American leadership is needed, Biden should seek to revive the WTO

Reviews of the recent disappointing conclusion of the biennial ministerial conference of the World Trade Organization in Abu Dhabi have been brutal. One headline pronounced: “WTO, RIP.” Another verdict: “The Death of the WTO Now Looks Inevitable.” The perceived reaction of the United States government to the meager outcome of the conference: “WTO flops, USA shrugs.”

The clear implication in much of this commentary is that we are now counting the days to the fated demise of the international organization that is supposed to provide a fair framework for a rule-based global system for international trade.

But not so fast. The WTO is still here. No one is packing up to leave Geneva. Nor should they.

WTO delegates have returned to Geneva from Abu Dhabi to continue negotiating. Although American and, increasingly, other unilateral trade actions are proliferating in violation of WTO rules (and, alas, still more are being proposed by both leading candidates for president), most of the trade among WTO members is still conducted every day in accordance with those agreed rules. Dispute settlement  — though hindered by the misguided opposition of an increasingly protectionist United States — is still managing to function (as evidenced by the recent settlement of the wine dispute between Australia and China).

And two more countries — Comoros and Timor-Leste — were added there to the now 166 members of the WTO. Twenty-two other countries are waiting in line and transforming their local economies in a bid to get into the organization. If the WTO is doomed, why are all these countries in this queue?

Although the leaders of our country in both our major political parties have apparently forgotten why we helped create and remain in the WTO, the vast majority of its members — and those who hope to become members —recognize and continue to value the institution and the benefits membership in it provides. Lower tariffs. Larger market access. Legal safeguards against trade discrimination. An impartial setting for resolving trade disputes. And much more that altogether amounts to significantly increased economic national and global gains from trade. Those that are not yet members desire those same benefits. This is why no country that has joined the WTO has ever left.  

To be sure, the Abu Dhabi conference was not a rousing success. WTO Director-General Ngozi Okonjo-Iweala — who is of course expected to put the best face on the facts — has said that the conference “produced mixed results: a few successes, but also some disappointments.” This is true enough, but the disappointments outweighed the successes, and they have, not surprisingly, drawn the most global attention.

Nothing was done toward improving rules to discipline subsidies for overfishing. Nothing was achieved on agricultural reform. Nothing was accomplished on establishing rules for digital trade. Nothing was done toward renewing the full functioning of the two-tier system of dispute settlement. Not to mention, at this point the members are not even trying to engage in any general trade liberalization to counter the growing global wave of higher tariff and non-tariff trade barriers which is constraining the growth of the world economy amid mounting geopolitical commercial power plays.

That said, the “few successes” Ngozi highlights are worth noting. Formalization of new rules that will reduce domestic regulatory barriers to services trade (of great value to the U.S.) New rules to help the poorest members of the WTO advance economically. A commitment to cooperate on trade action to help end global plastic pollution. And not least, a hard-won extension for another two years of the moratorium on taxation of electronic commerce (though at the potential price of ending this vital moratorium in March 2026 if it is not further renewed then).

Perhaps even more significant is a new “plurilateral” accord agreed by 125 members to eliminate red tape and other bureaucratic barriers to domestic and foreign direct investment which could save participating members up to $1 billion a year and boost Foreign Direct Investment. It shows the right way forward for an organization that can no longer afford to make decisions on new rules only when all 166 of its members agree. Only opposition of India and South Africa to anything other than fully multilateral agreements kept this new agreement from being incorporated into the WTO legal framework in Abu Dhabi, so that is the next task.

Perhaps more leadership from the United States would have overcome India and South Africa’s myopic obstructionism in Abu Dhabi. Instead, the Biden administration stood on the sidelines — an unfortunate yet unsurprising turn, given years of frequently ignoring the WTO, increasingly flouting its rules, and disingenuously opposing the restoration of an appellate tribunal that would again help the institution enforce its rules on all WTO members (including the United States and China).

The administration should reverse course. It should return the WTO to the center of its trade policy and work for the conclusion of more plurilateral agreements — such as the new one on investment facilitation — on crucial issues in the American interest such as services, industrial subsidies, digital trade, technical standards, intellectual property, energy and environmental sustainability, and more. Without American leadership, the WTO will persist but will be unable to accomplish much more toward freeing and thereby enhancing the flow of world trade multilaterally through modernization of its rules for the 21st century. And the world will be worse off because of it.

Sadly, the Biden administration seems at best indifferent toward the trade goals that Americans have long supported.

James Bacchus is an adjunct scholar at the Cato Institute and a professor of global affairs at the University of Central Florida. He is a former member of Congress and a former chairman of the Appellate Body of the World Trade Organization. Among his books are “The Willing World” and “Trade Links,” both from Cambridge University Press.