WTO's top-level meeting in Abu Dhabi seeks reform amid divisions

Ministers from around the world will convene to broker trade deals, as war and US elections complicate efforts to reach consensus

Ngozi Okonjo-Iweala, director general of the World Trade Organisation, will lead the Geneva-based body's ministerial conference in Abu Dhabi on February 26. AP

About 7,000 delegates are expected to descend on Abu Dhabi next week for the World Trade Organisation's 13th Ministerial Conference, faced with the tough task of brokering key trade agreements.

In previous meetings these have been hobbled by lack of consensus, prompting the UAE host to nudge participants to narrow their differences to achieve results this year.

The key negotiations, which cover reforms at the Geneva-based body to cutting fishing subsidies, come amid mounting concerns about the impact of geopolitical tensions and looming US elections on international commerce.

The biennial gathering of the world's ministers representing the WTO’s highest decision-making body from February 26 to 29 will aim to achieve results particularly on the key dossiers of fishing subsidies, agriculture, e-commerce and reforming the 29-year-old organisation's dispute-resolution system.

However, disagreements remain between the organisation's 164 members, making consensus on major issues difficult, especially against the challenging backdrop of coming US elections, the wars in Gaza and Ukraine, Red Sea shipping attacks by Yemen's Houthi rebels that have disrupted global trade, US-China tensions and an increasingly protectionist stance by some governments, analysts say.

"With the rise of populist politicians in developed countries, often in favour of protectionism, the risk is that technocrats in organisations like the WTO have their legs cut from under them because of a lack of political will in individual countries to advance global free trade," Hasnain Malik, head of emerging market equity strategy research at Tellimer, told The National.

Differing positions on issues from CO2 emissions control to trade tariffs "do not provide any positive recent precedents for effective global co-ordination, particularly between the US and China”.

On October 5, the WTO had forecast 3.3 per cent growth in global trade for 2024 – a strong improvement from the 0.8 per cent of last year – but this forecast was made before the Israel-Gaza war. Uncertainties stemming from geopolitical friction and presidential elections in many countries may result in a weaker-than-expected performance, WTO director deneral Ngozi Okonjo-Iweala told the World Economic Forum in Davos last month.

The ministerial talks also come against a backdrop of fragmentation in trade due to rising geopolitical tensions between major world powers, supply chain disruption and trends of "near-shoring" or "friend-shoring", where manufacturers move their supply chains closer to their home base or to ally countries.

Changes to WTO rules require consensus, which has limited its ability to reach global deals because one country alone can block an agreement.

Another worry stems from presidential elections, particularly in the US where Donald Trump – who bypassed WTO rules by raising import tariffs when previously in power – makes another attempt at the White House, analysts say.

"The elections will likely add to the challenges of reaching consensus, with countries focusing on their domestic voter base," Monica Malik, chief economist at Abu Dhabi Commercial Bank, told The National.

"This could include areas such as decreasing or removing import tariffs on key agricultural goods. Differences on adding environment clauses and restrictions to exports and imports also add to the challenges, with different positions between developed and emerging economies.

"We see one of the greatest challenges at the moment being an increasingly multipolar world."

WTO reforms

The WTO is seeking to push a package of reforms to improve its trade dispute settlement system and overcoming a four-year impasse on the appointment of new judges. Its court has not functioned since the US opposed a new judge appointment, leaving trade disputes worth billions of dollars unresolved.

As the US blocked appointments to the WTO’s Appellate Body, the second-tier group to which any party in a dispute case can lodge an appeal, the process of dispute settlement has been gutted.

Keith M. Rockwell, senior research fellow at the Hinrich Foundation and former WTO spokesman, said in a report on February 6: "While most WTO members are committed to reform dispute settlement at the ministerial conference, the US is not on board.

"It was always wishful thinking to assume that a fully functioning WTO dispute settlement system would be operational before the November US presidential election.

"So here’s what we can expect: no deal on agriculture. No deal on fisheries subsidies. No continuation of the moratorium on e-commerce duties. No reform of dispute settlement or the WTO more generally."

Agriculture

The chairman of the WTO's agriculture negotiations, ambassador Alparslan Acarsoy of Turkey, circulated a revised negotiation text on February 16. This was submitted as a potential outcome document for ministers to consider at the latest meeting.

The WTO's agriculture negotiations entail various topics, including domestic support, market access, export competition, export restrictions, cotton, public stockholding for food security purposes, the special safeguard mechanism and the cross-cutting issue of transparency.

The most intensely debated negotiation is around a push by India and a group of developing countries for a standalone permanent waiver to WTO rules that currently restrict domestic agriculture subsidies on food items such as rice.

"It will be difficult to reach consensus on major reforms such as those related to dispute settlements or agricultural/fisheries subsidies," Scott Livermore, chief economist at Oxford Economics, told The National.

E-commerce

The trade ministers must also make a decision on whether to extend the existing e-commerce moratorium.

This worldwide ban on cross border e-commerce duties has been in place since 1998. India and Indonesia are among those opposed to extending it.

Some countries see it as guaranteeing stability for e-commerce trade and an important tool for development. But other developing members question its impact on revenue and policy-making capacity, viewing it as perpetuating a digital divide.

Developing countries argue that letting it expire would jeopardise a global e-commerce recovery.

"India and South Africa, joined by Indonesia and perhaps several others, demand the expiration of the moratorium so that governments can use this 'policy space' to raise revenue and nurture domestic industries," Mr Livermore said.

Fishing subsidies

After the WTO struck an agreement in 2022, which banned subsidies contributing to illegal, undeclared and unregulated fishing, the organisation now hopes to conclude a second deal, which will focus on subsidies that drive overcapacity and overfishing.

"There is likely to be opposition from countries such as India, Bangladesh and Sri Lanka that need to protect their vulnerable fishing communities, though flexibility in the terms and framework could allow some progress," Ms Malik said.

"An agreement for the reduction of subsidies that contribute to overfishing could be a potential area of compromise, having also been previously discussed at MC12."

'Never say never'

Ms Okonjo-Iweala acknowledged the challenges that members face in securing a package of outcomes.

“It's always very difficult and seems like it's not going to work,” Ms Okonjo-Iweala told the WTO’s general council during a meeting on February 14. “But we never say never. We are going to get it done.”

Dr Thani Al Zeyoudi, Minister of State for Foreign Trade, and chairman of MC13, urged the general council meeting to continue working on narrowing their differences before ministers arrive in Abu Dhabi.

“In the present international context with considerable challenges and uncertainty, it is crucial to welcome the ministers at MC with some positive news,” he said. “We need to show them that, yes indeed, reaching agreements on trade issues is possible today.

“We really need to settle the low-hanging fruit now and show more flexibility across the different issues and areas."

In a statement on Tuesday, the minister highlighted the importance of the meeting.

"MC13 is a historic event that will bring together the world’s trade ministers to demonstrate their shared commitment to inclusive, sustainable supply chains," he said. "It is important that we are able to create a conducive environment for negotiations that will help advance the future of trade."

The agenda of the MC13 meeting will encompass key discussions in the industry including women and trade, digital commerce in Africa, and strengthening inclusivity and environmental sustainability.

"A continued and prolonged impasse at the WTO could bode ill for developing and low-income countries, who would likely stand more to gain than high-income countries," Mr Livermore said.

"A higher share of their trade is dependent on WTO's Most Favoured Nations tariff schedule. These countries also benefit from capacity building efforts from the WTO."