Sustaining prosperity: Asia-Pacific business supporting the WTO

Senior Asia-Pacific business leaders have issued a strong call to support and reform the World Trade Organisation, recognising the critical role that the global rules-based trading system plays in sustaining prosperity for all countries, businesses and communities.

At the initiative of ABAC New Zealand, the APEC Business Advisory Council (ABAC), which met last week in Jakarta, has issued a strong and unified statement of support for the WTO.  The statement emphasises the crucial role of the global rules-based system in levelling the playing field, giving a seat at the table to even small players in the global system, sustaining growth and creating opportunities for businesses both large and small, and in emerging as well as advanced economies – reflecting the diversity in economic size, levels of development and trade interests across the APEC region.

“It is surely no coincidence that the past year has seen a sharp uptick in protectionist action around the world, just as we feel the ripples of a loss of momentum in global trade and economic growth.”

Reform and modernise existing WTO rules and procedures

The statement also acknowledges the need to reform and modernise some of the existing rules and operating procedures, which are of course now nearly a quarter of a century old (and in the case of GATT rules, over seventy years old).  In particular, the statement calls on APEC economies to complete the unfinished business of the Doha Round (including on agriculture and services), enhance transparency, update the rules to reflect 21st-century business models including e-commerce and digital trade, and address non-tariff barriers (including by applying ABAC’s Cross-Cutting Principles on NTBs – the development of which was also led by ABAC New Zealand).  

Dispute settlement in crisis

The statement emphasises the need to address the currently impasse in the dispute settlement system.  The crisis in the Appellate Body, which comes to a head in December of this year as the number of AB members drops below the functional bare minimum, is deeply troubling for New Zealand – which has of course been able to use the WTO dispute settlement system to defend our interests even against much larger players including the US, Indonesia, Canada, the EU and Australia.  Keeping the dispute settlement system functioning is now a matter of the greatest urgency.

ABAC unity in the face of a worrying loss of momentum in global growth

The significance of the ABAC statement should not be underestimated.  The ABAC-wide ‘call to action’ transcends some of the differences that have been only too evident at the political level on the WTO and global trade more broadly (see for example our previous blog here), reflecting the compelling case for sustaining the global rules-based system for business.   

Minds were no doubt focused at the ABAC meeting by gloomy recent forecasts for the global economy, including the IMF’s prediction that global GDP would grow by just 3.3 percent, down from the 3.5 percent that had been forecast in January (this would make it the weakest growth level since the Global Financial Crisis, and the third time that the IMF has downgraded the outlook in the past six months).  In a similar vein, the WTO has forecast world merchandise trade to drop to 2.6 percent this year – by comparison to last year’s forecast for this year of a 4.4 percent growth rate.  It is surely no coincidence that the past year has seen a sharp uptick in protectionist action around the world, just as we feel the ripples of a loss of momentum in global trade and economic growth.

The path ahead will no doubt be rocky, but for a small, distant, open, globally-connected economy like New Zealand, the case to press on, despite the challenges, is a no-brainer.   It is heartening that this view is widely shared by our friends across the Asia-Pacific business community.

This post was prepared by Stephanie Honey, the Associate Director of the New Zealand International Forum and New Zealand’s WTO agriculture negotiator for several years of the Doha Round.