Shipping containers sit on the dock. Global trade is showing signs of bouncing back from pandemic-induced slump, however, a complete recovery will take longer as countries battle second and third waves of Covid-19, according to the WTO. AFP
Shipping containers sit on the dock. Global trade is showing signs of bouncing back from pandemic-induced slump, however, a complete recovery will take longer as countries battle second and third waves of Covid-19, according to the WTO. AFP
Shipping containers sit on the dock. Global trade is showing signs of bouncing back from pandemic-induced slump, however, a complete recovery will take longer as countries battle second and third wave
While the world's eyes were fixed on the US presidential election, another consequential, if less thrilling contest was happening elsewhere, with significant ramifications for global trade. The World Trade Organisation is trying to appoint its new head, a decision that was supposed to be wrapped up in low-key style in the week of the American election.
As it turned out, that did not happen and the reasons for the delay are intertwined with US politics and the election season.
The battle between two contenders to lead the 164-country WTO has, unusually, been invested with drama and a sense of urgency. Some say it is a sign of the state the global trade body is in. The institution, they say, is neither nimble nor persuasive in its mission to oversee the multilateral international trading order. More to the point, they claim, it is unfit for the purpose of updating the rule book and fixing a broken system for solving disputes.
With Ngozi Okonjo-Iweala and Yoo Myung-hee in the final round to be WTO director-general, the stage is set for the organisation to have its first female leader. AFP
Is this doom and gloom warranted? The answer lies in history, just as much as in contemporary events and geopolitics.
First, in the WTO's 25-year history, there has never been a leadership election like this. Two women are in the running. With Nigerian-born US national Ngozi Okonjo-Iweala and South Korea's Yoo Myung-hee in the final round to be WTO director-general, the stage is set for the organisation to have its first female leader.
The WTO's leadership vacuum is also playing out against the backdrop of the coronavirus pandemic, a worldwide recession, the US-China battle for trade supremacy and, of course, the results of the American election.
Second, the Trump administration torpedoed the near-unanimous selection of Ms Okonjo-Iweala shortly before US election day, which threw the WTO’s traditions and systems into confusion. With the US having become the only country to oppose Ms Okonjo-Iweala’s appointment, the WTO was left without much hope of a consensual decision, its long-favoured approach.
Once it became likely that Joe Biden would be America's next president, the WTO simply postponed its search for a consensus. It did this in the hopes of a potentially favourable shift in the US position come January 20 when Mr Biden is inaugurated.
That makes sense. American objections to Ms Okonjo-Iweala appear to be a result of the Trump administration’s hostility to the WTO. President Donald Trump has described the WTO as “horrible” and claims it is biased towards China. He frequently threatened to pull the US out of the body.
Donald Trump has been no fan of the WTO, alleging that the organisation favours China unreasonably. AP Photo
In December, the Trump administration crippled the WTO with a two-year effort to block judicial appointments to its trades-disputes court. As a result, for the past 11 months, there has been no authoritative entity to decide on international disputes about unfair trade practices.
The fact that much of the world has not really noticed the change is significant. Only policy wonks and pundits know that resolving trade disputes – a key part of the WTO’s mission – is currently impossible. Accordingly, it is fair to say that the WTO – a cornerstone of the multilateral rules-based global trading system since its inception in 1995 and successor to the post-Second World War General Agreement on Tariffs and Trade – has not managed to impress by its speed, agility, decisiveness and impact.
The crisis has been many years in the making. The WTO has largely failed to work out new rules, even though for a long time it has been clear that its ability to make decisions depends on consensus among countries, all with different economic interests. When its previous chief, Roberto Azevedo, stepped down on August 31, the WTO could not even agree on an interim successor.
When the WTO's previous chief, Roberto Azevedo, stepped down on August 31, it could not even agree on an interim successor. AFP
In a time of intense disagreement over globalisation and free trade, the WTO's role will matter as it attempts to heal rifts over multilateral negotiations
In the past 25 years, the WTO has completed only one global trade negotiation. Its dispute-settlement process has hardly ever finished on time. And it has not kept pace with the changing global trade landscape. For example, the WTO still needs to agree on a definition of what constitutes a developed or developing country. Members currently decide their own categories and thereby whether or not they receive special and differential treatment as developing countries. The WTO also needs to tackle the urgent issues of how to better handle state-owned enterprises and countries with significant industrial subsidies, such as China.
These issues are not going away, even though Mr Trump, the WTO's most trenchant critic, has lost the election. As former US president Barack Obama notes in his newly published memoir, A Promised Land, the pandemic may be "a mere interruption in the relentless march toward an interconnected world", made up of "global supply chains, instantaneous capital transfers, social media, transnational terrorist networks, climate change, mass migration, and ever-increasing complexity".
The RCEP, the world’s largest regional trade pact, was signed by the 10-member Asean, plus Australia, China, Japan, New Zealand and South Korea. AFP
This sounds about right. In the past week, there have been two key developments in the march towards an interconnected world. The Regional Comprehensive Economic Partnership, the world's largest regional trade pact, was signed by the 10-member Association of South-East Asian Nations, plus Australia, China, Japan, New Zealand and South Korea. Six non-European Union Balkan countries have also created a common regional market of 18 million people.
At some point the WTO will have a new leader, who will assume office at a pivotal moment. The international community will be adjusting to a new US administration. In a time of intense disagreement over globalisation and free trade, the WTO’s role will matter as it attempts to heal rifts over multilateral negotiations. It will be up to the WTO’s new head to build a consensus for change.
Rashmee Roshan Lall is a columnist for The National
MATCH INFO
Quarter-finals
Saturday (all times UAE)
England v Australia, 11.15am
New Zealand v Ireland, 2.15pm
Sunday
Wales v France, 11.15am
Japan v South Africa, 2.15pm
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
SMEs in the UAE are defined by the number of employees, annual turnover and sector. For example, a “small company” in the services industry has six to 50 employees with a turnover of more than Dh2 million up to Dh20m, while in the manufacturing industry the requirements are 10 to 100 employees with a turnover of more than Dh3m up to Dh50m, according to Dubai SME, an agency of the Department of Economic Development.
A “medium-sized company” can either have staff of 51 to 200 employees or 101 to 250 employees, and a turnover less than or equal to Dh200m or Dh250m, again depending on whether the business is in the trading, manufacturing or services sectors.
