The pandemic has highlighted the need for cooperation to address unprecedented global challenges and the vacuum left by the US, says an observer.
WASHINGTON: COVID-19 is fast-tracking the declining relevance and effectiveness of a rules-based global trading system – one already buckling under the stress of a myriad of factors including the rise of China and the turn inwards by the United States.
The COVID-19 pandemic could not have come at a worse time for an international trading system already at a crossroads. In fact, what happens next could lead to the renewal of globalisation or its unravelling. These rules, embodied by the WTO, are not a system for global governance or hyper-globalisation. They encourage cooperation through non-discriminatory treatment for the cross-border movement of goods and services – US$19 trillion of goods trade in 2019 alone – and support economic growth that has generated enormous benefits globally and for the US.
But large cracks in these longstanding norms, including recent export restrictions on healthcare products, are part of a bigger picture of rising trade barriers. The WTO has also been unable to address these challenges or keep pace with new areas of trade, and is hamstrung by its consensus-based decision-making, stalled negotiations and distrusted dispute settlement system.
Bolstering WTO norms, like non-discrimination, predictable tariffs, and the rule of law, that allow global commerce to flourish is a start. This will take bold ideas and strong US leadership. Managed trade frameworks like the US-China ‘phase one deal’ and narrow political bargains, such as those with Japan, Brazil and India, undermine US leverage to address significant trade barriers. The US is better served pursuing agreements to build on and expand WTO rules with like-minded countries, particularly those whose domestic systems and underlying values align.
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