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It’s a couple of weeks now until the WTO ministerial meeting in the United Arab Emirates (Abu Dhabi, to be precise). The mood among delegates is currently sober, bordering on sombre, bordering on sepulchral. This good rundown of the issues with an appropriately dark tinge, published by the Hinrich Foundation think-tank, comes from Keith Rockwell, legendary former WTO spokesperson and comms director. Today we chat to Thani bin Ahmed Al Zeyoudi, the UAE minister of state for trade, who has the unenviable task of compèring proceedings and trying to get stuff done. Charted waters is on EU agriculture and climate change.
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Modest ambitions make sense
It’s an interesting time to be gathering the world’s trade ministers in the Middle East. The continued blockage of the Red Sea and Suez Canal by the Iran-backed Houthi rebels is a pretty graphic illustration of how supply chains can be interrupted.
UAE is trying to portray itself as what Zeyoudi calls a “natural mediator”, having also hosted the World Expo in 2021-22 and the COP climate change meeting late last year, the latter somewhat overshadowed by allegations that the meeting was being used to strike fossil fuel deals. On that front, UAE has a somewhat better story to tell on trade, having successfully made itself into a data and digital hub to diversify from hydrocarbon exports.
Zeyoudi predictably doesn’t think the precarious political and military situation in the Red Sea will overshadow the ministerial, noting reasonably enough that the previous meeting in 2022 came a few months after the Russia-Ukraine conflict and yet managed to get a few things done. His definition of success for the conference, though, is realistically modest: “A successful ministerial meeting is one where we’re going to bring back trust to the organisation.”
For example, one of the conclusions of the previous ministerial in 2022 was the aim of having a “fully and well-functioning dispute settlement system accessible to all members by 2024”, which will presumably mean undoing the US block on the system’s appellate body. But that’s clearly not going to happen this early in 2024. Zeyoudi says that a road map for future reform of dispute settlement would count as a success.: “It’s a very long process . . . but we’re going to draw timelines with the steps we should be taking.”
Maintaining trust in the system by keeping it going, coming up with road maps: these are modest outcomes. But as Zeyoudi points out, businesses themselves have adapted to a variety of shocks, from previous blockages in the Suez Canal to the Covid-19 pandemic, and have adjusted their supply chains. The situation in the Red Sea is just another problem. “This is the beauty of life,” he says. “It’s full of challenges and we have to be more and more resilient.” Hoping the WTO can advance policy at the meeting, but having companies and businesses be prepared to absorb shocks in any case, is a realistic conclusion, if not a spectacular one.
The missing champions of the multilateral
However energetic the leadership of the WTO itself is, and however many good blue-sky ideas are proposed to improve its functioning, it remains the case that it needs the member countries to keep the world trading system going.
This doesn’t just mean being active in the WTO, either. Moan about US intransigence in the organisation all you want (I have and I will), but it’s principally the Americans making serious efforts to resist the Houthis’ attacks in the Red Sea. It looks quite bad for the Middle Eastern countries to talk about their role in catalysing trade but then not even contribute meaningfully, even when the blockage materially affects countries in the region such as Egypt, Yemen and Sudan. (I put this to Zeyoudi: he said that all governments were contributing to peace in their own way.)
The US hobbling of the WTO dispute settlement system, an impasse now entering its fifth year, will continue at least until November’s presidential election. But the malcontent-in-chief by a long way is India, often backed by South Africa. New Delhi is still the holdout in a bunch of issues, some of which I’ll discuss between now and the ministerial (fisheries subsidies, agriculture, the very idea of plurilateral agreements and indeed the whole principle of holding environmental negotiations at the WTO). Partly, it seems, multilateral intransigence plays well at home, even if Narendra Modi’s government is simultaneously sneaking through a bit of preferential liberalisation, and partly as leverage over issues it does care about.
Of the other big powers, China enjoys being ostentatiously active in WTO discussions because it gets to look all multilateral without actually having to make any concessions. The EU does have a more genuine commitment to the process, but in the absence of anything meaningful happening on issues such as the environment is pressing ahead with its own measures including the carbon border adjustment mechanism. Some smaller countries such as Australia are competent and active, but don’t have the heft to get the show moving on their own. The UK is discovering that being a leader in the WTO is a lot harder than the Brexiters promised.
Until the big powers decide collectively to unstick the WTO, it will stay largely stuck. It’s as simple as that.
The farmers’ protests across the EU have resulted in environmental targets being watered down (see story in Trade links below), but the measures that were being contemplated wouldn’t have reduced emissions in agriculture that much.
Taking a short break from lecturing the rest of the world about green policy and using trade deals to enforce it, the European Commission is backing off from environmental targets for agriculture because farmers are complaining.
As the South China Morning Post reports, the EU member states are also divided about how tough to get with China. NOBODY COULD HAVE PREDICTED THIS.
Investors expect China to export more deflation to the world in 2024.
The New York Fed’s index of supply chain pressure has returned to its pre-pandemic range for both December and January, after the huge upward surge in 2021 and 2022 was followed by a slump below the long-run average during most of last year.
Deforestation in the Amazon may be causing the Panama Canal to dry up, threatening one of the world’s big chokepoints for goods trade.
My FT colleague Martin Sandbu interviews Enrico Letta, the former Italian prime minister tasked with producing plans to protect and extend the EU single market.
Trade Secrets is edited by Jonathan Moules
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Source: Economy - ft.com