As trade ministers from the World Trade Organization’s 164 member states gathered in Abu Dhabi for the organization’s biennial 13th ministerial conference, hopes were already dim for any significant progress.
However, no one expected that the ministerial conference would end without anything of substance agreed upon. Despite the negotiations being extended for an additional day, the US Trade Representative Katherine Tai left early, and the final declaration from the conference failed to address the key issues of agriculture, fisheries and taxation on e-commerce.
The only agreement came on the temporary extension of a moratorium on the right to levy tariffs and duties on transmissions of digitized content, such as movies and video games. This moratorium has been extended until the next ministerial conference in 2026.
Perhaps most importantly, the WTO’s Appellate Body, which is the organization’s apex appeals body and critical to its dispute resolution system, remains hamstrung even in the wake of the ministerial conference. The United States’ opposition to judge appointments over fears of being sanctioned for its unilateral trade restrictions against China is widely seen as the reason for the body’s inactive status.
What is the WTO?
The World Trade Organization (WTO) was formed in 1995 as a successor to the General Agreement on Tariffs and Trade (GATT), and is the international organization that governs and monitors nearly 98% of all global trade and commerce.
With 164 member countries, the WTO aims to facilitate communication and negotiation between governments, promoting open trade and mediating disputes. Its key functions include lowering trade barriers, fostering international economic growth, and offering a dispute resolution process. The WTO agreements form the legal basis for international commerce, and bind countries to agreed upon rules.
Dr. Ngozi Okonjo-Iweala, a two-time Nigerian finance minister, became the WTO's Director General in 2021, marking the first woman and African in this role. Despite criticism, particularly from skeptics who argue the WTO widens the wealth gap and undermines democracy, multinational corporations view it favorably for stimulating free trade and reducing disputes.
The US has been a member since 1995, though there have been periods of tension, such as during Donald Trump's presidency when he considered withdrawing. The WTO plays a vital role in maintaining global trade stability, administering agreements, and mediating disputes among its members.
Why is the 13th Ministerial Conference in Abu Dhabi being seen as a failure?
In her opening speech, the Director General of the World Trade Organization Ngozi Okonjo-Iweala said that the world was in a “tougher place” compared to when the last ministerial conference took place in 2022.
“Let's not pretend that any of this will be easy. If we thought the world looked tough in mid-2022, when we were slowly emerging from the pandemic, and the war in Ukraine had shaken food and energy security, we are in an even tougher place today.”
An agreement on fisheries could not be reached due to opposition from Japan, China and the EU, all of which subsidize open seas fishing fleets, even as the six Pacific Island nation members – which includes Fiji, Papua New Guinea and the Solomon Islands – lobbied for a reduction in subsidies to protect the global fisheries stock.
Developed nations, which included the EU, UK and Switzerland, failed to agree on a deal to lift patent protection on Covid-19 drugs for developing nations.
India insisted on a permanent solution on public stockholding, which refers to state policies on food procurement aimed at ensuring food security and smoothing out price volatility. Even though a proposal was put forth, India rejected it over concerns that it extends to other developing countries the privileges that only it enjoys under current rules. India was criticized for driving up global grain prices with its stockpiling.
The WTO’s decisions have to be agreed upon by consensus from all member states, and at the Abu Dhabi ministerial conference, it seemed that national self-interest won out over collective responsibility to keep the multilateral trading system running smoothly.
The hobbling of the WTO is often blamed on the United States relinquishing its leadership role and retreating from its commitment to the rules of the multilateral trading system. Experts have expressed fears that the failure of the WTO’s membership to arrive at any substantial agreements could further erode the organization’s legitimacy to create new global trade rules, and prevent nations from engaging in brazen economic nationalism via protectionist policies, which would ultimately cause higher prices for consumers and businesses globally and slow the global economy down.
The future of global trade is widely seen to be in peril, as the WTO’s consensus-based decision making process is considered unfit to resolve key disputes in an era of growing economic nationalism and geopolitical fragmentation.
In her closing remarks, Director General Ngozi Okonjo-Iweala said that “The beauty of the WTO is that each member has an equal voice but that also comes at a cost. Let’s keep going so we can make our voices heard.” She also added that “We have achieved some important things and we have not managed to complete others,” claiming that the “glass was half full”.