Analysing WTO conference

New govt must recalibrate trade policies, actively engage with global community

ISLAMABAD:

Amid heightened geopolitical tensions and elections spanning 64 nations, coupled with escalating discontent regarding trade matters, expectations for significant breakthroughs at the recently concluded 13th WTO ministerial meeting in Abu Dhabi were modest.

Nonetheless, with 164 members convening at the highest level to evaluate the functioning of the global trading framework and chart its future course, concerted efforts were made to make headway on numerous trade issues.

These included reviving the WTO Appellate Body, strengthening the fisheries subsidies agreement, state policies on food procurement (public stockholding) and renewing the multilateral moratorium on customs duties on electronic transmissions.

Despite round-the-clock negotiations and extending the conference duration several times, except for extending the moratorium on electronic transmissions, success eluded on all these issues, as this required the consent of all WTO members.

However, in some areas where negotiations were conducted by groups of countries in a plurilateral setting, significant breakthroughs emerged. These include a new agreement on domestic regulations in services, where 72 nations, encompassing over 92% of the world’s trade in services, reached a deal.

These regulations aim to alleviate procedural impediments enterprises encounter, yielding a worldwide cost reduction of $125 billion. Considering services’ pivotal role in driving commercial growth and marking the first significant outcome in services trade in over a quarter-century, this achievement is a notable milestone.

Another significant accord that was concluded earlier in July 2023 but finalised in the Abu Dhabi ministerial conference by 123 WTO members is the “Agreement on Investment Facilitation for Development” (IFD).

Read: WTO meeting seeks modest outcomes

Since many earlier efforts in different settings, including in OECD, had failed, this is hailed as another major success. The agreement is expected to facilitate the flow of foreign direct investment among WTO members, especially for developing countries.

As it also incorporates special and differential treatment provisions, including technical assistance and capacity-building support, it received overwhelming support from developing countries, which account for two-thirds of signatories.

It is estimated that the IFD could generate global welfare gains of $295 to $1,041 billion with most gains accruing to low- and middle-income countries.

Since the failure of the Doha round, plurilateral agreements have shifted from being exceptions to becoming the norm. Unlike multilateral WTO agreements, plurilateral are voluntary and only binding on members that choose to ratify them.

They are typically negotiated through Joint Statement Initiatives (JSIs). Key plurilateral initiatives currently being negotiated include on issues such as digital trade, e-commerce, environmental sustainability, fossil fuel subsidies’ trade relevance, MSMEs (micro, small and medium-sized enterprises), and women in trade.

Unfortunately, Pakistan is not active in any of these plurilateral negotiations as its membership is optional. In fact, it has not yet become a member of the WTO’s most successful plurilateral Agreement on Information Technology (ITA), which now accounts for over 97% of world trade in information technology products, estimated at $1.7 trillion or more than the total trade in automobiles and pharmaceuticals.

Many studies show that in the participating developing countries, productivity has increased several folds due to the lowering of the cost of communication networks and IT equipment.

When Mian Nawaz Sharif was the prime minister, in 2017 he approved the recommendations of a high-level committee that Pakistan should join the ITA. However, before the summary could be submitted for cabinet’s approval, he was removed from office and since then no further action has been taken.

The new government must urgently recalibrate its trade policies and actively engage with the global community across various platforms. Participation in multilateral and plurilateral negotiations at the WTO is imperative, alongside reinvigorated involvement within regional frameworks such as Safta and RCEP.

Simultaneously, unilateral trade liberalisation is warranted to bridge the substantial gap that has emerged with other competing developing countries. Over the past 15 years, Pakistan has entrenched itself as one of the most protectionist nations and is now grouped with Myanmar and Zimbabwe for its inward-looking policies.

Without sweeping reforms, Pakistan’s growth rate will continue to remain below par, export growth will remain stagnant and reliance on loans will increase further.

The writer is a senior fellow at the Pakistan Institute of Development Economics. He has previously served as Pakistan’s ambassador to WTO and FAO’s representative to the United Nations at Geneva

Published in The Express Tribune, March 4^th, 2024.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.