About the new realities of the international trading system, the WTO and the ability to negotiate
On April 21-22, 2023, within the framework of the VII International Economic Symposium of St. Petersburg State University, the XX International Conference “Evolution of the International Trading System: Problems and Prospects” was held.
During the Conference, such topical issues as innovative scenarios and financial aspects of the development of international trade, regional trade agreements and their role in a changing world, the crisis of unipolar governance and a new balance of power were raised. The participants emphasized the role of the World Trade Organization as the main platform accumulating international efforts to counter modern challenges.
Several questions regarding the current activities of the WTO and its future were discussed with one of the key speakers of the Conference, adviser to the Center for Expertise on WTO Issues, professor, head of the department of trade policy at the Higher School of Economics in Moscow, Maxim Yu. Medvedkov.
Maxim was the head of the delegation at the negotiations on Russia’s accession to the WTO, and until 2019, he was the main Russian negotiator for bilateral and multilateral cooperation in the field of international trade.
Dep. We know that the WTO is now at a certain impasse. The Doha Round (note 1) remains open on many agenda items, while new tasks arise that require a timely response and explain the plurilateral negotiation tracks (note 2). At the same time, there is a lot of talk about how the organization should be a platform for cooperation in conditions of increasing geostrategic competition, capable of integrating the efforts of member countries, if not to level out, then to mitigate negative consequences, especially for less developed countries. Is the WTO really capable of being such? Taking into account that the opinion of the “new leaders” (note 3) mentioned in the plenary discussion is not taken into account much.
M.Yu. Medvedkov. First, if we look at the historical context, the answer is “yes, absolutely yes.” The WTO and the predecessor of the WTO, the GATT, have actually so far coped with all the tasks and complex tasks that were set before them. In fact, there is no reason to believe that the issues you spoke about cannot be resolved within the WTO. That is, there are no artificial obstacles. There are obstacles that relate to countries' positions: in some cases these positions are based on assumptions and policies, in others they are objective. Countries want to solve problems together, but they all have their limitations. And we don’t know to what extent these positions will coincide. This largely depends on the political will of countries and the ability of negotiators to negotiate. That's where the problem lies. The problem is not the WTO. The WTO is just a meeting place. The problem is what countries will do there. Of course, if some well-known countries, we will not name them, come with the same slogans with which they speak outside the WTO, we will never agree on anything.
Dep. Accordingly, the main obstacle is the “political restrictions” you mentioned and the WTO is becoming highly politicized? Could you expand a little on what they mean at the level of organizational workflows?
M.Yu. Medvedkov. We can hope that sooner or later this rhetoric will be changed and directives will be given that will allow the negotiation tasks to be resolved. And to do this, the only thing that needs to be done is to free the WTO from politics. Because the WTO was free of politics, and the GATT was free. Well, how free... politics is present everywhere, but at least there were very few external manifestations. Now they are everywhere. And there are various kinds of limiters. I would even start with the technical ones, since those countries that illegally imposed sanctions against Russia and Belarus refuse contacts with Russia. Therefore, this is a kindergarten, it’s like being in a sandbox. They carry out missions and instructions given to them by the Ministry of Foreign Affairs. But if they don’t want to talk to one of the leading countries, then how can they negotiate? Here's a technical problem for you. Representatives of some delegations are coming up with all sorts of mechanisms to prevent our colleagues, our negotiators, from meeting with them. This doesn't make the job any easier. But there is a second problem when some countries, the United States in particular, say “our task is to reduce China’s competitiveness,” and they say this publicly, without hesitation. Is it then possible to agree on at least some issue if this issue will contribute to the development of China? And this applies to Russia in exactly the same way.
Dep. In your answer to the first question of the plenary discussion, you mentioned relevant historical examples from the 12th century. Do you think we can look in history for tools to solve real problems?
M.Yu. Medvedkov. Good question. I did not think about that. But if we analyze the reasons for the current situation in the trade sector, I mean sanctions, for example. Has Russia taken any actions to ensure that these sanctions were legitimately introduced? No. But what the sanctioning countries have done against Russia in the field of trade are things that do not comply with WTO law. Everyone understands this very well; accordingly, their action must be terminated. So what analogy could there be? What should we do if someone acts against us illegally? Can we start acting illegally? This will get you nowhere. Or appeal to their conscience? We see that this is a waste of time. It remains, in fact, to wait for this situation to change. And it will change when the electoral cycle passes. These are not things that last forever.
