Caribbean Trade Law and Development

Tag: G20

  • G20 Trade Ministers call for WTO Reform

    G20 Trade Ministers call for WTO Reform

    Alicia Nicholls

    Trade Ministers and Digital Economy Ministers of the world’s twenty most economically advanced nations met on 8 and 9 June 2019 in Tsukuba City, Japan to further strengthen G20 trade and digital economic policy cooperation. The meeting was the first time G20 Trade Ministers and Digital Economy Ministers came together. It was chaired by H.E. Mr. Hiroshige Seko, Minister of Economy, Trade and Industry, H.E. Mr. Masatoshi Ishida, Minister of Internal Affairs and Communication, and H.E. Mr. Taro Kono, Minister for Foreign Affairs, of the Government of Japan.

    Following the meeting the Ministers released a statement on trade and the digital economy. Symptomatic of the division existing among G20 countries on the way forward, a Chair Statement was also released which reflected the views of interest where consensus was unachievable.

    The G20 Statement on Trade and Digital Economy spoke of trade developments, promotion of trade and investment for sustainable development, WTO reform, recent developments in bilateral and regional trade agreements and the interface between trade and the digital economy. It should be noted that the statement did not include a pledge to fight protectionism which was a staple of G20 statements.

    They reiterated that “trade and investment have contributed to widespread and sustainable global growth, inclusivity, poverty reduction and sustainable economic development.”  They noted that “trade and investment growth slowed in 2018 and that this is contributing to a weaker global growth outlook for 2019-20 than previously projected” and further that “while growth is expected to increase in 2020, downside risks arising from the current trade environment could undermine this growth”.

    The statement also indicated that many members also “affirm the need to strengthen international rules on industrial subsidies and welcome ongoing international efforts to improve trade rules affecting agriculture”.

    On WTO reform, the Ministers stated that they “will work constructively with other WTO Members to undertake necessary WTO reform with a sense of urgency, including in the lead-up to the Twelfth WTO Ministerial Conference”.

    They also confirmed “the importance of the role of the WTO in generating opportunities and addressing various challenges.” They reiterated their support for “the work to agree on comprehensive and effective disciplines on fisheries subsidies as mandated in MC11” and further noted “some ongoing initiatives for updating WTO rules”.

    On the pressing issue of the WTO Appellate Body, they agreed that “action is necessary regarding the functioning of the dispute settlement system consistent with the rules as negotiated by the WTO Members.”

    The Ministers recommended that G20 leaders consider the topics discussed at the upcoming Osaka Summit.

    The full statement may be read here. The Chair Statement may be read here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

    DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.

  • G20 Trade Restrictive Measures Increase Significantly, WTO reports

    G20 Trade Restrictive Measures Increase Significantly, WTO reports

    Alicia Nicholls

    The world’s twenty most economically powerful countries, the Group of 20 (G20), imposed a record number of trade restrictive measures between mid-May to mid-October 2018. This is according to the World Trade Organisation’s just released Report on G-20 Trade Measures, which  revealed that G20 countries’ trade-restrictive measures, estimated at US$481 billion, covered six times more trade than in the previous reporting period and were the biggest since this measure was first calculated in 2012.

    According to the WTO’s report which was released on November 22nd, G20 economies applied a total of 40 trade-restrictive measures during the review period (May 16 to October 15, 2018) or about eight such measures per month, on average. These measures included tariff increases, import bans and export duties. According to the WTO, “about 79% of the current import-restrictive coverage is associated with bilateral measures between U.S. and China”.

    G20 countries also implemented a higher number of trade remedy investigations than they terminated, but the gap between initiations and terminations has narrowed. Initiations of anti-dumping investigations accounted for three-fourths of all initiations during the review period. The WTO noted that iron and steel and products of iron and steel, furniture, bedding, mattresses and electrical machinery and parts thereof were the main sectors affected by trade remedy initiations.

    On the flip side, G20 countries applied a total of 33 trade-facilitative measures, or seven trade-facilitative measures per month. These included eliminating or reducing import tariffs and export duties. The trade coverage of import-facilitating measures was US$ 216 billion. One silver lining is the WTO’s Information Technology Agreement which liberalized an additional US$541 billion of trade and has been an important trade liberalization measure.

    Another nugget of good news is that despite the current crisis facing the WTO’s Appellate Body, the report noted that WTO members’ use of the WTO’s dispute settlement system remained high, which shows that WTO members still value the dispute settlement system.

    The report presents the first concrete evidence of trade restrictive measures implemented during the current period of escalating trade tensions among the world’s major trading powers, most notably the US and China. It also comes on the heels of the just released report by the Organisation for Economic Cooperation and Development (OECD) which warned that global economic growth had peaked on the back of the slowdown in global trade and investment flows and appealing to the global policymakers to increase cooperation on matters of trade and the multilateral trading system.

    In his statement on the report, WTO Director General Roberto Azevedo warned that “the report’s findings should be of serious concern for G20 governments and the whole international community.” He further warned that “further escalation remains a real threat” and that “if we continue along the current course, the economic risks will increase, with potential effects for growth, jobs and consumer prices around the world.” As a result, he noted that while the WTO was doing all it could to support efforts to de-escalate the situation, he called on political will and leadership from the G20 to find solutions.

    The full WTO Report on G20 Trade Measures (mid-May 2018 to mid-October 2018) may be accessed here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • Urgent WTO reform needed, says G20 Trade and Investment ministers

    Urgent WTO reform needed, says G20 Trade and Investment ministers

    Alicia Nicholls

    Trade and investment ministers of the world’s twenty leading industrialised economies (G20) have called for urgent reform of the World Trade Organisation (WTO) to ensure its ability to “face current and future challenges”. This is according to the Ministerial Statement released following the G20 Trade and Investment Ministerial Meeting held on September 14, 2018 in Mar del Plata, Argentina.

