Carney, multilateralism champion, must help save the World Trade Organization

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Robert Wolfe is professor emeritus of policy studies at Queen’s University. He has written extensively on WTO reform issues.

Peter Ungphakorn is a former journalist and a former information officer at the WTO Secretariat. He writes Trade Beta Blog, to which Mr. Wolfe is a contributor.

The World Trade Organization is in crisis and badly needs proper attention, and that’s going to be a struggle. The danger is that the world’s leaders will simply let it sink.

At a political level, the WTO is ignored. It languishes in a crisis of neglect and lack of faith.

U.S. President Donald Trump loves tariffs and has hit the headlines regularly by wielding them arbitrarily and with nonsensical excuses at friend and foe alike. Mr. Trump trampled over treaties the U.S. had itself negotiated, not only the United States-Mexico-Canada Agreement, but crucially the rules and principles of the 166-member WTO.

Since the WTO deals with global trade, we’d expect governments to rush to its defence. Instead, leaders seemed to join in the WTO-bashing. Last year, EU Commission President Ursula von der Leyen called the WTO “defunct.” German Chancellor Friedrich Merz said, “The WTO hasn’t worked for years.”

Failure to reform WTO may prompt some countries to seek other free-trade options

In his famous speech to the World Economic Forum in Davos, Prime Minister Mark Carney said that the WTO was among multilateral institutions that are greatly diminished, which is why “we are championing efforts to build a bridge between the Trans-Pacific Partnership and the European Union.”

But since then, judging by the readouts he releases, Mr. Carney has barely mentioned the WTO with other leaders. International Trade Minister Maninder Sidhu’s press release as he left for Yaoundé, Cameroon, was remarkably empty, considering what he faces at the WTO Ministerial Conference.

These leaders are wrong. World trade needs the WTO. Canada does, too.

The WTO may sometimes seem ponderous and technical. Decisions require consensus, which takes time with such a large membership. The impact is never immediate.

At the conference this week in Yaoundé, ministers from member countries will spend almost half the time discussing how to deal with fundamental problems that are preventing the WTO from moving ahead, including their recent inability to build consensus.

One proposed solution, to allow subsets of members to reach agreements among themselves within the WTO (known as plurilaterals), is blocked, primarily by India.

A major issue: Dispute settlement, the arbiter of whether countries’ trade measures are legal under WTO agreements, is disrupted because the U.S. is blocking appeals. Sixty countries, including Canada, have found a less formal stopgap (known as the Multi-Party Interim Appeal Arbitration Arrangement), but fewer than half of the membership are using it.

Many people think the U.S. has cast the WTO aside. That’s certainly untrue at a day-to-day technical level, despite the political rhetoric. It attends meetings and submitted almost 1,000 documents in Mr. Trump’s second term. It has paid its outstanding contributions to the budget. With Mr. Trump, the WTO is in a better position than the many international organizations from which he has withdrawn.

But despite months of preparation in Geneva on various ideas for WTO reform, and on specific subjects such as agriculture and fisheries subsidies, member governments are still too far apart to agree on anything in Yaoundé other than to continue talking afterward.

Without decisions on substance, the conference could appear to have achieved nothing except promising further talk. Yet, if by treading water the conference manages to keep the WTO afloat, that would be a success under the circumstances, until a better opportunity presents itself. Conversations in Yaoundé might even encourage the ministers present to pay more attention to the WTO and understand where the difficulties lie in work after the conference.

We should think of the WTO as world trade’s operating system, helping almost US$35-trillion flow smoothly every year. When it works, it’s quietly ticking over in the background – hundreds of delegates meeting in Geneva daily, examining Indonesia’s new regulations on microbiological and chemical contaminants in food, or how Canada has reacted to other countries’ subsidized exports.

The system makes trade policies more transparent and predictable, lowering costs. For example, the basic principle of countries treating their trading partners equally, known as most-favoured-nation (MFN) treatment, sounds abstract, but it simplifies trade and trade negotiations considerably.

Mr. Carney got a lot of attention talking about a “rupture” in world affairs. But he and his Trade Minister must help save the WTO. If the organization is allowed to fade away, and world trade fragments into multiple small agreements, that will increase costs for everyone. It won’t be as instantaneous as closing the Strait of Hormuz, but it will still be bad.