How can coalitions turn WTO stalemate into progress?

Valerie Picard (00:01)

Hello, my name is Valerie Picard, and I am going to be your host for today’s episode of Trading Thoughts, where we’re going to be talking about one of the liveliest debates in trade policy right now: plurilateral agreements, and what they mean for the future of the WTO. I’m really pleased to be joined today by George Riddell.

So, George is the founder and managing director of Goyder Limited, a boutique trade advisory firm that helps multinationals navigate geopolitical tensions and build supply chain resilience. George previously represented the UK at the World Trade Organization and the United Nations and led trade strategy teams at two of the big four consultancies. And also, very importantly, George also worked with us on ICC’s paper: “what next for plurilateral trade agreements?”

George, thank you for joining us.

George (01:01)

Thanks Valerie and it’s an absolute pleasure to be here today.

Valerie Picard (01:05)

Great, thank you. So some of our listeners will remember an earlier episode that we did with Hamid Mamdouh, where we talked about the challenges facing the WTO. This was in the lead up to the last ministerial [conference]. And we talked, among other things, around issues facing decision making, plurilaterals and a number of other issues. For listeners new to the topic, when I refer to plurilateral agreements, what are these exactly and why have they moved to the debate of the about the WTO’s future?

George (01:48)

Thanks, Valerie. And it’s such an important question at the moment, as you say, it really is at the heart of a lot of the big questions around the future of the World Trade Organization and what its members can do in order to move trade negotiations forward. I think for me, the simplest way of thinking about a plurilateral agreement is something that is less than the full WTO membership. So, the WTO has 160 plus members. That number keeps getting bigger every couple of years as more countries join the organization. And the agreements where everyone has signed up to the same rulebook are called multilateral agreements. The last big round of multilateral agreements came out of the Uruguay Round in 1994, which led to the creation of the World Trade Organization. And there’s been a couple of standalone multilateral agreements that have been agreed since then. A case in point is a trade facilitation agreement back in 2013, and more recently, the fisheries subsidies agreement.

In parallel and this really does have a long history within the WTO and its predecessor the GATT, of agreements among subsections of WTO members. So, really around coalitions of the willing looking to advance rules or market access in very specific areas of trade. And this has a long history going back all the way to the 1960s and the Tokyo round with different agreements on technical barriers to trade and subsidies and things like that. The ones that I think people really have focused on and businesses are really most aware of, I would say, is something called the Information Technology Agreement, which was a sectoral agreement that a bunch of WTO members decided to eliminate tariffs on information technology products – sort of that’s what the name says on the tin.

More recently, there’s been something called the Joint Statement Initiative. So those are three new agreements around e-commerce, investment facilitation for development and domestic regulation for services. And I think going into a bit more detail on those is probably where we want to take the conversation next, because that’s really where some of the big disagreements are happening in the organization today.

Valerie Picard (04:29)

Thanks, George. So, I think plurilaterals are less than the full membership as you said, but they’ve always been a part of the system. So, this is nothing new and I think they’ve just, perhaps what we can say is, that they’ve gained in importance today because they’re becoming the primary route to new rules. And I guess that is a question sort of in terms of why have they moved to the center? Why aren’t we going through having agreements with 166 members?

George (05:06)

If anyone among the listenership has an answer to that question, why aren’t we doing it and has a viable solution on how to fix it, you know… [trails off] I think there’s a lot of ambassadors in Geneva and trade ministries around the world who would love to hear those ideas. I think fundamentally though, we’re at a geopolitical point in in the global economy, in geopolitics, where it is very, very difficult for the US, China, EU, India, all of the big countries to come together and agree a common rule book. That just fundamentally is very difficult at the moment, particularly in a system at the WTO, which requires consensus. So, something where all WTO members need to agree on it. If even you have one who disagrees, then it doesn’t pass, it doesn’t go through.

