Rethinking Trade - Season 1 Episode 41: A New U.S. Approach to the WTO?
November 15, 2021
U.S. Trade Representative, Katherine Tai’s recent speech about the World Trade Organization was shocking. Why? Because she openly and frankly discussed the yawning gap between the WTO’s expansive rules and what is right and good for people and the planet. And she made clear that the rules of the global commerce agency need a major redo.
That sort of tough love may be the last chance for the WTO, which has suffered a deepening legitimacy crisis for decades. Today WTO intellectual property barriers empower a few pharmaceutical corporations to limit how much vaccine is made, prolonging the pandemic.
In this episode we unpack USTR Tai’s recent comments and what they mean for the future of the WTO.
Learn more: www.tradewatch.org
Music: Groove Grove by Kevin MacLeod.
Transcribed by Sally King
Welcome back to Rethinking Trade where we don't just talk about trade policy, we fight to change it. I'm Ryan and I'm joined once again by our in-house trade expert, Lori Wallach. Today, we're going to be talking about a recent speech from United States Trade Representative Katherine Tai about US trade policy and the World Trade Organization. Lori before we get too far into the show, maybe you can just summarize for our listeners, what the WTO is, and a bit about the history of calls for significant changes to be made at the WTO.
So the WTO is the World Trade Organization. And it is a body that replaced a thing called the General Agreement on Tariffs and Trade, which was the post World War II body that basically set the rules of border taxes, tariffs and quotas, how much stuff that come in. Unlike the old GATT, the general agreement, tariffs and trade the WTO broke all the boundaries of what has ever been in a trade agreement and imposed one size fits all on the whole world obligations that countries owe to corporations like extended monopoly protections for pharmaceutical corporations, which right now is making the WTO an obstacle to ending the pandemic, or requirements that you can't regulate service sector companies healthcare or transportation, or banks, for instance, how big they are, or whether they are protecting consumers. And it's set up rules that even set limits and how we can spend our tax dollars as governments. Really invasive and behind the borders policymaking. And the key requirements of the WTO is a provision that requires all signatory countries to, "ensure compliance of domestic laws, regulations, and administrative procedures," with all of the WTO is non-trade rules, so it basically sets a ceiling imposed by corporations and what our democratically elected governments can do on a whole bunch of stuff unrelated to trade. The WTO has been suffering from a crisis of legitimacy almost from when it was hatched because its very establishment was opposed by many of the developing countries that are members of it. And the US and European Union basically cooked a deal. And it came into effect in 1995, replacing the old GATT, and ever since there have been efforts by the corporate world and by some governments to expand its powers even more. And people famously remember the Battle in Seattle, the 1999 WTO ministerial in Seattle, where basically the developing countries stood up and said, " No. We are not expanding this further. We need to fix the existing rules." The WTO has never really recovered from its crisis of legitimacy. And then over the last 10 years or so it's dispute panels because it strongly enforces all these extreme rules. Its dispute panels started pushing out even further and further and kind of making up new laws given the negotiations were jammed, until ultimately, first the Obama administration then the Trump administration said this crap has to stop. And ultimately the Trump administration basically put that enforcement system out of business by not appointing new judges. And at this big speech on the WTO just recently, the new US Trade Representative Katherine Tai for the binding ministration basically said, yeah, big reforms are needed before we want this thing back in operation.
So I just wanted to play a quote from that speech, Lori from USTR Tai's, recent speech at the Graduate Institute, the Geneva trade platform, and then I was hoping to get your thoughts on it. Here's the quote.
USTR Kathrine Tai
"For some time, there's been a growing sense that the conversations in places like Geneva are not grounded in the lived experiences of working people. For years, we have seen protests outside WTO ministerial conferences, about issues like workers' rights, job loss, environmental degradation, and climate change, as tensions around globalization have increased. We all know that trade is essential to a functioning global economy. But we must ask ourselves, how do we improve trade rules to protect our planet and address widening inequality and increasing economic insecurity? Today I want to discuss the United States vision for how we can work together to make the WTO relevant to the needs of regular people."
Lori, how significant is this quote coming from the United States Trade Representative? And what does it say about the potential future of US trade policy?
It's a really big deal. And the reason it's so significant coming from the US is historically things like that might have been said from activists from scholars like Nobel Prize-winning economist Joe Stiglitz, from developing countries. But it's a really strong leadership development to have the US Trade Representative admitting that there are problems and in fact leading that there are problems, and then committing to try and do something about it. It's amazing.
I also I just want to play another quote as well. This one is maybe a little bit more in the weeds. Here's the quote:
USTR Kathrine Tai
"Over the past quarter-century, WTO members have also discovered that they can get around the hard part of diplomacy and negotiation by securing new rules through litigation. Dispute Settlement was never intended to supplant negotiations. The reform of these two core WTO functions is intimately linked."
Can you speak a bit about this dispute settlement mess at the WTO? And what reforming it could look like?
