Does the WTO have a viable future?
Power politics is paralysing the global trade body
Good morning! The UAE isolating NGOs. The US, Japan, China, and the EU blocking a consensus to protect global fish stocks. The EU, Switzerland, and UK doing the same with a proposal to lift patents for Covid-19 treatments. India stonewalling challenges to subsidised food stockpiling. The US getting its way with the extension of a customs moratorium on Big Tech services. The takeaway from the recently-concluded 13th World Trade Organization (WTO) ministerial conference is that the world’s apex trade body has morphed into a bastion of bullies. In exerting their power, certain countries are leaving the rest of the world out to dry. What does this say about the WTO itself? Bonus: our picks of the week’s best longreads.
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Jane Kelsey
The 13th World Trade Organization (WTO) ministerial conference in Abu Dhabi has failed to resolve any issues of significance, raising the inescapable question of whether the global trade body has a future.
The three-day meeting was due to end on February 29. But late into a fourth extra day, the 164 members were struggling to even agree on a declaration, let alone the big issues of agriculture, fisheries and border taxes on electronic commerce.
The closing ceremony was sombre, and the ministerial declaration bland, stripped of the substantive content previously proposed. Outstanding issues were kicked back to the WTO base in Geneva for further discussions, or for the next ministerial conference in 2026.
Briefing journalists in the closing hours, an EU spokesperson noted how hard it would be to pick up the pieces in Geneva after they failed to create momentum at the ministerial conference. She predicted:
“[Trade] will be more and more characterised by power relations than the rule of law, and that will be a problem notably for smaller countries and for developing countries.”
Restricted access
That imbalance is already evident, with power politics characterising the conference from the start.
There were accusations of unprecedented restrictions on non-governmental organisations (NGOs) registered to participate in the conference. These bodies are crucial to bringing the WTO’s impacts on farmers, fishers, workers, and other communities into the negotiation arena.
A number of NGOs have submitted formal complaints over their treatment by conference host the United Arab Emirates. They say they were isolated from delegations, banned from distributing papers, and people were arbitrarily detained for handing out press releases.
Critical negotiations were conducted through controversial “green rooms”. These were where the handpicked “double quad” members – the US, UK, European Union, Canada, China, India, South Africa, and Brazil – tried to broker outcomes to present to the rest for “transparency”.
Influence of power politics
These powerful countries largely determined the outcomes (or lack of them). The US, historically the agenda-setter at WTO ministerial conferences, appeared largely disinterested in the proceedings, with trade representative Katherine Tai leaving early.
The final declaration says nothing about restoring a two-tier dispute body, which has been paralysed since 2019 by the refusal of successive US Republican and Democratic administrations to appoint new judges to the WTO’s appellate body.
The EU failed to secure progress on improvements to the appeal process. Likely Republican presidential nominee Donald Trump has already announced he would impose massive WTO-illegal tariffs on China if elected.
China, Japan, the US and EU – all big subsidisers of distant water fishing fleets – blocked an outcome aiming to protect global fish stocks, an issue already deferred from the last ministerial meeting.
The six Pacific Island WTO members lobbied tirelessly for a freeze and eventual reduction in subsidies. But the text was diluted to the point that no deal was better than a bad deal.
The EU, UK, Switzerland and other pharmaceutical producers had already blocked consensus on lifting patents for Covid-19 therapeutics and diagnostics, sought by 65 developing countries. A deal brokered in 2021 on Covid vaccines is so complex no country has used it.
Domestic and global agendas
India’s equally uncompromising positions also reflected domestic priorities. The 2013 Bali ministerial conference promised developing countries a permanent solution to prevent legal challenges to India’s subsidised stockpiling of food for anti-hunger programmes.
A permanent solution was a red line for India, which faces an election next month and mass protests from farmers concerned at losing subsidies.
Agricultural exporters, including New Zealand, tabled counter-demands to broaden the agriculture negotiations. The public stockpiling issue remains a stalemate, without any real prospect of a breakthrough.
India and South Africa formally objected to the adoption of an unmandated plurilateral agreement on investment facilitation.
The concerns were less with the agreement itself and more with the precedent it would create for sub-groups of members to bypass the WTO’s rule book. This would allow powerful states to advance their favoured issues while developing country priorities languish.
Crisis and transformation
The face-saver for the conference was the temporary extension of a highly contested moratorium on the right to levy customs duties at the border on transmissions of digitised content.
Securing that extension (or preferably a permanent ban on e-commerce customs duties) on behalf of Big Tech was the main US goal for the conference. Developing countries opposed its renewal, so they could impose tariffs both for revenue and to support their own digital industrialisation.
The moratorium will now expire in March 2026, so the battle will resume at the next ministerial conference scheduled to be held in Cameroon that year.
But there is every likelihood the current paralysis at the WTO will continue, and the power politics will intensify. As the previously quoted EU spokesperson also mused:
“Perhaps the WTO needed a good crisis, and perhaps this will lead to a realisation that we cannot continue like this.”
Ideally, that would result in a fundamentally different international institution – one that provides real solutions to the 21st century challenges on which the WTO is unable to deliver.
Jane Kelsey is Emeritus Professor of Law, University of Auckland, Waipapa Taumata Rau.
This article is republished from https://theconversation.com under a Creative Commons licence. Read the original article at https://theconversation.com/wto-conference-ends-in-division-and-stalemate-does-the-global-trade-body-have-a-viable-future-224948
ICYMI
Fiat fracas: Gianni Agnelli died in 2003. And with that, an all-out Succession-like war—though far uglier—would be waged over the next two decades and counting.