So that I that has been a consistent frustration around the multilateral discussions. That and you tend to always get cross-linkages starting to occur between different negotiating files. So certain countries will want to trade agriculture off e-commerce as what happened at the most recent WTO ministerial conference back in March in Yaoundé, Cameroon. So, the multilateral discussions do end up being really difficult, particularly in the current environment. So, what you’ve had, and this really started back in 2017 at the Buenos Aires Ministerial Conference, where you had a host of countries, coalitions of the willing looking to advance negotiations, as I said, on e-commerce, investment facilitation, and domestic regulation for services, and they said we’re going to do that plurilaterally.

Where we start to get into some really crunchy issues around sort of how the legal framework of the WTO operates is you basically have two routes at the moment of how to integrate plurilateral agreements into the legal framework. The first is around sort of where each WTO member amends their market access schedule, whether that’s on the tariff side for goods or on the services side, where any country can do that unilaterally. So, in the case of the information technology agreement, all the countries who were part of those negotiations unilaterally committed to the agreement as part of their WTO schedules, their market access. And it was given effect, practical effect that way. Same for domestic regulation for services. It was up to each of those countries to really do it themselves and sort of their own legal commitments. And you know, there there’s a couple of bits of paper and ministerial declarations that sit on top of that. But what really matters is how you integrate it into the schedules. Each country can do it themselves on their own.

The other way is what’s known as an Annex IV agreement, which essentially allows new plurilateral agreements to be integrated into the framework. That, unfortunately, to add a new Annex IV agreement requires consensus. And today that is what is being blocked in the WTO with the e-commerce agreement and the investment facilitation for development agreement, that there’s not this ability to get them into that Annex four because even though they’re plurilateral agreements, even though that subsection of WTO members really, really wants them to be WTO agreements, there is this consensus requirement to get it legally integrated.

Valerie Picard (09:10)

So, you know, there are a number of legal issues facing all this. But we’re gonna come back to the role of business and what business wants. But if we’re speaking to some of our SMEs sitting in countries and we start to explain to them all this, at the moment, what we’re hearing from them is: “we need to move forward with the rulemaking”. And I wonder to what extent that debate, that very legal debate, is now confronting sort of the real need to move forward with new rulemaking?

George (09:56)

Yeah, it is absolutely what we hear from business and even my own clients. When you’re trying to say, you’re mired in this big debate around the future of the WTO and procedural rules between ambassadors as to how certain things get integrated into what is effectively a rule book that sort of sits on the desk, that is not what impacts businesses. That’s not what allows them to trade. That’s not what really allows for market access and international growth opportunities.

I think the headline is that business would obviously like a multilateral agreement. It’s obviously easier to have one agreement where the majority of countries around the world have signed up to a single set of rules. Given we don’t live in that world, I think that it is businesses’ role to say “we want to see progress wherever that may be possible” and certainly push their governments in order to look in those directions. And I think that is also reflective of the fact that the global economy continues to change. The trade issues that businesses face are very real and evolving. Whether that’s around environmental goods and sustainable technologies – incredibly important for many businesses today. We’ve obviously got the impact of the digital economy and artificial intelligence. And then also more prosaic issues like agricultural tariffs continue to be a big barrier for many businesses around the world. So, wherever there is possibilities for countries to move forward as coalitions of the willing on particular issues, I think that is incumbent on the business community to be making those arguments. It’s not for business to be saying: “and here are the legal technical solutions”. That really is for WTO members and their trade lawyers to figure out. It’s us as businesses to say: “we want progress and however we get there, you governments need to go in in those directions.”

Valerie Picard (12:19)

Completely agreed. And you mentioned coalition of willing members moving things forward, but we know that not everyone and not all members have been fans of plurilaterals. There is some movement now within perhaps. That’s a debate. But what are their concerns? Are there legitimate concerns? And I think the other issue that we often hear around this is the risk of fragmentation. Right. So, is a plethora of plurilateral agreements going to fragment the system? So maybe you can walk us through that.

George (13:29)

As with everything, I think there’s a bit of a range of views when certain countries express skepticism about the value of plurilateral agreements. One is definitely inclusion. That for many developing and least developed countries, they don’t necessarily have the negotiating capacity to be involved in lots of different negotiations at the same time, particularly in Geneva, they have very small teams.

