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Spanish foreign minister: WTO needs a ‘course correction’

The World Trade Organization is in need of a “course correction,” Spain’s Minister of Foreign Affairs Arancha González-Laya — often cited as a potential WTO director-general candidate — said on Wednesday, arguing that members must “think big” but “start small.”

González was WTO chief of staff under the prior director-general, Pascal Lamy, who is also European. She has been named by sources — as well as media reports — as a likely candidate to be nominated to succeed Director-General Roberto Azevêdo, who will step down as of Sept. 1. The nominating window opens June 8.

“I think this WTO, which is relevant and needed today, needs a bit of a course correction and a new map to get to where it needs to go,” she said during a Peterson Institute for International Economics webinar. “It does need some fundamental rethinking to make it responsive and relevant for this new normal that we are moving into. But the solution is not to completely dismantle it.”

González’s is among several names being floated as potential successors to Azevêdo. In the webinar, she laid out a vision of the WTO as a house with good bones “that needs rebuilding.”

The virtual panel was moderated by PIIE senior fellow Anabel González, the former trade minister of Costa Rica and a director-general candidate in 2013, and included PIIE senior fellow Gary Hufbauer.

The Spanish foreign minister argued that international cooperation will be important in recovering from the pandemic. Multilateralism is an “insurance policy” against the uncertainties unfolding, she added.

“We have to think big, but we have to start small to build trust and confidence that the world that is going through such a huge transformation desperately requires,” she said. “We are going to have to invest in long-term thinking, in patience, in working with all stakeholders, and in finding relevant spaces where we can demonstrate that the organization can make a difference.”

While the WTO doesn’t need to immediately reassess issues like special and differential treatment, unfair competition rules or the move to plurilateral talks, according to González, members will need to “recognize these challenging questions” and move to address them.

She likened the WTO to “a house that needs repairing.”

“What do we do about this house that needs repairing? Do we knock this house down and begin constructing the house again? I would not encourage such an avenue,” she said. Some rooms need “a complete retrofitting,” she added, continuing the metaphor, while others “are in pretty good shape” and “fit for purpose.”

González also outlined what she saw as the role of the WTO, and what falls outside of that. The WTO, she said, “makes trade possible” through rules, monitoring, liberalization and settling disputes. It opens up possibilities for members to further build on their economies. But the WTO cannot turn those possibilities into realities, she said. That, she argued, requires international economic cooperation and the right domestic policies.

The monitoring aspect, she added in response to a question about persistent under-notifying by WTO members, works on the “goodwill” of members. The WTO should foster that goodwill, she said, by showing countries how it benefits the system and their use of the system rather than enforce it through policing.

The U.S. and European Union have a joint transparency proposal that includes some punitive measures if countries remain in violation of their notification obligations and do not attempt to seek assistance.

Hufbauer noted that the U.S.-China relationship will continue to be at the center of geopolitical realities for the WTO. The U.S. has, at least in part, abdicated its leading role at the WTO, he continued, and, if President Trump is re-elected, “the U.S. might very well be out of the game for another four years.” He added, however, that he was optimistic that other countries — like New Zealand and Singapore — were stepping up to lead on pandemic-related initiatives as the larger members fail to do so.

He argued that the institution is likely to see an even greater move to plurilateral negotiations as fragmentation among the 164 members worsens.

Hufbauer cited the pandemic response as a process through which like-minded countries could put that into practice, arguing that leading members could negotiate an agreement to make any vaccines or treatments available to the world. PIIE’s González noted that this would be especially relevant for developing countries, most of which are unlikely to be the site of vaccine research, but will need access to the results.

Spain’s González noted that the WTO has some intellectual property rules and flexibilities in place that could help move this effort forward so long as members are on the same page about what the flexibilities grant. She also advocated for members to explore the “incredible opportunity” of negotiating on electronic services.

Source: Inside Trade

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