Dep. During the discussion of the aspects that distinguish the current situation, the importance of AI and the transition to digital technologies, which undoubtedly have an impact on international trade flows, was also emphasized. This also requires adapting the regulation of international trade. Can the WTO keep up with these changes? As we know, the WTO is considering the above-mentioned features of the new reality within two tracks: the Work Program and the Joint Initiative on Electronic Commerce. The first does not aim to develop new rules and regulations. The second does not include half of the organization’s members, and those who are included experience great difficulty in reaching agreements. What are the prospects for the WTO here? Or will this area remain highly fragmented at the regional and bilateral level?
M.Yu. Medvedkov. I think that countries will try to come to an agreement. This is completely obvious. Why exactly in the WTO? Because digital services virtually 99% of trade, and this agreement should determine the boundaries of the application of regulatory tools. This is important in order to ensure the movement of goods and services that are produced and delivered using digital technologies. And in fact, the issues that are discussed there, for example, the principle of freedom of the Internet, where personal data should be stored, what is the responsibility of the supplier, are issues that each administration of each government decides for itself. This now needs to be resolved at the multilateral level. The advantage of any trade agreement is that it fixes the rules and fixes exemptions. Therefore, in difficult times, negotiators always have the opportunity to agree on most principles, and omit or withdraw some. They try not to do this right away, because then the agreement will consist of exceptions. This will be done at the very end, when two or three questions remain that simply cannot be fundamentally resolved. But this agreement will not solve other problems. You mentioned the topic of artificial intelligence and WTO. If we break it down, what is artificial intelligence? This is a big machine, this is a program. And the question is how do you allow access to this machine, to whom and under what conditions, where should it be located. Society must still realize the importance, and perhaps even the unimportance, of this system for itself, and, accordingly, for serving personal interests, trade interests, and consumer interests. And after that, come to the conclusion whether it needs to be regulated or not at all. Experience must be accumulated. It may take a year or five years until there are some things that need to be looked at more closely. Well, I’m fantasizing now, conditionally, artificial intelligence can create, if it starts to compose some recipes for poisons or medicines, then the parties must agree that it would be prohibited from doing this. I don’t know why it occurred to me (laughs).
Dep. The last question of the plenary discussion touched upon the topic of the effectiveness of the activities of international organizations and institutions, in particular the WTO and the EU. It was said that they are capable of conducting in-depth research activities, producing quality reports and recommendations to regulators, but their actual ability and ability to respond to current challenges is questionable. How do you evaluate this point of view? Can you agree with her?
M.Yu. Medvedkov. Firstly, the international organization of the international organization is different. And we know that there were organizations that were extremely ineffective, but then they carried out internal reform and became mega effective. And vice versa. If we are talking about the WTO, then now one of the tasks of the general director is to lead the reform of the organization, and this is a very serious reform. There are a lot of initiatives from different countries, the USA, the EU, and Russia, to reform certain elements of its activities, for example, the transparency system, the ratification system, the system of countries’ responsibility for what they do in the WTO. Therefore, everything is in the hands of the members. If we don't want to do it, nothing will work. But so far, no, I have not heard of a single country that would not want to improve the efficiency of all organizations, including the WTO.
Notes:
(1) The current round of multilateral trade negotiations was launched during the Fourth WTO Ministerial Conference, held in November 2001 in the Qatari capital Doha. Traditionally, the WTO follows the “package principle”, according to which a round does not end until solutions are found on all issues on its agenda.
(2) The term “plurilateral” in the context of WTO law is used to define a multilateral agreement or negotiation process for the conclusion of one, the participants of which are three or more states. Despite the limited number of participants, plurilateral agreements are united by a regulatory and institutional mechanism, and they are part of the WTO law system.
(3) “New leaders” refer to countries that represent and defend the idea of a multipolar world, mainly members of BRICS and BRICS+.