So, there is this point around if it’s not happening within the formal structures of the WTO negotiating function, are they going to really be able to have their voices heard, advocate on their own behalf, and really understand the negotiations and what they’re signing up to? With very targeted support, we have seen really positive instances, particularly in the investment facilitation for development negotiations around how it’s possible to build an inclusive process from the beginning for those countries to make sure that they feel comfortable with where the direction that the negotiations are going and I think needs to be built into to any future plurilateral negotiations.

Then there’s an argument that some make around slippery slope. Particularly, if we do move into this world of just negotiating plurilaterally, it reduces the incentive for countries to pursue multilateral negotiations because they won’t necessarily have to make some of those trade-offs between the negotiating files that I was talking about earlier. And there’s sort of a principled stand that no, the WTO is for multilateral negotiations.

And again, in an ideal world I would absolutely agree with that. However, I think there is just the reality of the moment that we’re in currently where multilateral progress isn’t really possible on some of the big ticket items. So how do you move forward given some of those pressing business concerns that that we spoke about?

The final one is where maybe it’s less of a valid argument and this is rarely said out loud – but certainly underlines some positioning – is where it is not in a country’s interest to advance plurilateral or indeed multilateral rulemaking that due to the specific political economy within their country at a p particular time, that they just don’t want to see progress, so we’ll find ways of blocking those negotiations moving forward. And we certainly in the past have seen instances of that usually resulting in quite heavy lobbying from other WTO members to try and get a shift in the position to varying degrees of success.

Valerie Picard (16:40)

I think that  inclusivity is a real issue. And I sometimes also think about what we and we’ll come back to this as well around the role of business and supporting their governments as well. I think it’s that’s something we need to dig into a little bit. But let’s make this a bit more concrete, especially as we talked about earlier in terms of what business actually wants and you’d mentioned already the information technology agreement. So, what are we hearing? What do we see in terms of what we think are the most promising plurilateral initiatives that could be taken forward at the moment? And maybe dig into, you know, why is this so important to the to the private sector that we make progress on this agenda?

George (17:31)

So, in terms of where we see businesses really wanting to see progress, I think there is the almost an updating of the current plurilaterals that we have, particularly, you know, when it comes to the information technology agreement that was last agreed in 2013. It doesn’t contain a lot of the IT products that businesses currently use. So, there’s certainly a push to see that updated. And that applies to a number of the other tariff sectoral deals, whether that’s pharmaceuticals, whether that’s chemicals. There’s a couple of other instances where those agreements could be updated from sort of previous incarnations.

There’s also an updating of the trade facilitation agreement. So this was a landmark multilateral agreement from 2013, really designed at cutting red tape at the border and the ICC and others have been instrumental in seeing that implemented over the last ten to twelve years. However, we know that there continue to be issues in the sort of services of trade facilitation, whether that’s maritime logistics, there is a huge amount more that we can do to cut red tape at the border and seeing what the next generation of those issues is and codified at the WTO I think would be really helpful for, you know, reducing the amount of time at borders. And then you’ve got sort of the new issues where certain countries, you know, around environmental goods some countries have been really pioneering in their free trade agreements for liberalizing the trade in environmental goods and services. Can we see that expanded in the context of the WTO? I think that would be absolutely fantastic to see.

There’s obviously services market access, you know, a lot of services firms would love to see those negotiations restarted. And then, I would then have a third category of really out there future issues and maybe putting AI and some of the other more advanced trade topics in that bucket. We’re definitely not ready to launch negotiations on those yet, but we know the just fundamental impact that that they’re going to have on global trade and how does the global rule book respond to that, I think is going to be some really fascinating questions moving forward over the coming months and years.

Valerie Picard (20:14)

So, basically, we’ve got opportunities to deepen existing agreements that you’ve mentioned and in particular, you know, we’ve already mentioned the information technology, but the trade facilitation agreement, which is an extraordinarily important agenda for the private sector. It’s spoken about a little bit less, but it actually when we speak to businesses, it remains absolutely top of the agenda is trade facilitation. You’ve also got sort of – I tend to think in buckets, you know – there’s the trade and environment agenda, there’s the services and market access, and as you also said, those future areas, and we’ve gone through these in the paper in that way.

