Instead of relying on the United States as a standard-bearer for open markets, the approaching World Trade Organization ministers’ conference will have to deal with its newfound protectionism.
Thousands of government trade officials from more than 160 member countries convene in Buenos Aires on Sunday for a four-day event meant to strengthen the global trading body and advance the goals of the WTO.
“The big fear is that instead of just a sort of stalemate, it could be the U.S. taking even more negative steps,” said Kim Elliott, a visiting fellow with the Center for Global Development. “I think most people are just hoping for it not to be a disaster.”
Several participants have said their goals for the event center less on taking steps to improve the rules-based system and more on making sure they are able to preserve the status quo — while faced with threats from the United States about blocking the functioning of the WTO’s dispute settlement court.
“It is not clear what the U.S. administration is trying to do. They have clearly voiced their discontent with the [court]. The rest of the membership … are happy with it,” European trade chief Cecilia Malmström said in an interview with POLITICO.
The conference is the WTO’s 11th ministerial, a biennial gathering of member countries’ top trade officials. Over previous such gatherings, the right — and might — of the United States was often enough to tempt even the most defensive of countries to sit down and agree to pry open their markets.
“I think it’s now a dangerous situation … there is a bit of bite” — Pascal Lamy, former European trade commissioner
But President Donald Trump’s disdain for multilateral trade deals is casting a shadow over this year’s event. And nations who have long depended on the United States to drive the policy agenda and lead the battle to lower global trade barriers are looking to see who, if anyone, they might be able to count on to fill the leadership vacuum the U.S. has left.
“The system needs to be protected,” said Scott Miller, a trade policy expert at the Center for Strategic and International Studies. “It’s going to take a real commitment by a lot of members to turn around what’s now sort of a period of slow decay of the functioning of the institution.”
After spending the better part of two years stacking up a policy wish list of outcomes, WTO members and trade ministers will be searching for any way to take incremental steps forward while dealing with an increasingly uncompromising U.S. administration.
“Probably we will not achieve a lot of negotiating solutions this time,” Malmström said.
Past as prologue
Trump’s heated rhetoric against the WTO stretches back to the presidential campaign last summer, when he threatened to withdraw from the organization if it stood in the way of some of his more extreme trade policies.
He had largely backed off the agency until last month when, during a two-week trip to Asia, he told a meeting of regional economic leaders that “simply put, we have not been treated fairly by the World Trade Organization.”
“We can no longer tolerate these chronic trade abuses, and we will not tolerate them,” Trump said during a speech in Vietnam. Countries who do not “play by the rules,” he added, “can be certain that the United States will no longer turn a blind eye to violations, cheating or economic aggression. Those days are over.”
In the months since taking office, Trump has also taken aim at other multilateral organizations and followed through on promises to withdraw the U.S. from the Trans-Pacific Partnership and the Paris Climate Agreement — moves that trade experts say have lent credence to the idea that while the U.S. may not go so far as to leave the WTO altogether, it may very well take steps to severely weaken it.
“Six months ago, my own view was this was probably more bark than bite,” said Pascal Lamy, a former European trade commissioner who served as director general of the WTO from 2005 to 2013. “I think it’s now a dangerous situation … there is a bit of bite.”
In Argentina, one open question will be how warmly the U.S. embraces the organization and, in turn, “how strong the denunciations are of the United States,” said Gary Hufbauer, a senior fellow at the Peterson Institute of International Economics.
U.S. Trade Representative Robert Lighthizer will attend the ministerial, where he’s expected both to speak publicly at an open plenary session on Monday and hold a series of bilateral meetings with his counterparts. His speech will be closely watched for indications of what the U.S. wants out of the WTO and how seriously officials are considering taking steps to shake up or — as some fear — dismantle it.
Lighthizer has also indicated “in a very harsh way” that the U.S. does not want “to negotiate any items on the table” and is “only willing to discuss — not negotiate — a reform of the WTO,” said Bernd Lange, who chairs the European Parliament’s trade policy committee.
Susana Malcorra, who will chair the meeting in Argentina, has another view.
“I have received a very concrete feedback” from Lighthizer in recent days “that they are willing to engage,” said Malcorra, Argentina’s former foreign minister. Although talks “will be tough,” Malcorra said she is optimistic about achieving “some small advancement” in the area of fishery subsidies as well as in setting up a multilateral work agenda for the coming two years.
It’s possible ministers will leave the conference without having notched concrete progress on anything.
The most likely outcome is that countries are able to agree to some sort of progress on a deal to cut down on fisheries subsidies, an objective derived from the United Nations’ Sustainable Development Goals. But rather than finalize an agreement, as members had hoped, the best-case scenario appears to be that they will commit to continuing talks beyond the conference.
Member nations have also been discussing including agreements on electronic commerce, public stockholding in agriculture and facilitation of services trade, among others. But partly because of U.S. obstructionism — and to a greater extent a lack of U.S. leadership — any semblance of agreement on those issues has proven evasive.
“For 70 years you’ve had a captain of the football team who suddenly doesn’t even show up for the practices” — Scott Miller, trade policy expert
“It’s hard to produce results out of the WTO under the best of circumstances, when the U.S. in a well-coordinated fashion with other like-minded partners is pushing incredibly hard and showing a lot of leadership,” said Michael Froman, who served as USTR under President Barack Obama until January of this year. “That’s not been the case this year, so I don’t expect much on the negotiating front.”
One area where Lighthizer will be forced to defend the United States’ stance is related to the WTO’s appellate body. The U.S. has for months been blocking the appointment of new members, saying that it is concerned about how the body will handle appellate reports that had been written or championed by members whose terms had since expired. It has blocked the search to replace three members of the panel until its concerns are addressed.
The ongoing blockage means the seven-person panel will this week be down to four members, severely reducing the speed at which it can handle appeals and produce reports. Other WTO members have argued the U.S. block is a violation of WTO rules and risks undermining one of the central pillars of the global trading system.
“This has to be a matter of major concern,” Alan Wolff, a deputy director-general of the WTO, said last month at an event hosted by the Center for Strategic and International Studies.
Wolff, who spent years of his career at UTSR, warned that the blockade could soon paralyze the dispute settlement system — and ultimately the entire global trading system — if members unhappy with a dispute panel report begin to simply retaliate against the offending country if they no longer have any option to appeal.
Even if significant policy initiatives are not finalized during the event, officials and attendees say the conference could at least help pave the way forward for the next several months or years for a global organization that has since the start of the year been figuring out how to deal with the sudden loss of leadership the United States had previously provided.
“For 70 years you’ve had a captain of the football team who suddenly doesn’t even show up for the practices,” said Miller of the Center for Strategic and International Studies.
“So players are looking around and saying, ‘Now what? What do we do?’”
Hans von der Burchard contributed reporting from Buenos Aires and Jakob Hanke contributed reporting from Brussels.