Belgian expert talks about the future of the WTO
On October 2, Professor of Leuven Catholic University, Dr. Jan Wouters delivered a lecture on The future of the WTO during trade wars, at the Presidential Academy.
The Belgian expert spoke about the role of the World Trade Organization in regulating the global economy, citing the factors that currently pose the biggest danger and may have a negative impact on the entire global economy.
The crises experienced by the populations of different countries have made them try to create a more stable economic system after the Second World War. One of the ways to do so was to set up organizations that would influence the most diverse aspects of economic life. This is how the International Monetary Fund and the World Bank were established, in a bid to create a body that would regulate trade relations between different countries, even though that never actually happened.
For half a century after the Second World War ended, international trade was regulated by the General Agreement on Tariffs and Trade, primarily aimed at removing trade barriers. Many of the functions performed by that agreement were transferred to the WTO in 1995.
According to Dr. Wouters, the WTO never had it easy, because the organization brings together a large number of participants, each with their own interests, which makes negotiating a challenge. “The main problem in the WTO is the need to adopt a new trade agreement. One attempt to adopt a new agreement was made at a conference in Bali in 2013, but the document was blocked by India over food security concerns,” the professor said. One of the reasons this happened was because the organization seeks to reach a consensus, not decide by a majority vote; it is difficult to persuade all member countries to agree with one general decision, he explained.
The failure to adopt a new agreement spurred talk about the need to reform the WTO. Recently, the situation became further complicated by political developments. According to Dr. Wouters, now the main problem is the risk of the US withdrawing from the organization. The American economy is one of the largest in the world, and if cooperation with American companies no longer requires WTO membership, this may lead to other countries starting to leave it. Once there is no single regulator in the world market, the law of the jungle will prevail, putting the security of individual economies at risk.
Agreements at the regional levels pose another threat to the WTO: for example, the European Union has already concluded a rather detailed trade agreement with Canada, while other countries are considering similar cooperation deals. Dr. Wouters noted that with the possible collapse of the WTO, there is a risk of a confusing and non-transparent situation in global trade.
The emergence of new major market players leads to new trade wars breaking out, China and the United States being a striking example. The US is trying to impose duties and raise tariffs to use its influence to contain the growth of its rival.
According to Dr. Wouters, what the WTO is now facing is existential challenges. “The lack of progress in the new trade agreement talks and the need to reform the organization are the main problems that experts are pointing out,” the speaker summed up the lecture.