G20 Trade Ministers Call for "Urgent" Discussions on WTO Update and Efforts to Boost Confidence in Trade

20 September 2018

Trade and investment ministers from the G20 coalition of major advanced and emerging economies met last Friday in Mar del Plata, Argentina, calling for intensified “dialogue and action” towards updating the WTO system, tamping down on risk, and ensuring sustainable economic growth. 

The 14 September meeting in the coastal Argentine city brought together top-ranking officials from countries that together make up 75 percent of international trade and 80 percent of global investment. The ministerial meeting was preceded by the G20 Trade and Investment Working Group (TIWG), which was convened on 12-13 September in the same city. 

The Argentine hosts welcomed the closing ministerial statement, including the value and enthusiasm around using dialogue such as through the G20 format to find or brainstorm solutions for common problems, such as the WTO’s future direction. 

“We welcome the effort of all ministers. They have agreed on a common denominator, which has allowed us to have the ministerial statement,” said Jorge Faurie, the Argentine Foreign Minister at the closing press conference. “Through dialogue and by searching for common ground, we can build a new reality and this reality must be adapted to the changes in the world regarding the ways in which we work, produce, and trade.” 

“This is an extremely positive step, an achievement by the Argentine presidency of the G20, because this is one of the thorny issues of the year. The G20 is a forum for dialogue; we don’t have mandatory solutions from here, but we do have proposals for resolution so we can work jointly,” he continued. 

Analysts and officials noted that this event was successful in that officials were able to endorse a joint trade ministerial statement, despite significant tensions between them. The communiqué is the first to see consensus on trade matters and the multilateral trade system in major summits since differences on traditional language calling for rolling back protectionist measures had surfaced at the G7 in Italy last year. 

“We’re pleased that Argentina played the role that was stated right at the beginning of its presidency to be a ‘fair broker, an honest broker,’ as we hear in G20 jargon,” Faurie told reporters. 

In the joint communiqué, officials also included a section on inclusive agro-food global value chains, emphasising especially the value of greater participation of women, as well as micro, small, and medium-sized companies, as well as  a separate section on “the new industrial revolution” and the opportunities and challenges that policymakers should consider going forward. Ministers in both sections referred to “inventories” that have been put together to coalesce countries’ work to date in these policy areas. 

As this year’s G20 president, Argentina has outlined a set of overarching priority issues during its leadership role: the future of work, infrastructure for development, and a sustainable food future, bringing at the forefront an “inclusive trade system that contributes to sustainable and shared growth.” They have also called for applying a “gender perspective” to the overall agenda of the G20 coalition. 

WTO reform: G20 ministers call for dialogue 

The meetings come at a complex moment in international trading relations, just days before the US confirmed previously rumoured plans to impose tariffs on an additional US$200 billion worth of Chinese goods, with Beijing pledging to target up to US$60 billion in US products in response. (For more on the tariffs, see related story, this edition) 

Meanwhile, the US and Canada are undertaking protracted, challenging negotiations to reach a deal on modernising the North American Free Trade Agreement (NAFTA), after Washington confirmed that it would soon move ahead with its preliminary bilateral deal with Mexico City, even if Ottawa does not join in. 

Concurrently, trade ties between the US and EU remain in a difficult phase, despite continued meetings among top officials towards achieving some package of agreed deliverables by November in the context of “Executive Working Group” discussions. At a press conference on Tuesday 18 September with Polish President Andrzej Duda, US President Donald Trump said that the US remains “the piggybank to the world” and has “been ripped off by China” and also by the European Union. (See Bridges Weekly, 13 September 2018

In this context, the joint ministerial statement released on Friday saw G20 ministers pledge to cooperate to “enhance sustainable economic growth, keep markets open, address economic development and reinvigorate the international trading system.” Trade ministers also devoted the closing section of their communiqué on “dialogue on current international trade developments.” 

“We stepped up our dialogue on current international trade developments, recognising the urgent need to discuss current events in international trade and ways to improve the WTO to face current and future challenges. In this context, we discussed what the G20 can do to address the current situation in a collaborative manner,” trade ministers said in the closing section of their communiqué. 

They also urged all members of that forum, together with “other interested parties,” to release any proposals on how to approach the issue. 

Statements issued by different, individual ministers or senior officials similarly welcomed the value of intensified dialogue, while some cautioned that the process must be built around addressing diverse views and make sure to incorporate 21st century trading realities. 

“Europe is committed to a comprehensive modernisation of the World Trade Organization in order to better address the underlying causes of current upheaval, in particular the trade-distorting measures of non-market economies,” said Oliver Wittke, the German Parliamentary State Secretary to the Federal Minister of Economics and Energy, who represented his country at the G20 meet.

Others similarly warned that the current political climate on trade makes it imperative to shore up the existing WTO system and improve it. 

“As a country that finds itself as collateral damage in the current trade wars we can't condone any undermining of the rules of the multilateral trading system,” said South African Trade and Industry Minister Rob Davies following the G20 meeting. 

“Legitimate and durable solutions, including any WTO reform, require that the needs of all and not only the needs of some are taken into account. For Africa policy space to industrialise is paramount,” Davies continued, highlighting as a priority issue discussions on improving the WTO’s dispute settlement system and end the current block on Appellate Body appointments. 

The head of the WTO, meanwhile, indicated that he has noted “growing interest” among delegations in Geneva to hold further discussions on the subject, though he also cautioned that the process must be inclusive in its incorporation of different views. 

