Post-Ministerial Blues, or is it Reds?

Stimson Spotlight

Post-Ministerial Blues, or is it Reds?

I had planned this week to make some profound comments reflecting on the year past, but I can’t let a WTO Ministerial conference go by without saying a word or two about it. So, profundity will have to wait a bit.

The most obvious thing to say about the meeting is that not much happened, which has not in the least deterred us trade wonks from trying to over-interpret very modest results into something meaningful. I’m not going to do that. To paraphrase Freud, sometimes nothing is just nothing.

That does not, however, mean there is nothing to say about it. The first thing to note is that most long-time observers of the WTO were not surprised. It is usually safe to bet on disappointment at a WTO meeting, and this one was no exception. Countries have spent two years trying to develop a work program in the wake of the Doha Round’s demise (which they are also unable to officially agree has happened), throwing different gobs of mud at the refrigerator door hoping at least one would stick. The most likely seemed to be an agreement on fisheries subsidies which kept negotiators busy throughout 2017, but in the end that was killed off, apparently by the Indians who, as usual, were shameless in their pursuit of their own agenda at the expense of everybody else’s.

So, instead of agreements on substance, members contented themselves with standing up several new “coalitions of the willing” — countries prepared to negotiate specific deals in specific sectors that would apply to the signatories only and not all WTO members. The most notable is the one on electronic commerce, where the U.S. was one of the joining parties. This is not a new trend. There is already a Government Procurement Agreement done as part of the Uruguay Round, now more than 20 years old, an Information Technology Agreement (also updated) that have been concluded, an environmental goods agreement, and a trade in services agreement that are under negotiation. These are not all the same — the ITA was done on an MFN basis, and the EGA is contemplated on the same basis, although part of the debate there has been over a snapback in case the amount of production within the agreement falls too low. TiSA, on the other hand, is being conducted outside the WTO, albeit adjacent to it, and would probably apply only to signatories, which is also true of the GPA.

Thus, while plurilateralism is clearly trending, it would be wrong to say it is a new trend. Some of us, including me, have been advocating it for some time, not as a superior approach but as the best alternative if multilateral agreement continues to be out of reach. And if there is one thing the ministerial proved it is that multilateral agreement is still out of reach. These more modest agreements are good by themselves because they move the trade liberalization ball forward for their members, but they also serve as an example for the unwilling. If they produce more jobs and growth for their participants, then perhaps the others will come to see the advantages of lower barriers and climb aboard.

Second, as much as it is tempting to do so, it would be wrong to blame the modest outcome on either President Trump or Amb. Lighthizer. There has clearly been an abdication of U.S. leadership on the multilateral trade front, and that will doubtless have a long term corrosive effect on the ability of the WTO to make progress, but this meeting was doomed anyway, largely due to India’s determination to hold everything hostage to its food stockholding demands. It does serve as a reminder, however, of the complexities of effective leadership, which the EU discovered rather painfully when it couldn’t get the things it cared about across the finish line.

For the big guys like the U.S. or EU, overt support of something can be the kiss of death because of suspicion and resentment from developing countries. Effective leadership needs to be more subtle, often by working through like-minded smaller countries with more credibility. That means we should not measure U.S. success by how long Amb. Lighthizer stayed there or how many meetings were held or speeches given. We measure it by whether the U.S. achieved its objectives. Sadly, it appears we had very few. We want other countries to behave better, and we want better dispute settlement rulings, but we have not tabled much in the way of specific solutions. That might actually have been the right tactic for this meeting, but eventually we will have to come up with something if we want to make progress.

What is depressing is that while those are laudable goals, they’re about process reform and not about trade liberalization. It would have been nice to once again see the U.S. defending an open rules-based trading system and spending as much time on “open” and “trading” as it is on “rules.”