George, let’s say you’ve got two minutes with your trade minister. So, you used to represent the UK at the WTO. What do we say to the minister at this point to make him understand or her how important this is?

George (21:28)

It’s absolutely a critical issue, I think, in terms of capturing your minister’s attention. And for a lot of trade departments that’s hard at the moment when you’ve got, you know, some of the big issues, whether that’s US tariffs, Chinese export controls, new environmental measures coming out of Europe. You’ve got some big ticket items, that getting attention at the moment is hard. I think there there’s three core messages that that I would certainly want, hope that they’re focusing on.

One is, without progress the value and relevance of the WTO does get heavily diminished. We know from the ICC’s excellent work in this area around sort of the economic cost of not having the WTO or it disintegrating, that remains true and even more so in the context of this discussion around plurilaterals.

The second message would absolutely be around: let’s get the current crop done. So that means ratifying the e-commerce agreement. Currently, only Singapore has ratified the agreement with the European Union potentially following soon towards the end of this year.But we have a lot of other WTO members who haven’t yet started that process. So that absolutely has to be there. As well as, you know, starting to do feasibility studies around what they need to do for the investment facilitation for development.

And then the third is start talking to your business community around which of these… You know, the ICC and the paper that we wrote together has put out some absolutely fantastic ideas. It’s for governments to start saying “this one appeals to me” and really taking that forward around “okay, how do we actually structure some negotiations on these different topics”? So those would be my three key messages. I never like going to a minister with more than three, so I’ll stop there.

Valerie Picard (23:30)

Very wise. I think it’s a good transition because talking – and we’ve already spoken about this a bit – but I want to really dig into this now, is the role of the private sector in all of this. These agreements are obviously negotiated by governments, that’s absolutely normal. But what should the private sector role be in all of this? I mean, we obviously know, but in particular in this current environment: What role should business be playing? You know, what needs to be happening in countries around the world – and I think you’ve touched on some of this – but also in Geneva, where the negotiations would be happening.

George (24:25)

So it business is really the only one who knows the challenges that they’re facing, the trade barriers that they experience on a day to day basis. And unless they’re telling their governments, “hey, this is an actual commercial problem for me, I am not trading as much or my trade is being impeded because of these different issues” – they’re the only ones who know. So unless they’re vocalizing that lived experience, I think, you know, government officials aren’t going to necessarily understand, have the expertise, or the sectoral knowledge to be able to do that work. So, I think it is incumbent on the business community to make their voice heard on real issues that are impacting them every day.

In terms of big macro political economy in each country, for many trade ministers, a outcome or a trade-off on WTO reform alone isn’t going to necessarily get them out of bed come the next WTO ministerial meeting. It is a very important discussion, but it’s not one necessarily that is going to drive jobs, investment, growth domestically, versus if there are plurilateral negotiations, whether they’re being launched, concluded, whatever the case may be – and they have business leaders calling them up and saying, “get this done, because it will benefit X sector in our economy. We will gain so many jobs. We will develop new industries off the back of it.” That will incentivize them to really show up in Geneva and make some of those harder calls that will result inevitably out of sort of this broader WTO reform process.

And that brings us to the point, what do you do in Geneva? And I think quite often, as we saw at the beginning of this conversation, the discussion can get really esoteric and completely moved away from the people who actually trade on a day-to-day basis and use the rules, whether that’s the information technology agreement, whether that’s the licensing requirements around the domestic regulation for services. It’s businesses who use these rules every day in the current plurilateral agreements. So, they’re the ones who should be reminding those WTO ambassadors that that’s the case and what more needs to be done as a result.

Valerie Picard (26:55)

Thanks, George. And I think also from the ICC perspective, we’ve been talking a lot about having a structured role for business at the WTO, which, at the moment there is there is no path. It’s informal. But either way, we’re encouraging the kickstart of negotiations and certainly think it’s really important for there to be, even if it’s an informal dialogue, but something that is continuous to support the negotiations to ensure that it’s grounded in what business actually needs and delivers a result that is actually commercially meaningful.

