The multilateral trade organisation is making efforts to strengthen the global trade framework by avoiding protectionism and promoting economic flexibility amid signs of “fragmentation” in the global economy.
Difficulties and obstacles
The WTO’s MC13 in Abu Dhabi is the first conference in two years for this multilateral trade organisation, featuring topics on fishing, agriculture and e-commerce.
WTO Director-General Ngozi Okonjo-Iweala expressed concern that the meeting would face many challenges due to "economic and political headwinds", such as the conflict in Ukraine, tensions in the Red Sea, inflation, rising food prices and global economic difficulties.
At the most recent ministerial meeting of the WTO in Geneva (Switzerland) in June 2022, trade ministers reached a historic agreement on banning subsidies for exploitation and fishing activities that cause harm to marine species and agreed to a temporary patent exemption for COVID-19 vaccines, while also pledging to re-establish a dispute settlement system that the US suspended in 2019, after many years of preventing the appointment of new judges to the WTO's appeal court.
However, European Union (EU) Commissioner for Trade Valdis Dombrovskis said that it will be difficult to repeat the success of the 2022 conference due to negotiations on reforming dispute addressing and some contents in the final document may face many challenges.
Multilateralism is under attack from all sides, instability appears everywhere, and the world is in an even more difficult period than two years ago when the MC12 took place.
WTO Director-General Ngozi Okonjo-Iweala
The WTO’s MC13 is expected to last until February 29 and is promised to make progress, especially in the fields of fishing, agriculture and e-commerce. However, it is difficult to reach major deals because the WTO’s rules require consensus from all 164 member countries.
Speaking on the first day of the MC13, WTO Director-General Ngozi Okonjo-Iweala emphasised that multilateralism is under attack from all sides, instability appears everywhere, and the world is in an even more difficult period than two years ago when the MC12 took place.
Therefore, Okonjo-Iweala said that it is necessary to reform the multilateral trading system and strengthen international cooperation. Reiterating warnings about signs of "fragmentation" in the global economy, Director-General Okonjo-Iweala noted that the world may not achieve the growth of 3.3% trading volume this year and, likely, the milestone of transaction volume growth at 0.8% will not be achieved by 2023, as forecast by the WTO in October last year.
Priority given to developing countries
Responding to the call of the WTO Director-General, the UAE Minister of State for Foreign Trade expressed his hope that the MC13 will serve as a launch pad for necessary reforms. EU Trade Commissioner Valdis Dombrovskis also said that the world has changed, geopolitical tensions are increasing, and organisations like the WTO need constant reform.
Just before the MC13, more than 120 WTO members reached an agreement to facilitate investment in developing countries by improving transparency and removing bureaucratic barriers. The agreement, called the Investment Facilitation for Development (IFD) Agreement, was signed by 75% of WTO members. The document’s content was published on the WTO website a few hours before the MC13 convened. The IFD signatories hoped that ministers attending the conference in Abu Dhabi would incorporate the agreement into the WTO's system of formal agreements. However, this requires the agreement to be approved by all members.
The IFD Agreement aims to facilitate the flow of foreign direct investment (FDI), especially to developing and least-developed countries, to promote sustainable development. To achieve this, participating countries agreed to improve the transparency of measures, simplify administrative procedures, apply other investment support measures and promote international cooperation. WTO’s Head Ngozi Okonjo-Iweala assessed this as a pioneering agreement, promising to help the signatories attract FDI towards promoting growth.
The IFD Agreement aims to facilitate the flow of foreign direct investment (FDI), especially to developing and least-developed countries, to promote sustainable development.
Meanwhile, African cotton-producing countries have called on the WTO to find solutions to end unfair competition in cotton trading activities stemming from subsidy policies. The call was made by C4 countries (including Benin, Burkina Faso, Mali and Chad) right before the conference. In addition to calling for an end to cotton price subsidies, the C4 group asked relevant countries to compensate for damages and remove cotton from agricultural records to promote separate discussions on this issue.
Before entering the official conference, WTO Director-General Ngozi Okonjo-Iweala announced a 50 million USD fund to support women entrepreneurs in developing countries to seize the great opportunities brought by the digital economy. According to Okonjo-Iweala, the countries need to have solutions to the financial problems that women are facing. UAE Minister of State for Foreign Trade Thani al-Zeyoudi assessed this as not only an initiative to honour the invaluable contributions of female entrepreneurs and women-led businesses worldwide but also recognise their important role in economic development. Women make up about 50% of the world's population and contribute 37% of global GDP.
One of the important contents on the agenda at this conference is the issue of fisheries subsidies. Icelandic Ambassador Einar Gunnarsson, who chairs negotiations on fisheries at the WTO, called on countries to compromise to complete a comprehensive agreement on this issue. This is an effort to promote global sustainable fish stocks after the WTO reached a historic agreement on fishing subsidies at the MC12 in June 2022. It was the first agreement to ban subsidies that lead to illegal, unreported and unregulated fishing activities.
However, this agreement has not resolved several issues, and WTO members are committed to continuing discussions to reach a comprehensive agreement at the MC13. After many months of intense negotiations, a new draft agreement has been published but some points in the new draft that relate to the definition of preferential mechanisms for developing countries and the poorest countries are still under discussion. The compromise is not easy for the multilateral negotiation mechanism, and the issue of whether or not countries reach a comprehensive agreement on this issue seems to significantly determine the success of this conference.
