While Canadian minister-of-everything Chrystia Freeland was declaring the era of trade multilateralism dead, one of her government’s foot soldiers was busy helping breathe a little life into it.
When I spoke last week with Mary Ng, Canada’s international trade minister, she had just come back from Geneva and the World Trade Organization’s Ministerial Conference – the top decision-making meetings for the global trade institution’s 164 member nations, normally held biennially, but this one delayed for two years by the COVID-19 pandemic. She admitted to still being in a state of excited exhaustion – perhaps from jetlag, but maybe more so from the round-the-clock negotiations that culminated in a June 17 agreement.
“The last 48 hours was straight through - I think I had probably three hours of sleep,” she said.
Whether it was worth all that sleep deprivation is debatable. The achievements, taken individually, are underwhelming. On many of the key issues – including vaccine intellectual property, fishery subsidies, e-commerce and World Trade Organization reforms – the agreement produced with either watered-down versions of more ambitious proposals, or commitments to kick the decisions down the road and keep talking.
On the other hand, the fact that the WTO was able to reach any kind of consensus at all is no small thing. A lot of observers have looked at the WTO over the past few years as dysfunctional, anachronistic and increasingly irrelevant; walking out of Geneva empty-handed would have proved their point, and, perhaps, even put the WTO on its death bed. The deal reached, however modest, is evidence that the organization can still reach consensus and get things done.
“We’re living in a time when the rules-based order is under attack,” Ms. Ng said. “At the end of the day, we came out with agreements. I think that bodes well for the global trading system.”
Yet at the same time that Ms. Ng was helping nail down those agreements, Deputy Prime Minister and Finance Minister Chrystia Freeland – who is, really, the only voice in this government that matters on economic policy – was publicly declaring that the era of economic multilateralism is over. It’s time to move on.
“The hopeful and entirely open post-Cold War world order that we tried to build starting on Nov. 9, 1989 - the day the Berlin Wall fell – ended on Feb. 24 [the date of Russia’s invasion of Ukraine]. In its place, we have entered a period of friend-shoring,” Ms. Freeland said in a June 16 speech in Toronto.
She took the same message to a more international audience a few days later, in a joint news conference with U.S. Treasury Secretary Janet Yellen – another economic leader who has been talking for some time about “friend-shoring.” The idea is to deepen trade ties and supply-chain links with allies who are friendly, trustworthy, and share economic and democratic values. And, by extension, to reduce reliance on undemocratic trading partners who are prone to flouting international trade agreements, engaging in economic hostilities and invading their neighbours (in other words, China and Russia).
So which is it? Does Canada still see an institution such as the WTO as relevant, necessary and in its best interests? Or are we moving on from that big multilateral trade tent as a naïve anachronism, and preparing to forge new paths?
It’s probably a bit of both.
The supply mess exposed by the pandemic has absolutely made a convincing case for re-drawing the global supply-chain map – it’s clear now that we have put too many of our eggs too few baskets that, when push came to shove, proved self-serving and unreliable. Russia’s invasion of Ukraine, and the profound effects on resource supplies that have resulted, have deepened the resolve of trading nations to secure more trustworthy sources that respect borders, sovereignty, and a rules-based economic and geopolitical order. It seems unlikely that we can go back; the world that we trust, and can rely upon, has become smaller.
Still, Canada is a modest-sized, trade-intensive economy that relies on rules-based global trade. That implies that at a minimum, Canada needs the WTO to function the way it’s supposed to on a day-to-day basis.
That means effectively enforcing the rules to which everyone has already agreed, long ago. It means getting the dispute settlement mechanisms working again.
That mechanism has been effectively shut down since late 2019; the United States – which has major issues with having the WTO tell it how to run its trade policy – has refused to approve appointments of new judges to the WTO’s appellate body when the terms of old judges expired. Significantly, the Geneva Package includes a commitment by all members to restore the dispute settlement system. Less encouraging is that the agreement only pledges to solve the impasse by 2024.
Like much of this Geneva pact, it’s less than hoped, but more than feared. It’s not a lot of progress, but it’s enough to keep the WTO alive to fight another day.
“The WTO needs to remain relevant,” Ms. Ng said. “We need to make sure that it is functioning properly, that it is modernizing and improving.”
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