade rules and decision-making procedures on an equal footing?

Lower-cost products and higher-quality services

In addition to promoting global commerce, the WTO promotes product, service and intellectual property (IPR) agreements. As mentioned above, it is thanks to these international agreements, it is possible for businesses, from the smallest micro-businesses to the larger firms, to expand into new areas with lower-cost goods and higher-quality services thanks to these guidelines.


Peace by tackling common challenges

So, the WTO is important not only because it facilitates international trade between nations, but also because it fosters a peaceful environment in which nations can collaborate to solve common issues such as climate change or cross-border pollution caused by industries such as oil refineries or steel mills.


But....

Yet, even if we trust in the WTO, we must constantly examine whether it is suitable for purpose. To be honest, in the wake of MC12, we have reservations.


MC12: a solution to today's problems or merely a talking shop?

This year's MC12 trade ministerial conference comes at a crucial time. This is an opportunity that should not be wasted. At this moment, the global community is facing a number of challenges and hazards as we referred to above. To be very clear, only the top five are mentioned here:

  • Attacks against Ukraine by Russia

  • Covid-19

  • Inflation

  • Food Insecurity

  • Climate Change

There is little doubt that a significant response from the global trade community is necessary.


What can the WTO do to assist address these difficulties?


The WTO must use MC 12 to provide answers to these challenges, at least to the extent that the global trade community can help.


What's the point of the World Trade Organization if we can't see how it can help to contribute to solving the world's issues right now?


If the WTO is unable to adequately define how it would help, it will be reduced to nothing more than a talking shop for businesses and individuals alike.


Expectation

Top 7 outcomes many customs and global trade experts would expect to see are:

  1. A meaningful commentary on how trade can avoid that food and grain are being utilised as a weapon of war (in the face of a Russian-caused humanitarian crisis).

  2. We need a Ministerial Declaration on Trade and Health that can help us cope with the current COVID19 outbreak and any future pandemics that could arise.

  3. A statement on Intellectual property and how it has the potential to play an important role (and the conditions for it), and we hope that progress is being made in that direction soon.

  4. To protect the environment, the global trading system must do its part. We expect to hear on what trade needs to do to reduce carbon emissions. On the issue of global fisheries sustainability, we expect a significant consensus to be reached at MC12.

  5. Agriculture reform should also concentrate on tackling trade-distorting practices, we believe.

  6. Renewal of the customs duty-free period for electronic transmissions

  7. For e-commerce, we propose to prolong the moratorium on tariffs.

Unblock and Reform

The consequences of a lack of a rules-based system and a functioning global trade organisation include aggressiveness, extortion, and violence. Individual nation trade wars or actual wars causes global commerce to halt or become a pinball in the battle for national supremacy: He who is stronger wins!.


As a result, both people and businesses suffer unnecessarily.


To avoid this from happening, it is vital to ensure that the WTO is unblocked, reformed and modernised - ready to serve an increasingly volatile and fragile world marked by conflict.


For the sake of a stable world economy, the WTO is a necessity. But not just any WTO.

We need a WTO that is able to stand up for the norms we have set for ourselves and protect them.


Based on 1990s reality, today's rule set is out of date.


To be relevant or successful, it must undergo a fundamental shift in strategy. For real change to occur by MC13, we must launch a significant reform effort during MC12.


Support for the rules-based order

At MC12, we're calling on everyone to show their support for an international trade system founded on openness, inclusion, and rules. MC12 participants are encouraged to show their support for the rules-based order by:

  • promoting cooperative approaches to trade problems,

  • encouraging domestic policy change through dialogue and capacity building,

  • working together to address the challenges of global commerce,

  • engaging in regular dialogue on matters of mutual interest and concern, and

  • taking all reasonable steps to prevent unilateral acts that would undermine the multilateral trade system's rules-based foundation.

Negotiation and compromise

We all know it: If you insist on doing things "my way or the highway," you will fail. MC12 is being closely watched by the public, and we require governments to convey this to the negotiators. Because of today's unpredictable environment, we think diplomacy and involvement with all stakeholders is the best strategy for reaching an amicable agreement at MC12.


However, Customs and Global Trade Professionals are aware of the problems of WTO members and urge multilateral solutions. The only way to reach an acceptable settlement on this subject is to have an open dialogue with all relevant stakeholders.


Conclusion

An uncertain future awaits the World Trade Organization (WTO). There have been major divides in the multilateral trade system after a decade of delayed talks, growing protectionism, and mounting geopolitical concerns.


Today, the membership seems more divided than ever: Some nations want to change the rules, while others want to violate them.


In this situation, there can be no slack.


For the next five years, we want everyone attending MC12 to show their support for the rules-based order by agreeing on a specific agenda that will aid in re-establishing trust and strengthening the multilateral trade system.


A failure to make headway at this summit risks undermining the WTO's authority and credibility as an organisation for global trade regulation in favour of more ad-hoc arrangements that lack the accountability and transparency of the WTO's rules-based system. This can't happen – the stakes are just too high for anybody to risk it.

The path ahead will be shown by MC12:


Fade into the background while nations do what they want, or emerge out powerful, revitalised, and reformed?

The multilateral trading system must be safeguarded.


Because of this, we ask all negotiators to make a long-term commitment to improving the World Trade Organization.


Protect international commerce by ensuring that all nations adhere to the norms.


It's also time to explain how the World Trade Organization can help solve some of the world's most pressing issues. In between MC12 and MC13, the WTO may have its last chance to prove that it is capable of adapting and contributing to global problems.


Do not let it go to waste.

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