Trade & investment
Building for Success: A World Trade Agenda for the Buenos Aires Ministerial
This report discusses the urgent needs for more liberalisation and better rules in global trade and discuss what WTO Members should focus on in the period before and after the upcoming WTO Ministerial Conference.
The World Trade Organisation (WTO) needs far more attention. Regrettably, these are challenging times for supporters of an open and rules-based world trading system. There are great uncertainties about the direction of global trade policy.
Sentiments of economic nationalism are on the rise and the political compact for globalisation is challenged in many countries. Governments all across the world have become more innovative in protecting domestic business against competition from abroad. Too many political leaders seem to have forgotten that trade restrictions are no recipe for economic success and that recent decades of rapid growth in trade and foreign direct investment have significantly boosted global economic prosperity. Many countries have made unprecedented progress in improving their welfare and in alleviating poverty. The economic integration fostered by trade has been instrumental in making that happen.
After two WTO Ministerial Conferences that ended with positive results, it is now time for Members to aim for new and more consequential trade agreements. While the WTO has suffered from “Doha fatigue” for over a decade, the problems in global trade have been piling up. It is understandable that WTO Members turned their attention elsewhere when the Doha Round lost energy and momentum, and when the global economy was confronted with a crisis that required Members to focus on issues other than trade policy. Global trade liberalisation was not seen as a “make-or-break” component of the pallet of efforts required to avoid the world economy sinking into depression. Reforming the financial sector and restoring fiscal sustainability — while keeping demand up — were rightly seen as having greater urgency and priority.
Now, however, is different and there should be a new sense of urgency in revitalising the WTO by delivering new and better results from negotiations. Three factors in particular should prompt Members to invest far more in the WTO and to take bolder initiatives that could deliver tangible benefits to their domestic economies.
First, the macroeconomic outlook has changed and added more urgency to improving the supply side of the economy.
Second, the rate of growth in global trade volumes and values has weakened and remains well below trend.
Third — and perhaps most pressing — the global trading system is being challenged by increasing protectionism.
These three factors present WTO Members with a new context that requires not only attention , but also new forms of policy action. Frustrated by the slow progress in WTO negotiations, a good part of the Membership turned their attention to bilateral and regional trade initiatives. For the past eight years, the main focus in global trade policy has been a myriad of initiatives to liberalise trade on preferential terms. Even if these efforts warranted support, it is clear that it has not been much easier to negotiate outside the WTO in a manner that leads to swift and smooth reductions of trade barriers. Furthermore, it is equally clear that these initiatives have not been able to support much new trade, and that they would not help to create much more new trade even if a greater number of the initiatives had actually come to fruition. Finally, it is obvious that these initiatives have not been enough to arrest the trend of growing protectionism.
None of this should come as a surprise. Bilateral or regional trade initiatives are usually not large or consequential enough to have a solid imprint on aggregate volumes of trade. For trade agreements to move global trade, they need to be global. For other forms of liberalisation to raise national levels of trade significantly, they have to cover a larger part of the world economy. Similarly, for countries to resist the temptation of introducing new protectionism there have to be global initiatives, not just bilateral or regional ones. It is multilateral initiatives that have the power to get policymakers to be more careful about policies that distort trade and opportunities of other countries to benefit from trade.
In the following sections, we will discuss the urgent needs for more liberalisation and better rules in global trade and discuss what WTO Members should focus on in the period before and after the upcoming WTO Ministerial Conference taking place in Buenos Aires, Argentina in December 2017.