But maybe from your perspective, what are some of the myths around the discussion or things that people tend to misunderstand around plurilaterals that we need to clarify to be able to move forward?

George (28:30)

I think the biggest myth is that it’s a one-size-fit-all thing. That you say plurilateral agreement and they all appear in the same way, in the same form and all have the same sort of problems with them, in particular if you’re talking to governments that perhaps are a little bit more skeptical of these types of agreements. Whereas, you know, as this conversation has demonstrated, you have a huge amount of variety within the types of agreements that can be called plurilateral. So really fine-tuning, you know, the outcome to what you want is really possible and it’s not going to undermine sort of the existing WTO rule book if you know these agreements go ahead, primarily because a lot of them designed to support the existing framework, whether that’s through the schedules or whatever else the case may be. So, for me that’s probably the biggest myth is that they’re not one size fit all. In fact, there’s, yeah, just this huge variety of potential options moving forward.

Valerie Picard (29:39)

And I think that’s really an important point, especially in the current environment, with what ICC and the discussion today around the future of the WTO or the WTO of the future, around introducing more flexibility. And already I think it’s around that flexibility that needs to be. But when it comes to plurilaterals – which are the natural expression of that flexibility, which has always been there. So, it’s also using the flexibilities that are already there without having to necessarily create new ones.

But when we talk about plurilaterals in the reform agenda: On the one hand, we’re saying we can move forward right now. We don’t need to wait for a full reform agenda. So, how do we clarify what that means? How can we move forward if we need to reform [at] the same time?

George (30:35)

I think this is one area where sort of we in the business community and certainly I know from working with ICC, we like outcomes. And you know we’re talking about the eventual outcome and the benefit to business from these agreements, whereas trade negotiators tend to take a little bit of time or a lot in certain instances to get these up and running.

So, if we look at, whether it’s the e-commerce agreement, services, domestic regulation, you know, that was launched in 2017. The processes aren’t even concluded today, in many instances. That, you know, fine, we have the legal text in the case of the e-commerce agreement, countries have started ratifying it, we have an interim arrangement while sort of some of the big reform discussions go on in the WTO. But that’s taken effectively nine years to happen. I think for businesses, even if WTO members were to launch these processes tomorrow, that we’ve still got quite a lot of time as they’re negotiated, as you know, for them to come into effect. So, for me, it’s when we’re saying start now, it’s you don’t need anyone’s permission to launch a negotiation, to launch an initiative to start moving forward. Fine, you might need to deal with how to legally integrate it on the back end, but nothing stops the discussion starting today.

Valerie Picard (32:10)

And I think that’s really from what we hear from our members – and our members are in and across from businesses that we speak to every day – they, I would say, is underscoring the urgency of starting those processes because standing still is not an option. And so we absolutely have to have to move forward.

George, is there anything that I haven’t asked or that we haven’t discussed that we sort of in a discussion on plurilaterals that we should have touched on?

George (32:47)

I think it is, you know, it’s a hugely exciting area and you know, if we haven’t plugged the ICC report enough, you know, I’m going to take one more opportunity to do so. And for the reason that, of how many ICC members and different types of businesses engaged in the process, I think really was you know fantastic to see, but also how rich some of the ideas in it are, because it draws from so many different sources as a result.

So definitely another plug for the report, but also how it’s you know going to be the foundation for future work and hopefully businesses choose to pick up, you know, even if it’s only one of the ideas and take it to their government and say, “hey, this would actually really help my business, my international trade operations”, if we saw easements happen in whatever the area of trade might be. So that that would be my sincere hope from, not only the report, but also this conversation.

Valerie Picard (33:57)

And yeah, no, I think that’s a really important point that we saw this as the foundation and actually we’re starting now work as well on our side to come with concrete proposals into some of these ideas that we’ve mentioned in the paper. So, we are starting that work so that we can bring something even more concrete to the table.

Well maybe we’ll end there. George, thank you very much for joining us today, for the collaboration on the paper, and of course to all of our listeners for tuning in.