Brazilian Roberto Azevedo, Director General of the World Trade Organization. Photo / AP
Brazilian Roberto Azevedo, Director General of the World Trade Organization. Photo / AP
Editorial
EDITORIAL:
If historians put an end date on the era known as "globalisation" it could December 10, 2019. That day two of the last three judges on the World Trade Organisation's appellate body retired and the United States would not approve new appointments.
The appellate body, the ultimate court fortrade under agreed rules, has ceased to function. The Economist called December 10, "The end of the World Trade Organisation as we know it." It may not be the end of globalisation overall but it is hard to overstate this setback for international law.
The World Trade Organisation (WTO) was conceived with other United Nations projects amid the ashes of World War II. Unlike sister agencies such as the World Health Organisation and Unesco, the WTO had a delayed birth. In the post-war era most countries jealously protected their economies in the name of social security.
The best that could be agreed was a general agreement on tariffs and trade (Gatt) under which periodic negotiating rounds were held. It was not until the 1990s, when open markets had proven more prosperous than protected states and communism had collapsed, that a Gatt round gave birth to the WTO.
A project that had previously interested mainly Western countries attracted well over 100 member states, many from the former communist bloc and the Third World. Optimists were hailing a "new world order".
The first "millennium" round of negotiations under the WTO adopted an ambitious agenda of proposed rules extending far beyond open borders to include agreements against subsidies, state purchasing preferences, discriminatory regulations on foreign investment, intellectual property, health, environmental and quarantine standards and much else.
Donald Trump has no respect for any deal he did not make. Photo / AP
New Zealanders took particular interest because the WTO's director general was our former Prime Minister Mike Moore. But New Zealand has always had a particular need for multilateral agreements.
A small economy far from large markets and of little strategic importance to military powers has not much leverage in bilateral dealings. And by 1990 New Zealand had already opened its economy unilaterally to international competition.
Sadly, the WTO failed as a negotiating forum. It inherited a unanimity rule from the Gatt – nothing could be agreed unless all members agreed – and lingering protective instincts in a few new members ensured the round failed.
But the world body's dispute resolution function was more successful. Governments could take a case to a WTO tribunal if they believed another member was treating their products unfairly.
The US has long been reluctant to accept international jurisdiction of any sort and Donald Trump has no respect for any deal he did not make. But this setback to international trade will probably outlast his presidency.
In the meantime, small trading nations such as ours are doing the best they can to promote WTO principles through regional agreements. The Trans-Pacific Partnership is a shining example. It offers a dispute resolution procedure.
Singapore is talking to like-minded trading nations about establishing a replacement for the WTO appellate body. But a truly global effort to regulate trade was a long time coming and may be a long time gone. Its loss will leave the world poorer.
