World Trade
Comeback postponed - The USA at the WTO

US Trade Representative Katherine Tai speaks at the Geneva Graduate Institute

US Trade Representative Katherine Tai speaks at the Geneva Graduate Institute on the role of the World Trade Organization (WTO) in the global economy, in Geneva, Switzerland, Thursday, October 14, 2021.

© picture alliance/KEYSTONE | MARTIAL TREZZINI

Representatives from all 164 members of the World Trade Organization (WTO) were due to convene in Geneva, Switzerland for the 12th Ministerial Conference, also known as MC12 from November 30 to December 3. However, because of the spread of the new Covid-19 variant Omicron the meeting has been postponed indefinitely.  This comes at a time when the WTO faces immense challenges from countless different angles. From widespread calls for significant structural reforms to the continuing recovery from the COVID-19 pandemic, there is no shortage of obstacles for the WTO.

The election of President Biden presents a new opportunity for both the US and the WTO however. While Biden has also publicly sympathized with certain protectionist beliefs and announced his intention to reinvigorate American manufacturing, he has acquired a reputation as a staunch supporter of international institutions over his three-decade long career as a public servant. Further, Biden’s administration has taken several moves indicating American willingness to increase cooperation on global trade issues. In June, the US and EU agreed to end the seventeen-year-long dispute between Airbus and Boeing, lifting tariffs that had cost American importers more than $1.1 billion. Building on this momentum, last month President Biden announced an end to President Trump’s tariffs on steel and aluminum imports.

The US Trade representative in Geneva

There are other promising signs, as US trade representative Katherine Tai offered reasons for optimism in her October speech in Geneva. In her speech Tai, an attorney who previously advocated for US trade cases before the WTO, laid out several American priorities at the upcoming MC12. Most important among those was accelerating vaccine access to the rest of the world to bring the COVID-19 pandemic under control. While the US has favored a Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver to allow other countries to produce vaccines, the EU has yet to hop on board, with the European Commission still opposing this move.

Tai went on to discuss the two-decades-long negotiations over fisheries, highlighting American opposition to forced labor on fishing vessels. Before delving into the numerous issues facing two of the WTO’s three pillars, negotiations and dispute settlements, Tai provided a key statement that lays out the Biden administration’s vision for the future of the WTO: “By working together and engaging differently, the WTO can be an organization that empowers workers, protects the environment, and promotes equitable development.”

Reestablishing American leadership and faith in the World Trade Organization

As the “chief founder and guarantor” of the WTO, the US bears a unique responsibility to the future of the organization. Without American support or guidance, calls for reform are destined to fail. With no new WTO agreements negotiated since 2013, countries have taken it upon themselves to negotiate bi- and multilateral agreements, risking further irrelevance for the organization. The US should take the lead at the MC 12 to demonstrate its commitment to the WTO’s role in ensuring free movement of global goods. There are three areas, where the US needs to focus on: vaccines, climate and dispute settlement.

Facilitating COVID-19 vaccine access for the entire world

As of November 18, 52.6% of the global population have received at least one dose of a COVID-19 vaccine. As has been well-documented however, the proportion of vaccines has skewed heavily towards wealthier nations. In fact, only 5% of citizens in “low-income countries” have received one dose so far, a damning statistic for the world’s leading nations. While the creation of the vaccine remains an incredible achievement, there remains much work left to bring an end to the global pandemic. In fact, Chad P. Bown and Thomas J. Bollyky of the Peterson Institute calculate that a total of 23 billion more doses will be required to fully vaccinate the global population after taking into account the need for booster shots. While there remain serious disagreements among WTO members on how to fully vaccinate the world, achieving progress on this crucial issue should be a top priority.

Aligning WTO trade agenda with sustainable climate policies

While much attention has been given to the recent COP26 conference that resulted in new agreements on methane and coal emissions, the WTO also has an opportunity to combat the growing risk climate change poses to humanity. As the UN report released in August of this year demonstrated, humanity is quickly running out of time to prevent the planet from warming past 1.5 degrees Celsius higher than 19th century levels. Jeffrey J. Schott, a former member of the US Trade and Environment Policy Advisory Committee (TEPAC), argues that the WTO’s “rules govern subsidies, regulations, taxes, and other instruments that countries use to raise the cost of energy from fossil fuels and of carbon-intensive products.” Methods such as ending subsidies for fossil fuels while encouraging subsidies for renewable energy sources could be utilized to foster international cooperation to lower emissions and combat climate change.

Revitalizing the WTO’s dispute settlement mechanism

The WTO’s Appellate Body has been unable to hear cases since the end of 2019 after the Trump administration blocked the appointment of new judges, leaving the Appellate Body without a minimum of three judges to hear cases. One way to reform the Appellate Body would be to narrow its rulings and to shorten the time periods for the Appellate Body to respond to cases brought before it to speed up what has become a long and arduous process. While the US Trade Representative has engaged in talks to reform the dispute settlement mechanism, the Biden administration has maintained the block on new judge appointments, while signaling that they don’t intend to change this until sometime after the MC12.

What can the US Achieve?

The question is what political capital the Biden administration would have held at the MC12 and whether it will be able to achieve meaningful results at the now postponed conference? Domestically, much of the political attention has been focused on the recent fights over the dual infrastructure bills in Congress. Supporting free trade has been a standard bipartisan issue for decades, although President Trump’s administration certainly tested this assumption. However, Katherine Tai was the sole member of President Biden’s cabinet to receive a unanimous confirmation from the Senate, signaling that she should have some leeway to fight for policies the administration wants.

Negotiations with the other WTO members to achieve meaningful outcomes remain a challenge. However, the US is still a global financial leader and should be able to flex its muscles if it chooses to. Negotiations on global fisheries are close to a breakthrough, and the will to tackle both climate change and COVID-19 issues appears strong across the board. The world is once again looking to the US for guidance, and this is an opportunity the US should not relinquish. While the Biden administration’s tone has given many a reason for optimism regarding the WTO, the postponement of the Ministerial Conference becomes yet another threat to the organization’s drift into irrelevance.