“Whatever the format of the conversation, it is clear you can’t have reform that only takes into account the concerns of some. All sides should be heard. I'm sure there is a wide range of views among members on both the need for reform, and what such reform should look like,” said WTO Director-General Roberto Azevêdo in a statement following the meeting, which he attended. 

EU publishes WTO reform “concept paper”

A few days after the G20 talks wrapped up, the European Commission published a concept paper that it described as a “comprehensive approach” for updating the WTO, and a way to contribute to discussions with trading partners on the subject. 

“The world has changed, the WTO has not. It's high time to act to make the system able to address challenges of the today's global economy and work for everyone again. And the EU must take a lead role in that," said EU Trade Commissioner Cecilia Malmström on Tuesday 18 September in presenting the paper. 

The concept paper, which numbers some 17 pages, begins by laying out the challenges facing the system, including the EU, such as the increased use of unilateral measures, and the backlog in Appellate Body appointments. 

“There is an urgent need to move the current debate on a positive path focusing on the modernisation of the WTO,” the paper says. It then sets out three overarching areas of proposed work. These cover the global trade club’s “rulemaking and development; regular work and transparency; and dispute settlement.” 

On rulemaking, for example, the EU calls for setting further disciplines on the use of industrial subsidies, specifically by “creating incentives for WTO members to fully comply with their notification obligations,” as well as tightening up WTO subsidy rules with regard to state-owned enterprises (SOEs). It also calls for “new rules to address barriers to services and investment, including the field of forced technology transfer,” and also says that the European bloc should put together a “detailed analysis” of the targets outlined under the UN Sustainable Development Goals (SDGs) to see whether trade policy, for instance through the WTO, can support their implementation.

 The document also refers to re-examining longstanding issues related to the WTO’s development dimension, such as how to address special and differential treatment (S&DT), as well as considering ways to avoid hitting procedural roadblocks in rulemaking.  On dispute settlement, it calls for a two-stage approach covering issues involving the “functioning” and approach of the Appellate Body, as well as tackling “substantive issues,” such as reviewing “possible changes or authoritative interpretations” that could resolve issues with how the Appellate Body interprets WTO rules. 

T20 Summit issues recommendations 

In addition, the “Think20,” which is a coalition of experts, think tanks, and research institutes, held their summit in Buenos Aires, Argentina, last week, where they presented their recommendations for the G20 to Mauricio Macri, the Argentine President. The group is also known as the T20. 

“The G20 is the ideal forum for starting dialogues to seek basic consensus around a form of multilateralism that would allow countries to take on a shared agenda with a focus on trade, climate change, inequality, and technological change,” the T20 communiqué says. 

The T20 communiqué is then divided into sections, with one of these devoted to “redesigning the multilateral trading system.” That section suggests that the existing G20 Trade and Investment Working Group could look at subjects such as a “new trade regime” that better suits the needs of a multipolar world, along with updating the current system to handle new realities like digitalisation while maintaining the system’s “essence,” and also making sure that the system can balance the need for both “flexibility and predictability.”

Other sections cover topics such as the Paris Agreement on climate change, the importance of a “new social contract,” and making the most out of the G20’s “representativeness, diversity, and flexibility.” 

“Global solutions need a compromise and action from all sectors of society. It means a collective construction, which is why it is so important that their contributions are concrete recommendations orientated towards action,” said Macri in receiving these recommendations and welcoming the work, according to an event summary released by the T20. 

Coming up 

The international trade calendar is growing increasingly packed in the months ahead, with various meetings coming up that are expected to address either WTO reform and/or other areas of possible cooperation to mitigate trade frictions. 

On Thursday 20 September, officials are due to meet at the Global Forum on Excess Steel Capacity, a forum set up by the G20 in 2016 under the Chinese presidency to come up with solutions to the steel sector crisis and tamp down on tensions between major producing and exporting economies on the issue. Those meetings are due to be held in Paris, France, given that it is the home of the Organisation for Economic Co-operation and Development (OECD), which has its own Steel Committee that meets regularly. 

In addition, Canada is expected to host a group of potentially “like-minded” countries on 24-25 October to discuss the WTO reform subject. It is also holding a meeting today in Geneva at senior and vice ministers’ level that includes around a dozen other participants, as part of the preparations for the ministerial-level meeting in October. It is expected to focus on the WTO’s monitoring function and dispute settlement, according to one source familiar with the discussions. Among those reportedly invited to today’s meeting in Geneva, the source said, are the EU, Japan, Switzerland, Norway, Mexico, Chile, New Zealand, Australia, Singapore, and Kenya, though a final list was not publicly confirmed at press time. 

Meanwhile, the US and EU are undergoing their respective domestic processes to receive negotiating mandates for talks between them, while meetings between US and Canadian officials on NAFTA are reportedly continuing this week. A text of the US deal with Mexico, with or without Canada, is expected by the end of the month. 

Meanwhile, G20 leaders will be meeting on 30 November – 1 December in Buenos Aires, Argentina. Ministerial-level and leaders’ level meetings of other major forums, such as the Asia-Pacific Economic Cooperation (APEC) grouping, are also expected in November. The Annual Meetings of the International Monetary Fund (IMF) and World Bank Group (WBG) are slated even sooner, from 12-14 October in Bali, Indonesia. 

ICTSD reporting; “Lighthizer to skip G-20 meeting as China tariffs loom,” POLITICO, 13 September, 2018; “Trade Ministers Call for W.T.O. Overhaul, but Offer Few Details,” THE NEW YORK TIMES, 14 September, 2018; “China prepares for new phase of Trump-led trade war,” FINANCIAL TIMES, 17 September, 2018.

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G20, WTO
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