World Trade Organisation (WTO)

When it comes to trade disputes, give WTO a chance

The World Trade Organisation is a platform for a rules-based global trading order and dispute resolution mechanism and it is, sadly, being sidelined by major players including the United States

PUBLISHED : Tuesday, 17 July, 2018, 7:47pm
UPDATED : Wednesday, 01 August, 2018, 4:04pm

As China and the United States have moved to trade war footing, the complexity of global supply and value chains has prompted anxiety about the extent of collateral damage to other countries not directly targeted by tit-for-tat tariff exchanges – to their industries, their job markets and, ultimately, the well-being of their economies. But not much attention has been given to collateral damage to the standing of the World Trade Organisation, the platform of a rules-based global trading order and dispute resolution mechanism.

The evidence of collateral damage and neglect abounds, from American dissatisfaction with the WTO’s response to what it sees as abuse of free-trade principles and unfair practices by China, to doubts about US commitment to the organisation, to China’s agreement with the EU to set up a working group to study reform and revamping of the WTO to make it more effective, and to China advocating that countries that have issues with it should use the WTO as a mechanism to solve their disputes.

China-US trade dispute: what role does the WTO have to play?

It is time something was said in defence of the organisation. It has served as an important infrastructure for globalisation over the past three decades and contributed a lot to prosperity and poverty alleviation. Like other global government agencies from time to time, it faces issues such as keeping up with changing times, and stifling bureaucracy and inefficiency, compounded by conflicting views among member states.

Indeed, the president of the European Economic and Social Committee, Luca Jahier, while deploring US tariff measures as divisive, told the South China Morning Post that existing rules and institutions both need improving. But by and large, the WTO remains an important international body despite its faults. So supporters of free trade and opponents of self-defeating protectionist policies should encourage all the major players to stand by the WTO as a viable channel for solving trade disputes, as a starting point for an effort to reform the organisation. Giving up on the WTO or setting aside its processes will only break down the globalisation process, which cannot be good for developing or developed countries.