The expectations for the 12th Ministerial Conference (MC12) of the World Trade Organization (WTO) held in mid-June in Geneva were low. Very low. The meeting was the first of its kind since December 2017, having been postponed several times due to the COVID-19 pandemic. Defying the odds, WTO members supported a small package of agreements on vaccine waivers, food security, and fisheries subsidies—a step toward strengthening the multilateral trading system. Members were silent on the issue of women and trade, however—even though women have suffered disproportionally during the pandemic and face disadvantages in trade.
With the lingering Trump trade wars, the pandemic, Russia's war in Ukraine and the associated sanctions, the world is in greater need than ever of global norms and multilateral cooperation. Inflation, food shortages, high energy prices, and climate challenges all call for unified global action.
In the face of these challenges, international organizations have shown weakness in recent years. The WTO, in particular, faces problems in all its main functions: trade rules and liberalization, policy monitoring, and dispute settlement. It has had difficulties making decisions and modernizing the rules governing trade among its 164 members, who make up 98 percent of global trade.
The failure of the WTO to reach unanimity—the rule by which it reaches decisions—has spurred many members to enter into regional or bilateral agreements and, increasingly, joint initiatives known as plurilateral talks, in which a large group of countries seeks agreements that are open for others to join. As unanimity is the rule at the WTO, and it has becoming increasingly difficult to achieve, plurilaterals have become a constructive way to move forward.
The plurilateral negotiation on e-commerce, for example, covers 86 WTO members, including the United States, the European Union, and China, and it is making important progress. Last December, 67 WTO members concluded a plurilateral agreement on regulation of domestic services. It aims to increase the transparency and efficiency of the procedures services providers must follow to do business in a foreign market. Some countries are reluctant to bring up new issues for members to negotiate as they feel that old, unsolved issues should have priority. Plurilateral negotiations are therefore a way for a large group of members to get around the unanimity rule.
MC12 reached small but important agreements
Despite difficulties and predictions of its imminent death, the 12th WTO ministerial, under the leadership of its director-general, Ngozi Okonjo-Iweala, did manage—in overtime—to get members to agree on a small but important package of deliverables. The package contains extension of the moratorium on customs duties on electronic transmissions, which is critical for the digital economy.
Agreement was also reached on ending subsidies on fisheries, an issue that has been debated for more than 20 years. The agreement prohibits subsidies that contribute to illegal, unregulated, and unreported (IUU) fishing. Three billion people in the world depend on fisheries, and global fish stocks are overfished and heavily subsidized. The accord in Geneva was the first time since 2015 that a multilateral agreement was made. The agreement is welcome, but it is diluted, far less ambitious than previous drafts, and includes long transitions and exceptions for some countries, notably India.
Ministers also agreed on a declaration on vaccines—a small waiver of certain procedural obligations under the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) without the consent of the patent owner. This step will facilitate access to vaccines, although it comes very late in the pandemic, is rather weak, and excludes China. Members promised to come back to the issue of diagnostic materials and therapeutics in six months, and many developing economies hope it leads to a more ambitious agreement.
Ministers also adopted a joint declaration on food security, responding to the various export limitations imposed by more than 40 countries at a time of severe food shortages. WTO members committed to avoiding unjustified export restrictions and to increasing the transparency of their actions. They also agreed to completely exempt the World Food Programme from restrictions.
Ministers committed as well to undertake a major reform of all aspects of the WTO's functions. This commitment includes the restoration of the dispute settlement mechanism, which broke down in 2019 after the United States blocked the appointment of new arbitrators. Progress on reform should be reported by 2024, at the next ministerial conference. My PIIE colleague, former WTO Deputy Director-General Alan Wolff, has written in detail about some possible reforms to improve the organization's functioning. His proposals are worth considering.
In sum, the progress at MC12 in June demonstrates that the WTO still exists and can make decisions. The very fact that ministers are meeting and delivering agreements, albeit minor ones, is important. One hopes that the meeting represents a turning point and that members realize that the organization needs care and reform.
But no progress was made on women and trade…
One issue that deserved a major place at the MC12 discussion table is women and trade. At the last WTO ministerial conference, in Buenos Aires in 2017, more than 120 member countries declared that more must be done to include women in trade. Since the Buenos Aires ministerial, a lot has happened, such as workshops, training, conferences, coaching, and mentorship programs for women. But more needs to be done to continue reducing tariffs, raising awareness, eliminating discriminatory laws, capacity building, and empowering women.
There is ample evidence that women benefit less from the global trading system than men do. Trade gains—and trade itself—are not gender neutral. Women tend to spend their incomes on household items, such as food and clothing, on which tariffs are generally higher than they are on other goods. In addition, women's clothes face higher tariffs then men's.
Many studies have demonstrated that women suffer from lack of finance, open or hidden discrimination, unfair laws, insufficient knowledge about trade, lack of networks, and prejudice, making it harder for them to engage in trade to the same extent as men. Recent data and facts on women and trade published by the WTO, the International Monetary Fund, the World Bank, and the International Trade Centre have increased public knowledge of the situation and what needs to be done.
When women do participate in the global economy, their home countries become more competitive. As women are more likely than men to work for small companies, support to small and medium-sized companies often equals support for women. Increases in trade by small companies thus raises women's wages and increases economic equality.
… despite the pandemic's deleterious effects on women
The pandemic hurt women and girls more than men and boys. Many small companies where women are active suffered disproportionately during the pandemic.
According to the International Labor Organization (ILO), globally, between 2019 and 2020, unemployment rose by 4.2 percent among women and 3.0 percent among men. In 2021, 13 million fewer women were employed globally than in 2019. In contrast, men's employment recovered to 2019 levels. Only 12 percent of all measures taken during the pandemic in the 130 countries the ILO studied specifically targeted women.
Given the pandemic's debilitating effects on women, it is odd that the Ministerial Declaration on gender equality and trade did not advance at all in Geneva. Instead the three WTO members that co-chair the informal WTO working group on trade and gender—Botswana, El Salvador, and Iceland—issued a short statement merely summarizing what the working group has done since the Buenos Aires ministerial. That work is by no means negligible, but, remarkably, MC12 discussions contained no ambitions for further work on this issue.
Some countries reportedly actively fought against ambitious outcomes for women—out of fear of bringing the contested labor standards issue to the WTO table. The United States in particular but also the European Union and others want to make a clearer link between trade and labor rights, such as elimination of workplace discrimination and abuse. They believe that bringing the matter to the WTO will provide incentives for WTO members to improve conditions for workers around the world. Many countries, however, view the issue as protectionism. Whether or not it is, the world cannot afford to ignore the involvement in trade of half of its population. It is ironic that despite the fact that the WTO, the European Central Bank, and the IMF are all led by women, little is being done to include women in trade.
The Geneva conference was a step forward; it showed that there is still life in the organization. With political will, the WTO can remain the hub for governing global trade, with modernized, updated rules and more efficient decision making. Free and sustainable trade is key to the recovery from the COVID-19 crisis. The WTO must continue to lead against increasing protectionism. The answer to the world's current challenges on trade rules, food shortages, health, and climate is not less cooperation but more. Let's hope that MC12 was a step in that direction.