Since its launch in 1995, the World Trade Organisation (WTO) has overseen significant shifts in economic and political relations. But back in 1995, the world had just emerged from a multipolar world to a unipolar status, where deep uncertainty prevailed over the shifting relationships between nations.
In fact, the GCC countries, at the collective level or within the scope of each member-stat, were trying to come up with practical ways on how to deal with the new world order, particularly given the great importance of trade due to their strategic location and wealth. Several studies were conducted, prompting the GCC to accelerate their accession to the WTO, along with other 160 countries and 24 observer countries. A decision that was deemed appropriate at the time.
Over the span of 20 years, the global push led by the WTO towards liberalizing goods and services gained momentum, resulting in the creation of millions of jobs, particularly in least developed economies. This positive trajectory however experienced a setback over the past decade, influenced by various factors, notably the shift in the balance of global power, including a transition back to a multipolar world, as highlighted by Josep Borrell, the EU's foreign policy chief.
Numerous countries, particularly the developed ones that used to strongly advocate trade liberalisation, have found this has adversely harmed their trade and economic situations due to production costs and losing their competitiveness on the global stage.
As the architects of the WTO system, the developed countries, who have been involved in the project for over 40 years, are increasingly stepping back from certain obligations. This is particularly evident as many trade dispute cases filed with the WTO have ruled against them.
During its recent conference held in Abu Dhabi last month, the UAE provided all the reasons for WTO’s future success, including overcoming some challenges. This happened despite the disparity of stances among major countries, particularly those that transitioned from developing to emerging status in recent years.
Non-functional since 2019
For instance, India, which refused accusations of impeding WTO talks during the conference, said: "It only wants justice in the global economy, whose rules have long stood against poor nations.”
Piyush Goyal, Indian Minister of Commerce and Industry said: “The WTO's most important priority is the restoration of its ‘appellate body’, which is responsible for settling disputes between its member states. The body, which is composed of seven countries, has been non-functional since late 2019.”
This confirms our conclusion about arbitral decisions issued by the WTO in the early years of its work.
Also, there has been a notable shift away from the WTO-led trend towards trade liberalization, with a marked rise in protectionist and counter-protectionist measures across developing and developed nations alike. This became apparent as many countries experienced protests stemming from perceived negative impact of openness on certain sectors of their economies. For instance, European farmers have been staging protests for over two months.
Fight over EV prices
The outlook appears grim, with numerous challenges overshadowing the WTO’s work in an escalating tide of protectionism. China recently voiced ‘its grave concern over the trade investigation initiated by the EU on China’s electric vehicles’.
This arises amidst intense competition between China and the EU in the trade of EVs, marked by significant price discrepancies.
A fundamental question arises regarding the WTO’s future role, in the sense whether the rapid shifts in the balance of economic power lead to a change in the rules governing global trade? Or will all countries contribute to helping the organisation play its important role in fostering trade development and facilitate the flow of trade exchange between countries for the mutual benefit of all parties involved?
The writer is a specialist in energy and Gulf economic affairs.
