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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is EU commissioner for trade
Global trade has been a key driver of prosperity and poverty reduction over the past few decades and the World Trade Organization has been at the heart of this. Now, at a time of geopolitical tensions, political uncertainty and the growing weaponisation of trade, the value of multilateral co-operation within the WTO is greater than ever.
This new geopolitical reality requires a reformed WTO and is the reason the EU is leading efforts to update the rule book.
The existing WTO rules, which still govern the majority of global trade, are our best guardrail against economic fragmentation. The EU continues to be a leading supporter of the organisation. It’s in our interests: almost 60 per cent of EU trade is done under WTO rules. But we now need to see a strong and reformed WTO that can effectively respond to the distinctive challenges of the 21st century.
The upcoming 13th ministerial conference of the WTO, which takes place in Abu Dhabi next week, represents a golden opportunity to give further impetus to this organisation. Our aim is to shake up its core functions, from settling disputes to tackling urgent global challenges.
The WTO has provided a vital forum for resolving trade disputes over the past quarter of a century. But the Appellate Body became defunct under the Trump administration. As a result, appeals cannot be heard and disputes are left in limbo — or “appealed into the void”.
Reforming this dispute settlement system is critical to the WTO’s overall legitimacy and to stopping the erosion of trade rules. It is vital in providing stability for companies to invest and export. The EU and others have now made good progress on a set of reforms, but there is still work to be done to have a fully functioning system, including the possibility of appeal review, as soon as possible.
We also want the WTO to strengthen its contribution to sustainability. The organisation delivered on this in 2022 at the last ministerial conference with a landmark agreement to protect our oceans by tackling harmful fisheries subsidies. WTO members must now deliver on the second part of this deal to address overfishing and overcapacity. This would also help us fully meet the relevant UN Sustainable Development Goals.
The EU also wants a stronger WTO to ensure that trade can positively contribute to tackling global environmental challenges such as climate change, biodiversity loss and pollution.
As part of that, we should enhance dialogue on domestic environmental measures, such as incentivising the green transition in a trade-friendly way. Together with Ecuador, Kenya and New Zealand, I will also be convening the 60-member Coalition of Trade Ministers on Climate to discuss how trade can support climate change objectives.
Agricultural reform and food security will also be of prime importance in Abu Dhabi. Climate change, geopolitical tensions, not least Russia’s brutal invasion of Ukraine and its weaponisation of food supply, all affect agricultural value chains and food availability.
The EU will lead efforts to encourage WTO members to move away from trade-distorting subsidies and embrace the transition to sustainable farming — a goal that the EU has already pursued through successive reforms of the Common Agricultural Policy. The EU will also engage with other members on the pressing issues related to the challenges of the current food insecurity crisis, notably export restrictions applied to food products.
Then there is digital trade. Here, we need to modernise the WTO rule book. The key demand of the business community — in developed and developing countries alike — is for ministers to renew the current moratorium on applying duties on ecommerce. This is vital to ensure that countries and businesses, especially small and medium-sized enterprises, can reap the benefits of the fast-growing digital economy. We also want to see a work programme to address the digital divide and we will work hard to secure these outcomes.
More broadly, the WTO must re-establish itself as the key international forum for discussing and delivering on other pressing global policy challenges, such as those posed by industrial policy. We also need to agree an agenda to facilitate the integration of developing countries into the global economy, especially the least developed.
An array of challenges is facing us all. Ensuring that the WTO is effective and capable of helping us meet them is in everybody’s interests.
Source: Economy - ft.com
