Once hailed as steward of a new economic order, the body risks becoming a monument to a future that never arrivedby Guy de Jonquières / October 21, 2019 / Leave a comment
Brexit enthusiasts like to claim that if Britain ends up leaving the European Union without a deal, it has nothing to fear because it can count on World Trade Organisation rules to safeguard its trading rights and keep foreign markets open. However, they are wrong twice over.
First, relying just on the WTO would condemn Britain to trading on more disadvantageous terms than any of the organisation’s 164 members. All of them have forged preferential trade deals that offer better access to other countries’ markets than WTO terms alone provide.
Second, the WTO is tottering under the crushing weight of the trade problems it is supposed to resolve. Many trade policy experts now say that it is in a profound crisis that threatens to relegate it to the sidelines as maker and enforcer of global trade rules.
Since Donald Trump became president, the US has strained those rules to breaking point by slapping punitive tariffs on China’s exports, on the dubious pretext that they threaten US national security. Washington is also imperilling the WTO’s machinery for adjudicating trade disputes—the bedrock of its authority—by blocking appointments to the Appellate Body, its final court of appeal. If the stand-off continues, the tribunal will cease functioning in early December.
Other governments are scrambling to try to repair, or at least limit, the damage. However, that task is not only proving politically and technically complex; it faces continuing hostility and obstructionism from a US president who, many believe, wants not to reform but to demolish an organisation that he claims—on the basis of little evidence—treats his country unfairly.
Yet it would be wrong to blame all the WTO’s woes on Trump’s brutal wrecking tactics. In truth, many of the causes have deeper and older roots. The chaotic collapse of two ministerial meetings, as long ago as 1999 and 2003, and the subsequent failure of the Doha trade round, aimed at liberalising and drafting new rules for global trade, were all early warning signals that something was going badly wrong.
The WTO has, it is true, had the odd modest negotiating success, notably an agreement concluded at Bali ministerial conference in 2013, which entered force in 2017, designed to expedite the movement of traded goods. But other efforts to reach deals have foundered or have yet to bear…