So this is the thing I was talking about, where because the agenda at negotiations is always more WTO power for corporations to set the rules on non-trade stuff, the negotiating agenda is just broken down. And so these tribunals who are the enforcement tribunals who can impose huge billion-dollar sanctions for countries to get nailed by trade sanctions unless and until they change their domestic laws to meet these WTO dictates. That system has been put out of business for three years because the US refused to appoint more appellate body judges. So they don't have a quorum, so they can't literally impose these sanctions. And what USTR Tai said, basically, was that because the way that the WTO enforcement system has played out a lot of countries instead of talking to each other at the WTO, or trying to negotiate settlements that are mutually agreeable, have started to basically try and use the litigation, the enforcement system to get their way. And that's not what it was supposed to be about. And that's actually something both sort of defenders of the current WTO rules will say, and those who think that they need to be majorly replaced. So the reform that she's talking about basically is linking both pieces, which is that the actual enforcement mechanism, the dispute settlement system needs major redo. But also she's making the exactly spot on right point, that the substantive rules also need to be updated, replaced, fixed, and that you're not going to end up with one without the other. No one wants to see strong enforcement of bad rules. If there isn't a way for countries to talk to each other and resolve their issues diplomatically, then you're not going to have successful negotiations to get the rules that deserve strong enforcement. So it is exactly the right way to be thinking about what the WTO fix agenda needs to be. And a lot of civil society groups have been taking sort of, I would say, you know, more robust, even wider position on that for some time. They talk about they don't want a new round of WTO expansion, but they want to turn around fixes to the existing rules. So again, it's super powerful that you have a US leading trade official, basically saying that both the process of enforcement and the underlying rules need to be reviewed. And I think she probably say fixed or reformed, civil society would say replaced, but at least everyone's heading the same direction, which has not been the case for the US. Typically US is going in one direction and civil society is going to another. So it's pretty hopeful and a lot of work to do but pretty hopeful that that's the perspective.
And Lori, what did USTR Tai say in this recent speech regarding the WTO TRIPS waiver, which our listeners are probably familiar with at this point, is there any movement on the waiver either at the WTO or from the USTR office?
Well, this is kind of a catch-22. Because at this point, the whole world is looking at the WTO and is seeing it as an obstacle to ending the pandemic. The WTO is, again, not about trade, intellectual property rules are reaching behind borders requiring 164 WTO members to guarantee monopoly control by a handful of pharmaceutical companies over how much and where vaccines for COVID-19 treatments, diagnostic tests are made, and where they're sold. And that is obviously fueling the continuing outbreaks needless deaths, economic chaos, we're just no place close, we just have an absolute shortage in the supply. The current vaccine makers and their monopolies will not deliver what the world needs. And until these WTO rules get out of the way, the whole world that's looking at this is right, the WTO is an obstacle. It's not only not part of the solution of one of the biggest challenges facing humanity, it is basically at this moment, the biggest obstacle. So with that in mind, actually, the speech did not focus on, in a sort of pragmatic sense, how the WTO is intellectual property barriers are going to be gotten out of the way. But if they're not, that could be sort of the final nail on WTO his coffin. I mean, the organization is sort of hanging by thread. Its negotiating system has failed to work forever. The member countries are in deep disagreement about what the substance of the role should be. But clearly, they're extremely outdated and have become an obstacle not just to stopping the pandemic, but to surviving climate crisis, etc. And in the face of an existing near-fatal legitimacy crisis. If the WTO after a year, because it was October 2020, that countries proposed temporarily waiving these WTO corporate pharmaceutical monopoly rules. If the WTO can't even get out of the way of this huge pandemic counter fight, basically, its lash read of potential usefulness or legitimacy could just be totally trashed. So institutionally, the WTO needs to deliver a waiver. And USTR Tai's speech basically said, there needs to be more work, we need to have an outcome. But you know, it's not looking super auspicious. I mean, we were one month out of the WTO ministerial, which certainly isn't you don't have to go to a ministerial to do this waiver of the WTO, Trade Related Intellectual Property or TRIPS rules, you can do that at any meeting of the general basically body, which is called the General Council. But this ministerial was certainly was the far out deadline that the head of the WTO, the director-general set by which this ought to get done. And it's, you know, it's not getting done. It's in part, because the European Union on behalf of Germany is blocking it. But also the US has a very strong hand to play, that has not been played to lead forward, I think the EU would get out of the way. Because at this point, there are 130 countries that support a waiver. And you have a handful of countries that oppose: Germany, the UK, Switzerland, and they've got a couple that are just missing an action. So I think between now and the November 30, meeting of the WTO Ministerial Conference, part of the fate of the WTO is going to be sealed. And to the extent that the Biden administration is key in getting these changes done, I think we all need to be focused on how we can help make sure it happens. And part of that certainly is talking to members of Congress if you run into them, because I think a lot of them want to see this done and they can speak to the administration. But also, you know, it is talking to your friends and your family about why we don't have enough vaccines worldwide why the next variant can come kick our ass, and that is because of WTO rules, and it's fixable, but we're gonna need to organize to fix it.
Rethinking Trade is produced by Public Citizens Global Trade Watch. To learn more you can visit rethinktrade.org. You can also visit tradewatch.org. