We need fair global trade, not Trump unilateralism
11 October 2018: There was a reported meeting this week in Beijing between Chinese and European Union trade officials about changes to the World Trade Organisation (“WTO”). We’re still waiting to hear outcomes of the meeting, which follows change proposals and continued negotiations between WTO members.
Member states have been under increasing pressure to change the WTO by the US’s “America First “ tactics which reject the rules of global forums. Trump has condemned the WTO as “unfair” to the US, has threatened to withdraw from the body, has refused to reappoint WTO judges, and defied WTO rules in imposing huge unilateral tariffs on Chinese and other imports to the US. Trump wants China to agree to tougher rules on subsidies, state-owned companies and preferential treatment.
What is the WTO, and why is the US thwarting it?
The WTO claims it is a “global international organization dealing with the rules of trade between nations," whose “goal is to ensure that trade flows as smoothly, predictably and freely as possible.”
Of the 196 countries globally, 164 of them are members of the WTO. Established in 1995, WTO is dominated by the largest industrialised economies. Though decisions are made by consensus between all member states, other measures can be used exert pressure on Global South countries to acquiesce to agreements detrimental to their economies. Although some bigger economies like China and India are now challenging the dominance of Global North countries like the US in the WTO, the US, EU and Japan remain dominant.
These richer industrialised countries want greater access for their products and investments, and less regulation by governments, than is delivered by WTO agreements. This has been resisted by developing countries.
The United States Japan and the EU and other wealthier countries like Australia have moved outside the WTO, negotiating many bilateral, and regional free trade agreements instead, which leave out or can be harmful to Global South nations.
Although legally binding, these free trade agreements are usually negotiated in secret, and often limit governments’ abilities to regulate in the interest of workers or the environment .
There are currently ten free trade agreements Australia has ratified, four more to come into force (including the now well-known TPP-11), eight more being negotiated, and many more between other nations excluding Australia.
Current trade policies in Australia and other industrialised nations give priority to the flow of goods, services, investment and finance at the expense of local development, democracy, protection of the environment, labour standards, and human rights.
It is difficult to see what reforms China and the EU could agree to this week that would allow the WTO to satisfy all member states or discourage the growth of bilateral and regional free trade agreements. What we need is a transparent and democratic trade system which promotes human rights, labour rights and environmental sustainablity and which remedies rather than intensifies global systems of inequality.