WTO reforms may go against the interest of Africa

South Africa’s envoy to the World Trade Organisation Xavier Carim. Net photo.

World Trade Organisation (WTO), a global club of 164 countries that seeks to support free, fair and open trade, is currently facing its deepest crisis. This is a statement that at least majority of members agree is truer than before.

The organisation is under threat partly because some members have failed to honour their trade obligations while on the other hand, other members feel the dispute settlement system has not benefitted them to their full satisfaction.

Now, members want to save this organisation and make it more relevant. At the top of the proposed reforms are developed countries most of who have already drafted official documents proposing the organisation’s reform.

The European Union has made clear what its decision is. In October, Canada also invited “like-minded” countries in the capital Ottawa to discuss the WTO reform.

Beyond that, there is the United States (U.S.) which arguably is a big member in the course to push for the reform of this multilateral trading system.

To be specific, Canada and a list of a few developed countries think the rules and institutions that facilitate trade seem increasingly fragile.

EU and a few other countries’ argument to reform the body is based on the fact that since 1995 the world has changed but the WTO has not evolved.

The US, on the other hand, thinks the dispute settlement system is no longer relevant and that it has not served its mandate. The US has reportedly blocked the appointments of new judges to the Appellate Body, a WTO body that settles trade disputes.

The Appellate Body which originally had seven judges now has only three judges, and its operations have stalled for all this year.

Surprisingly, in all these series of proposed reforms, African countries have hardly appeared in most discussions.

On behalf of the African Group, South African envoy to WTO, Xavier Carim, told Sunday Times that they have seen proposals from EU, Canada and a group of other countries, as well as US, Japan and EU.

“When we look at these proposals, we see them as making the imbalance that we have even worse. They should make it difficult for developing countries to advance,” he said.

South Africa is currently coordinating the African Group at WTO. Last year, Rwanda was coordinating the African Group.

Carim cited that the proposed reforms seem not to address the issues that are critical to African countries in the WTO – correcting distortions in agricultural trade, public stockholding programmes that African countries want to implement, and improvements to existing agreements that would allow Africa more policy space to industrialise.

“All of the things which we have been pushing for a long time are not expecting advances. Our efforts on them have been frustrated,” he noted.

On dispute settlement impasse, he said if the simultaneous blocking of judges to the AB continues until next year, the body will be dysfunctional and that this will be a disadvantage to developing countries.

“The implications of that is that we would return to an era where when a country loses the dispute, they can ignore the dispute resolution and this in general favours those that are strong in the system,” he said.

Last year in December, the WTO held its 11th Ministerial Conference in Buenos Aires, Argentina. But the conference ended without a major decision as is the norm during such meetings.

Some sources say an agreement which was supposed to be adopted at the conference was not affirming the special and differentiation (S&D) treatment for developing countries.

People with knowledge of the declaration say India blocked it for that reason.

According to other members representing African interests at WTO, other proposed reforms seek to change the well-known “consensus-driven” model at the WTO.

Currently, an agreement cannot come into force until all the 164 members agree. In case the “consensus” approach is altered, an agreement can come into force after a significant segment of members have voted for it.

Rwanda’s Ambassador to WTO, Francois Xavier Ngarambe, says it is time for Africa to stand together.

“It is a very critical time for Africa to stand up as one and to use its leverage as a big group to impose its own voice. It is now or never,” he said.

At the African Union Trade Ministers conference which took place in the Egyptian capital of Cairo alongside the inaugural Intra-Africa Trade Fair (IATF), ministers adopted a declaration urging WTO members to “keep issues of interest to Africa on agenda”.

Carim said the declaration calls for members to desist from unilateral trade measures that undermine the rules and principles of the rules-based system.

Trade restrictive measures

At the moment, what is clear now is that countries have been implementing trade-restrictive measures that generally undermine the principles of multilateral trading system.

The WTO estimates the trade coverage of the import-restrictive measures is around 588 billion dollars.

At the General Council, which took place this week in Geneva, Roberto Azevêdo, the WTO Director General, indicated that continued trade tensions could pose serious challenges to global trade.

“We all have witnessed the tensions in the global trading environment over the past months. And this proliferation of trade restrictive measures and the uncertainty created by such actions could place economic recovery in jeopardy,” he noted.

Azevêdo said further escalation would carry potentially large risks for global trade, with knock-on effects for economic growth, jobs and consumer prices around the world.