The grandson of Giovanni Agnelli, founder of Fiat, Gianni built an automobile empire that made him the richest man in Italy. The Agnelli family has stakes in Dicembre, the parent of listed holding company Exor. For perspective, these are the companies Exor has stakes in: Stellantis, of which Fiat is now part; Ferrari; Dutch conglomerate Philips; The Economist; and Juventus football club. Exor’s holdings are currently worth €33 billion ($36 billion). And it's this multi-billion euro empire that’s up for grabs between feuding family members.
After Gianni died, his daughter Margherita transferred her Dicembre stake to her mother, who in turn willed it to Margherita’s children. Now Margherita wants her due back, but her successors, led by son and Stellantis chief John Elkann, are having none of it. Head to the Financial Times for the full, gripping story.
Nothing regal about this: Speaking of Stellantis’ John Elkann, here’s a Bloomberg opus that features him in a guest appearance, though not in a flattering way. The Fiat scion also owned a stake in Monacair, a helicopter company that held exclusive rights to transfers between Nice, France, and the Principality of Monaco—a tiny tax haven synonymous with casinos, the Grand Prix, luxury, and now, alleged palace-sanctioned corruption.
The country of Monaco has been ruled by the same dynasty for 700 years. Its current ruler, Prince Albert II—son of Prince Rainier III and Hollywood actress Grace Kelly—has attracted bad press in his country and neighbouring France for favouring his nephews (the sons of Albert’s older sister, Princess Caroline), Pierre and Andrea Casiraghi, for business deals that have virtually monopolised industries in Monaco. These include the aforementioned helicopter route (Monacair is their company), real estate projects that flouted building rules before being greenlit, and now, even film production. That’s the tip of the iceberg. This story’s cast of characters also include a trusted royal accountant left for the wayside, judges and law enforcement who are up against a prince who can’t be criminally tried, and spoilt nephews who seem to believe an entire country is theirs for the taking. Don’t miss this for anything.
Jay to the con?: An Indian monk going west to teach Americans about the ancient wisdom of Hinduism is a tale as old as time. The latest incarnation of that archetype is Jay Shetty, a pop-psychologist guru known for his podcast On Purpose and two bestselling books. Shetty’s influence has now breached the holy confines of Hollywood: he officiated the 2022 marriage of Jennifer Lopez and Ben Affleck. Naturally, this meteoric rise comes with its own set of questions and prodding about the man and his numerous claims. Like his association with ISKCON, and whether he actually ever went to India as much as he claims. Or the Jay Shetty Certification School, where students pay thousands of dollars to be like him. To know about shady Shetty, read this in-depth profile in The Guardian.
Manufacturing woes: Thanks to the ‘China Plus One’ supply chain/manufacturing strategy becoming a global norm after Covid-19, many factories are being established in India. Attached to such facilities are sprawling townships, such as those run by iPhone contract manufacturer Foxconn. Established in Sriperumbudur in Tamil Nadu, the Foxconn township employs close to 15,000 workers, 80% of them women. This atypical gender ratio, while welcome, comes with some disturbing caveats, as this Scroll investigation found. Most of these women are made to live in far-flung dormitories with questionable hygiene. To top it all, they’re not allowed to leave during weekdays. They are allowed to travel for a brief 12-hour window only on Sundays. If these adult women do wish to travel on other days or for a longer duration, the warden must confirm the same with their parents. The practice seems to stem from Foxconn’s China model, and it’s one that should concern us all, India’s manufacturing ambitions notwithstanding.
The Fat Cat is losing weight: When a little-known investment firm Wesray bought Gibson Greeting Cards company—owner of Garfield the cat—it paid up only $1 million from its pocket and borrowed $289 million to fund the transaction. It was among the first few such transactions in the world, now known as leveraged buyouts, the cornerstone of the private equity industry. Wesray made so much money off the purchase, The New York Times had joked about reaping profits from the ‘fat cat’ aka Garfield. Most people and institutions with money to spare have spent decades pursuing the PE fat cat, now worth $5 trillion in assets under management worldwide. But as Financial Times argues in this column, the cat ain’t fat anymore. A combination of factors—rising interest rates, fewer companies going public, and too many PE firms floating about—have depressed the industry’s once magical returns. Yet, there are enticing benefits to putting money in illiquid securities whose performance is often conveniently benchmarked to make PE fund managers look good. Was it all always a conjuring trick? Or has the fat cat simply run too hard for too long?
Stuck in the past: For decades now, residents of Mumbai have squabbled over the state of the city’s infrastructure even as residents of other cities pronounce the death of Mumbai. In this story for Asterisk Magazine, researcher Saarthak Gupta argues that the primary reason for the ‘ruin of Mumbai’ is the severe restrictions on floor area ratios (FARs), or what Mumbaikars know as FSI (floor space index). FSI is a measure of how much area of real estate a developer can build on a given plot of land. Compared to densely populated urban sprawls such as Tokyo and Manhattan, Mumbai’s FAR is a lot lower, meaning developers build smaller homes in shrinking land parcels, forcing higher population density rather than lower, as the FSI policy intended. Besides, Gupta argues, historic rent control in the city has held landlords back from buying property to rent it out, squeezing the supply of rental units and forcing people to enter into informal contracts. In sum, Mumbai is neither growing nor prospering as it should while its residents squeeze into poorly constructed homes in badly managed residential areas. Given the city’s Municipal Corporation recently rebuilt two connecting flyovers so badly they’re six feet apart in height, can it even fix this mess?