    The 164-member WTO serves not just as the only multilateral forum for the negotiation of global trading rules, but is a forum for the orderly and peaceful resolution of trade disputes amongst WTO member countries. While the Ministerial Statement does not detail what specific reforms the G20 Ministers deem necessary, it implores all G20 member countries and other interested parties to explore ideas to safeguard the continued relevancy of the multilateral trade governance organisation. G20 member countries have also ‘stepped up’ dialogue on current international trade developments.

    The statement comes in the wake of increased threats to the multilateral rules-based trading system. The most recent are the current escalating trade tensions between the US and China manifested in the imposition of billions of dollars’ worth of tariffs on goods by both sides. It also comes  amidst new threats by United States’ President, Donald Trump, to withdraw the US from the WTO, which he perceives to be inherently biased towards the US. This is, despite independent research showing that the US, which is the most litigious of the WTO member countries, wins about 91% of the trade disputes in which it was the complainant, and 89% of cases as respondent. Despite this positive track record, the Trump administration continues to block Appellate Body judge selections, which threatens to grind the WTO’s once vaunted dispute settlement body system to a halt.

    Concerns about the relevance of the WTO predate the Trump administration, with a major concern being the WTO’s consensus-based decision making model which requires agreement by all member countries for progress to be made. Out of frustration with the slow pace of the Doha negotiations and the refusal to include new emerging issues into negotiations, there was a marked shift in the US focus during the Obama Administration from the now defunct Doha Development Round negotiations towards the negotiation of mega regional trade agreements. However, the Trump administration marks the first time a US administration has openly threatened to withdraw from the WTO, an organisation it was instrumental in pushing for and forming.

    One positive aspect to the Trump administration’s anti-WTO stance and actions is that they have given new urgency to the need to reform the WTO to secure its relevance, efficiency and effectiveness for all members, including small vulnerable economies (SVEs). SVEs account for only a tiny fraction of world trade, but generally have high levels of trade openness and a narrow range of exports and export partners. As such, any unfair trade practices by one of their major trading partners which prejudices an SVE’s exports, could have a deleterious impact on its economy and development prospects.

    Despite the problems inherent with the consensus-based decision making model, the removal of such a system would likely undermine the WTO’s legitimacy and disenfranchise less powerful member countries, such as SVEs. The WTO is of particular importance to SVEs because it is one international organisation in which they have equal voice, and because, at least in theory, it provides a mechanism for small States to hold hegemons to account when they engage in unfair trade practices. This, however, has not always been the case. For instance, Antigua & Barbuda’s inability to receive compensation from the United States following the rulings in the US-Antigua Gambling case is the most glaring example of how power asymmetries affect small States’ ability to hold powerful States to account, even where rulings have been made in their favour.

    There have been numerous calls for reform of the WTO over the years, as well as several studies, including this one by Bertelsmann Stiftung, which have posited recommendations. Encouragingly, current Director General of the WTO has expressed support and willingness for reform of the organisation, noting that some countries have already begun talks. It is hoped that CARICOM countries, as well as other SVEs, will demand a voice in these discussions and offer their ideas for reforming the WTO to ensure it meets their needs. The presence of CARICOM at the G20 Trade and Investment Ministers meeting, represented by Jamaica, is a good start.

    Despite the WTO’s shortcomings, the fact that non-Members continue to pursue accession to the WTO show that countries generally still see value in the organisation.

    In essence, the G20 Statement shows support in principle, at least from a majority of the world’s largest economies, for the continuation of the rules-based multilateral trading system which the WTO affords and states commitment towards making the reform of the WTO an urgent priority. Now these words must be translated into action.

    The full G20 Trade and Investment Ministers’ Ministerial Statement may be read here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • WTO: G20 Trade Restrictions remain high, despite slowdown in new measures

    WTO: G20 Trade Restrictions remain high, despite slowdown in new measures

    Alicia Nicholls

    Despite a slowdown in new measures, existing trade restrictions among the G20 countries remain high. This is according to the World Trade Organisation’s (WTO) latest Report on G2o Trade Measures (mid-May 2016 to mid-October 2016) released November 10, 2016.

    Some of the key findings of the sixteenth edition of this Report are as follows:

    • A total of 85 new trade-restrictive measures were implemented by G20 economies during the review period (mid-May to mid-October 2016).
    • This is an average of 17 new measures per month
    • The good news is that this is a decrease  from the 21 per month imposed in the previous reporting period (mid-October 2015 to mid-May 2016)but the WTO also cautioned that this is actually a return to the trend level for new trade-restrictive measures since 2009.
    • Of the 1,671 trade-restrictive measures (including trade remedies) recorded for G20 economies since 2008, only 408 had been removed by mid-October 2016.

    As noted by the WTO, these  findings are of concern given the slowdown in global trade flows and the continuing economic uncertainty in the world economy.

    The WTO in its recent downward revision of its trade forecasts is now predicting 1.7% growth in world merchandise trade volumes in 2016 (down from its previous forecast of 2.8%), the slowest rate of growth since 2009, and lower than global GDP forecasts of 2.2%.

    I would also add that President-elect Trump’s tariff-happy rhetoric does not bode well for the future reduction of trade restrictive barriers if he does go through with his promises.

    The WTO therefore noted that:

    “It is imperative that G20 economies — collectively and individually — re-double their efforts to deliver on their commitment to refrain from taking new protectionist measures and roll back existing ones.”

    The full report may be accessed here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.