Writing in today's Telegraph (https://www.telegraph.co.uk/politics/2020/07/13/wto-needs-political-momentum-top-not-better-technocrats/) on 13th July 2020, Dr Fox wrote:
The World Trade Organization meets in Geneva this week to select a new Director-General. In usual times, there would be debates around how the benefits of growing trade should be distributed. But these are not usual times. It is not business as usual but “business unusual”.
No one has any real idea what damage the Covid-19 pandemic will have wreaked on the global economy by the time it is finished, but we can bet it will lie on a spectrum between bad dream and worst nightmare. Even before the pandemic the global trade system was creaking at the seams. China and the US are involved in a prolonged trade war. Britain continues to negotiate its post-Brexit relationship with the EU. Global trade started to shrink in the latter part of 2019, and foreign investment fell to a 10-year low, meaning less capital available for economic growth, which is likely to be felt acutely in the developing world. The relentless growth in trade barriers, meanwhile, has silted up the global system since the financial crash.
In this environment, the choice of candidate to lead the WTO takes on an added importance. The wrong choices now could lead to further paralysis or the collapse of the trade system itself, taking us back to a system in which the strongest call the shots and the weakest take what they are given. That is why the next Director-General needs to be a politician rather than a technocrat with an understanding that the real issues facing the WTO are political not technical.
We must re-establish the concept of free trade itself. Fundamentally, it is a right. Everyone should be free to sell goods, services or labour to the highest bidder, and to buy from whoever they choose. Free trade allows the benefits of trade to spread to every level of society. It has been the greatest liberator of the world’s poor, harnessing the forces of globalisation to lift millions from poverty.
It is also key in helping to meet a key development objective: the empowerment of women. Women in developing countries deserve better access to education and democracy, but better access to commerce must be as much of a priority. Enabling people to trade their way out of poverty is the only sustainable way to progress economic development. Given that women own close to 10 million of the world’s small and medium-sized enterprises (SMEs) and SMEs account for almost 80 per cent of jobs around the world, women’s economic empowerment is a vital part of sustainable path out of poverty.
But free trade must be underpinned by a rules-based system. For the first time in decades, the system of rules-based multilateral trade has come into question. Some of the criticisms are justified and must be addressed.
We need to do more to integrate developing countries into the global marketplace. We need to ensure that the changes the world has seen since 1995 when the WTO was created are reflected in the promises countries make to each other. Then there is the perception that internet based commerce does not compete fairly with traditional commerce. That state owned enterprises do not compete fairly with privately owned firms. That low environmental standards undercut sustainable business – or that high environmental standards are an excuse for keeping foreign products out.
These all lead countries to unilateral solutions – and make it easier politically to break promises than to keep them. We need to find a new point of balance in this new world, and find a set of promises that nations big and small are ready to stand by.
Progress in many of these areas has been slow. The Bali package in 2013 gave rise to the Trade Facilitation Agreement which is about cutting red tape and speeding up port clearances but too little was delivered elsewhere. Multilateralism may not have been abandoned by the WTO or by its members, but failure to make progress has resulted in a proliferation of more geographically limited deals that are politically easier to achieve.
The WTO needs political momentum not better technocrats, for failure will be felt beyond the world of trade. Above all the DG must be a powerful advocate of the rules-based system to powerful nations. Otherwise, those who are denied access to prosperity through free, fair and open trade will try other ways to get it.
We need to understand the close links between economic opportunity, social cohesion, political stability and our own security. It is a continuum that cannot be broken without utterly unpredictable consequences. It is not the time to pretend it is business as usual but accept that “business unusual” will necessitate change and embrace it.