Trade in a Pandemic: Do the Old Systems Work?
A debate on Strategic Autonomy vs Protectionism heard WTO Director-general Ngozi Okonjo-Iweala, discuss with European Commission Executive Vice-President Valdis Dombrovskis the role of international trade in responding to the pandemic.
The multilateral trading system has taken a fair few blows in recent years, Ngozi Okonjo-Iweala, Director-General of the World Trade Organisation said. But it has been remarkably resilient.
Major economies this decade have introduced unilateral trade measures against each other, the WTO Director-General said. “This would lead many to refer to disruption,” she said. “They think perhaps the trading system is not what it used to be.”
“But multilateral trade is remarkably resilient,” said the Nigerian-American economist. “It is alive and well.”
International trade today supports 1 in 6 jobs in the EU alone, the Brussels Economic Forum audience heard. This was 35 million jobs in 2020, up from about 20 million in 2000.
Throughout the COVID pandemic last year, she said, trading systems managed to move pharmaceutical supplies, PPE and food around the world.
Referring to her own claim earlier this year that the WTO dispute settlement procedure was paralysed, Okonjo-Iweala said this did not mean the WTO was irrelevant – or moribund.
“The system is not completely paralysed,” she said. “Dispute resolution is part of that. It is still possible to bring a dispute, but the appellant body does not work. That’s where we need to work.”
“It may take time to take WTO members to a shared set of reforms, but I’m not pessimistic,” she said.
More broadly, she reminded the audience that “the WTO has been an active participant in helping to resolve the pandemic.”
On the question of waiving IP rights for vaccines, she said some members thought it would make “a big difference” in making vaccines available, while some were less sure. “My role is to negotiate.”
“In order to increase the availability of vaccines we need several things,” she explained. Firstly, “developed countries need to send them” to developing countries. The unevenness between countries records of sharing vaccines “is just not acceptable,” she said.
The EU is “a major contributor” to vaccine supply, Okonjo-Iweala said, exporting about half of supplies to developing countries.
“Also we need the transfer of technology and know-how. We need WTO members to get to a pragmatic outcome,” she said. “And we need to help allow supply chains to move freely.”
“Negotiations at the WTO take time and we are losing lives,” she warned. “We are trying to mitigate supply scarcity, encouraging pharma companies to do more licencing in developing countries.”
As the EU hopes to support the green and digital transitions, she added that the global trade organisation was also working to promote sustainability and e-commerce, as well as looking at the role of trade in bringing emissions to net zero by 2050.
“There are a large number of existing initiatives. The WTO is alive and well,” Okonjo-Iweala said. “Do we need to update our rules? Absolutely.”
Dombrovskis agreed that multilateral trade continues to play an important role in the world today. He said the EU’s role was to make sure that trade was “open, fair and rules-based,”
He said the election of Joe Biden, who succeeded Donald Trump as US President in January this year, was a “new start in EU-US relations. It seems we are going back to normal.”
But on the question of WTO reforms, Dombrovskis said the EU had set out details months ago and the US was “still formulating its position. We probably need a bit of patience.”
He confirmed that the EU will publish proposals to cut emissions 55% before 2030 in mid-July, the so-called Fit for 55 package, and that these will include a carbon border adjustment.
The EU has always said that any carbon border adjustment measures will be in line with WTO fiscal norms.