To celebrate its twenty-fifth anniversary, the World Trade Organization (WTO) was no doubt hoping for a more favorable backdrop.
The Covid-19 pandemic has caused a collapse in international trade while multilateral cooperation, an essential condition for the exercise of its mandate, has lost favor with political leaders around the world, in particular with the United States under Donald Trump. Washington is, however, at the origin of the GATT agreements signed after the Second World War, and which gave birth to the WTO in 1995.
Why are we talking about it. Based in Geneva, the institution is looking for a CEO following the resignation of Roberto Azevêdo, who left his post at the end of August. The names of the eight candidates will be released on July 8. The process, which is expected to last between two and three months, is being overseen by Victor do Prado, director of the organization’s Council and the Trade Negotiations Committee. The Brazilian spoke on Monday, August 31 at the Geneva Chamber of Commerce, Industry and Services, during his first public appearance "in a tie" in several weeks.
Geopolitical tensions. In front of about thirty members of the Chamber, Victor do Prado appeared nostalgic, like a helpless spectator watching “an acceleration of history” induced by the pandemic, exacerbating pre-existing geopolitical tensions. The rise of nationalism, the fragmentation of a multipolar world, divisions and increased competition characterize this “Westphalian” order, an allusion to the treaty which, in 1648, enshrined the primacy of the nation-state in international relations.
"The borders are thick, or are becoming so again," he explains. The optimism following the fall of the Berlin Wall, in the wake of which the WTO was created, has lived on; the time has come for disenchantment.
Hints of cold war. To measure the leaders’ state of mind, it is enough to observe "the geopolitical race which is taking place around the development of a vaccine against the Covid-19", argues the diplomat. Didn't Russia draw from the repertoire of the Cold War by baptizing its own Sputnik?
“The leaders are asserting themselves and it has become very difficult to predict the future of international relations. Today we lack a visionary leader, who carries multilateralism,” he notes. The list of heads of government not meeting this definition is indeed long among the great powers. We can thus measure the difficulties faced by an institution composed of 164 members with competing interests and which takes its decisions by consensus.
Redeployment. On the commercial front, the pandemic has brought about a sudden drop in international trade of between 13 and 30% for the year 2020, according to WTO estimates. With the exception of digital activities, which are the big winners, the current context demands a redefinition of global trade strategies. “Supply chains that were thought to be eternal were suddenly broken. Companies are redeploying in a vertical production network, each entity becoming autonomous,” notes Victor do Prado. The future of multinationals could be described as follows: one branch per continent, each operating within a short circuit, carrying out its own purchases and sales in its market segment.
Nevertheless, Victor do Prado is worried about certain words taking hold since the start of the pandemic: self-sufficiency, autonomy, sovereignty. For him, the implementation of these strategies will reinforce the geopolitical trends described above. He recommends (re) reading "The Age of Extremes", a work by historian Eric Hobsbawm, devoted to the "short" twentieth century. The book traces two world wars, a so-called cold war and tens of millions of victims as a result of the nationalist and ideological follies of the period. It was published in 1994, a year before the creation of the WTO, just when we thought we were done with these “extremes”.
Urgent reform needed. These external contingencies in no way affect the need to reform the WTO. It is perhaps even the only consensual element of which it can take advantage. "The eight candidates agree on this point," said Victor do Prado.
There are many questions to be resolved. What is a developing country, therefore receiving special treatment? It is impossible not to think of China, undeniably a great power, but also a territory where extreme poverty affects hundreds of millions of inhabitants. How to define a market economy? Here too, China is the implicit example of an ambivalent case. The notion of subsidy must also be clarified, in order to remove the obstacles to transparency that members must show when supporting a part of their economy.
Finally, the mechanism for settling disputes between states is in limbo. It's been three years since its appeals body, a sort of Supreme Commercial Court, has seen its legitimacy challenged. Since December 2019, it has been unable to function for lack of sufficient magistrates - with the Trump administration blocking the appointment of new judges.
For the WTO which tried, according to Victor do Prado, to control globalization by instituting rules and standards, a “return to moderation” in international relations seems to constitute an existential issue. This is the challenge that its future CEO will have to take up.