The head of the World Trade Organisation on Wednesday said global trade ministers' talks entering their third day in Abu Dhabi are a "pressure cooker" as member countries try to bridge the chasm between their negotiating positions to reach agreement on key international commercial deals.
The WTO's 13th ministerial conference is focused on discussions about a package of reforms to the trade body's dispute-resolution system. This is aimed at addressing the way it adjudicates trade quarrels between member countries.
"Three days into the ministerial [meetings], I am cautiously optimistic about what we're trying to do, although I have to confess to you that we have some tough spots. Although the atmosphere is good, we're still facing significant gaps in negotiating positions, which we hope we will be able to close," Ngozi Okonjo-Iweala told the MC13 Business Forum, pointing to key deals on fisheries and agriculture.
"The good news is that it will be a pressure cooker because we have to get it done. The bad news is that it will be a pressure cooker, but we will see how we go."
The WTO chief's comments came as tough negotiations continue, with the ministerial conference scheduled to run until Thursday. However, it may get extended because of divisions between member countries.
A move towards 're-globalisation'
Addressing a forum of private sector leaders, Ms Okonjo-Iweala said that uncertainty around market access influences their business choices because they are the end users of the trading system.
The multilateral trading system is at a "critical juncture" and this affects businesses engaged in cross-border activities amid threats from the Red Sea shipping attacks, the Panama Canal drought and slowing economic growth, she said.
"Trade has become a four-letter word in many quarters of the world, instead of a five-letter world," she said, as the multilateral rules-based trading system continues to be misconstrued in some parts of the world.
This could "open the door to dramatic and costly" changes in the way the global economy operates because three quarters of the cross-border trade of goods is regulated by WTO rules, the WTO chief said.
Trade within geopolitically aligned blocs is growing fast, and while the current status quo of global trade is not perfect, the Covid-19 pandemic and the Russia-Ukraine war exposed gaps in the supply chains, she said.
The trends of friend-shoring and near-shoring, where companies move their manufacturing bases to allied countries or closer to their home base, can create more problems than they solve because they make countries more vulnerable to local shocks, she said.
"Widespread fragementation among major economies would be incredibly costly. The better way forward is to re-imagine globalisation by diversifying supply chains to include countries in parts of the developing world in Latin America and Africa and parts of Asia that remain on the margins of the global division of labour," Ms Okonjo-Iweala said.
"Re-globalisation, as we're calling it at the WTO, offers the benefits of interdependence without the risks of overdependence."
This move towards re-globalisation requires open and predictable markets, making the MC13 meetings in Abu Dhabi important.
Global trade at an 'inflection point'
"We are at an inflection point: Will we continue to have a reasonably open, integrated and predictable economy? Or will we move towards an increasingly fragmented and divided one?" she said.
The MC13 meetings are happening against a challenging backdrop of an impending US election, 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.
Responsibilities of the private sector
Dr Thani Al Zeyoudi, Minister of State for Foreign Trade and the conference chairman, told the forum that the trade delegations at MC13 continue to "work tirelessly" to tackle the key issues confronting global trade.
"Our responsibilities as policymakers are to ensure that we come up with very futuristic policies to move things forward. The agreements reached by delegations this week will shape trading realities for millions of companies, their suppliers and their customers. That is a responsibility that none of us should take lightly," he said.
However, there is equally a responsibility on the business community to be "clear, forthright and detailed" with their national representations about their demands, he said.
"Any success achieved this week will be at least partially due to the realisation that the business community is watching ... I ask that you do more than just watch this week. I invite you to engage in the trade policy deliberation and discussion occurring in your own countries or region."
Governments around the world are balancing the need for economic change and diversification with the new realities of climate change and net zero goals.
"We have to accept that this may bring friction with trading partners or with the trading system itself. Combatting climate change or protecting national interests are not incompatible with rules-based trade. The system provides plenty of flexibility to pursue these goals and to do so in a way that minimally harms the trade of dollars," Dr Al Zeyoudi said.
The business community needs to "articulate the reality on the ground" to policymakers on key areas such as e-commerce, sustainability, WTO internal reforms and digital trade, the minister said.
Mohammed Al Muallem, executive vice president of global ports operator DP World, told a panel that he is optimistic about the outcomes of MC13 meetings despite the existing challenges because "trade has to continue going forward".
"The WTO has played a great role in encouraging trade and growth, I'm sure in MC13 there will be decisions that will make that growth continue despite the problems and pessimistic views we hear," he said.
Tarek Sultan, vice chairman of logistics company Agility, emphasised the importance of removing barriers to cross-border trade for a more inclusive business environment for SMEs who form the backbone of GCC economies.
"They definitely want to participate in global trade, within the region and outside, but they are more sensitive to constraints and issues they might face in cross-border trade. So SMEs have a much harder time navigating the complexities of global trade than larger companies," he said, calling for reduced tariffs, the digitalisation of trade and a simplification of the rules.
"As you reduce customs duties you make it easier, you're getting a real bonus for SMEs to participate in the economy."
