DDG Ellard cites role of WTO in promoting open markets, need for transatlantic cooperation

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Speaking to the American Chamber of Commerce in Germany’s Transatlantic Business Conference on 3 December, Deputy Director-General Angela Ellard discussed the role of the WTO in promoting open markets and rules-based free trade as well as the importance of transatlantic cooperation. She noted that a common transatlantic position on critical trade issues helps increase the likelihood of positive outcomes at the WTO. Her remarks are below.

Before turning to the subject of my presentation, I would like to start with what has been on the minds of many of us this week – the WTO’s decision to postpone the Ministerial Conference (or MC12), which was supposed to end today.

As you know, we had to take this decision due to the appearance of a new Covid variant, which would have prevented some delegations from participating in the Ministerial. This raised concerns not only about the health and safety of our participants, but also about the inclusivity and fairness of the process and the credibility of any potential outcomes.

The reaction from our Members was very supportive of the decision as the only option.  And so many of them noted that we had been making much progress and had built strong momentum last week.

Now, the question is how do we maintain that momentum and build on it?  Work must continue. And we must continue to keep the pressure on. We are hoping that, with this extra time, negotiators will manage to close some of the remaining gaps.

Some of you may have seen the letter of the Chair and Vice-Chairs of MC12, which proposes to convene the Ministerial in March if conditions permit, to build on our progress and finalize key priorities, particularly response to the pandemic and fisheries subsidies. This is now up to our Members to decide.

Let me now turn to a broader topic – addressing the role of the WTO in promoting open markets and rules-based trade, and then turning to the importance of transatlantic economic cooperation.

Let me start by saying that the economic case for an open trading system based on multilaterally agreed rules is not only rooted in economic theory, but also supported by evidence.

Since the adoption of the GATT in 1948, import tariffs on industrial products have gradually fallen and now average less than 4% in developed countries. Today, WTO rules cover around 98 percent of world trade. The WTO has 164 Members, and more than 20 countries are in the process of accession, which shows that they see value in the multilateral trading system. Furthermore, despite the proliferation of various regional trade initiatives, around 75% of global trade takes place on an MFN basis, in other words benefits offered to all instead of preferential trade agreements.

Global rules of trade, embodied in the WTO Agreements, provide assurance and stability. Producers and exporters know that they can source components and raw materials from abroad and that foreign markets will remain open to their products and services. And consumers know they can enjoy a secure supply of finished products and services. This leads to a more prosperous and peaceful economic world.

The importance of the rules-based trade has been magnified by the COVID-19 crisis. WTO rules have slowed, and even prevented, countries from taking damaging trade-restrictive measures during the pandemic. And our Trade Facilitation Agreement has played an outsized role in worldwide recovery. Countries that have embraced and rapidly implemented trade facilitating measures and infrastructure have generally proven more resilient and adaptable. They have also proven to be better equipped to keep trade flowing, including trade in products necessary to combat the pandemic.

But let’s be honest: the last few years have been difficult for the WTO, for multilateralism, and for trade’s reputation in general. The key element permeating discussions in the WTO today is that the Organization needs reform. And we all acknowledge that.

In thinking about the reform, we must recognize where the WTO has been successful, be honest about where it has not, and be ambitious as to how we can make it better. For example, the monitoring function of the Organization works well. This autumn, we have had trade policy reviews for seven of our Members, which are an excellent opportunity for Members to evaluate each other’s policies and measures. Furthermore, during the pandemic, the Secretariat has done impressive work in identifying bottlenecks and trade-facilitating measures on critical products to combat COVID-19 as well as preparing an indicative list of critical COVID-19 vaccine inputs. This work was appreciated by the Members as it helped policymakers see the blockages and opportunities. By contrast, the negotiating and dispute settlement functions are in a more difficult place and need to be mended. But, as I said, there are 164 Members in the Organization, and not all of them have the same view of what a reform should look like.

One of the best ways to repair the WTO is to achieve results in key areas of our work.  MC12, whenever it is held, is an important milestone that offers a great opportunity to attain concrete outcomes. One of the central issues on our agenda is concluding the fisheries negotiations, which have been ongoing for 20 years. This is important from environmental, economic, and humanitarian perspectives. It is also important because new agreements have not been added to the WTO rulebook for a while, and many refer to the fisheries deal as a litmus test for the WTO’s ability to remain a forum for multilateral negotiations. While we have made a lot of progress, gaps remain in Members’ positions on special and differential treatment for developing countries, forced labor, and fuel subsidies.  Negotiators are working to close these gaps during the time leading up to the MC12.

We also need to work to restore trust between Members, which has been shaken over the years. This is particularly visible in the relationships between developed and developing country Members of the WTO. MC12 and the time leading up to it is a good opportunity for Members to listen to each other and increase the level of trust, through specific outcomes and by setting the table for future work.

Let me now turn to the importance of the transatlantic cooperation. The transatlantic economic relationship is crucial for the world economy. Either the EU or the US is the largest trade and investment partner of almost every other country in the global economy. Taken together, the economies of both territories amount to more than 40% of global trade in goods and services. And that is why the EU and the US should be interested in the WTO’s success.

After a rather chilly period, we see some positive signs in the EU-U.S. relationship, for example cooperation on resolving disputes such as Boeing-Airbus and Section 232 steel and aluminium tariffs. Another positive development is the launch of the EU-US Trade and Technology Council, which, among other things, will serve as a platform to coordinate approaches to key global trade as well as economic and technology issues.

It is important that this bilateral cooperation feeds into coordination in multilateral bodies, including the WTO. While we have 164 Members and each of them holds the key to developing consensus on an issue, a common U.S.-EU position on critical issues helps increase the likelihood of positive outcomes in those areas.

I’d like to conclude with a plea. If you value the WTO, then it is important to make the case that it is relevant and that it is worth improving and modernizing. We can’t take for granted that everyone believes in the value of trade and establishing a rules-based system governing trade. Businesses must be a voice for good, on matters that are in their immediate interest, as well as broader issues like fisheries, access to vaccines, and climate change.

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