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Your Trade Secrets squad has been out and about over the past couple of days. One of us was at the inaugural EU-US Trade and Technology Council (TTC) in Pittsburgh, where all the expected positive noises about transatlantic co-operation were duly made. The joint statement after the meeting from the US is here, and the EU version here if you’d like exactly the same thing only with the Europeans’ names put first. We should have more coverage up later today on FT.com. Trade Secrets looked at the export control and foreign direct investment issue earlier this week, and we’ll go over more of the substance of the TTC, once we’ve found some, in future newsletters.
Meanwhile, today’s Trade Secrets author has been in Geneva at the World Trade Organization’s Public Forum, an annual gathering of trade academics, officials and business types. After skipping a year in 2020 the forum was this week held in hybrid form, in practice with a heavy bias towards the virtual. Beyond the physical emptiness of the building, there’s an odd vibe around the institution. People are pleased that the WTO is edging back towards some semblance of normality after Covid-19, but less happy that said normality includes the familiar problem of not much getting done. Today’s main piece looks at progress under the director-general, Ngozi Okonjo-Iweala, with the organisation’s set-piece ministerial meeting now just two months away, a sliver of a fraction of a nanosecond in WTO negotiating time.
Living in a ministerial world
The big WTO ministerials where the entire 164-strong membership turns up, usually held every two years, are supposed to act as forcing events to drive negotiations to a conclusion. Rather too often they involve a preceding months-long scramble that fails to produce particularly impressive “deliverables” (vile word, sorry), and the gathering mainly becomes a stocktaking and a plan to do better next time.
The last ministerial, in Buenos Aires in 2017, was widely deemed a failure. This year’s, delayed and moved from Nur-Sultan in Kazakhstan to Geneva because of the pandemic, doesn’t look like it’s going to be a triumph of global governance either. An energetic leader in the form of Okonjo-Iweala, the former Nigeria finance minister and World Bank number two who took over in March, hasn’t magically made the WTO’s deep-seated problems melt away. (For the record, we never thought the choice of leader was really the issue.)
To be fair, Covid restrictions make the ministerial difficult. In place of the usual vast phalanxes of negotiating officials there’s a maximum of four people per member delegation and it might still end up being entirely virtual. But even allowing for that, the meeting’s not heading for anything spectacular and people are already talking about what might happen at the next ministerial after this. The big hope was a deal that would reduce fisheries subsidies to protect global fish stocks, but that’s made little progress. The most substantive outcome will probably be a sub-set of WTO member countries doing a plurilateral deal on services domestic regulation, not negligible but not seismic.
As for Okonjo-Iweala, no one doubts her contacts, her intellect or her energy. Few WTO DGs have been nominated as one of Time magazine’s 100 Most Influential People – especially not by those noted authorities on trade policy Harry and Meghan, the Duke and Duchess of Sussex. She can pick up the phone to ministers and heads of government. The opening session at the forum included a (video) address from South African president Cyril Ramaphosa. She has used her convening power to assemble gatherings of policymakers, pharmaceutical companies, activists and academics to discuss the production and trade of Covid vaccines, a role we ourselves mused might be a direction for the WTO.
But substantial progress in the WTO’s core negotiating function? Reaching agreement on a patent waiver for Covid vaccines? Persuading the US to normalise the dispute settlement system by unfreezing the Appellate Body? So far, no, no and no.
Okonjo-Iweala convened an ad hoc virtual ministerial in July to try for progress on fisheries subsidies, a move she herself admitted was unusual. It was a gamble that did not really come off. India (often with South Africa in a supporting role) has now established a role in the WTO objecting to more or less everything. In the fisheries subsidy talks it has demanded massive loopholes that are politically a total non-starter. There’s talk around the WTO of Okonjo-Iweala going to India to make a direct appeal to Narendra Modi. But the Indian prime minister has resisted all entreaties and openings to do serious trade liberalisation so far, including passing up the chance to join the Regional Comprehensive Economic Partnership, the Asian mega-deal.
The patent waiver discussions have ossified into a ritual exchange of unchanging views. Developing countries (led by India again) argue for a broad suspension of intellectual property protection across a huge range of medical products, and the EU and other developed countries push back.
As for the US, ambassadors from other countries say the Americans are barely engaging at the WTO and have for months been damping down expectations for the ministerial. Like India, the domestic political calculation in the US leans heavily against being seen to compromise on trade policy.
One of Okonjo-Iweala’s tactics to try to create some momentum, we’re told, is to look for pots of cash to lubricate the machinery. One ambassador to the WTO told us: “The DG is from a World Bank background where money equals leverage.” But the WTO isn’t an aid agency, and it runs on a tiny budget. True, it houses some trust funds which can disburse money to help countries to implement trade policies. But these are really only to pay for training and technical assistance, not serious economic restructuring.
A mooted fisheries trust fund in association with various governments and public bodies including the UN’s Food and Agriculture Organization is only planning on raising about $20m. It’s not remotely the kind of aid you would need to compensate workers in the fishing industry for losing their jobs and to invest in alternative industries.
In any case, there’s resistance from members including the US and (guess who?) India (amazing, we know) to increasing the role of trust funds. Washington doesn’t like them because the likes of China might use donations to the funds as leverage over developing countries. India sees them as akin to aid from the likes of the World Bank with intrusive conditions attached.
We’ll keep an eye on proceedings ahead of the ministerial to see if there’s any sudden progress. But around the institution at the moment there’s hope rather than optimism, let alone confidence, that it’s going to be a big success. And in due course we’ll get on to what might happen (clue: more plurilaterals) if WTO multilateralism continues to play an ever-shrinking role in governing international trade.
Your daily round-up of supply chain gloom from the Financial Times. Businesses are saying they’re in danger of collapsing without more freedom of movement for labour. US Federal Reserve chair Jay Powell warns that supply chains are set to remain snaggy. Chinese manufacturing activity has declined on the back of power shortages.
The Peterson Institute has an interesting paper looking at whether Mexico can bring supply chains back to North America.
Apple was expecting a smooth rollout for its incrementally updated iPhone 13 but now faces longer delivery times (Nikkei, $) as a Covid wave in Vietnam hits components suppliers. The end of Japan’s Covid emergency on Thursday will not mean (Nikkei, $) a border reopening, frustrating companies whose foreign employees have been waiting for visas for nearly a year. Claire Jones and Francesca Regalado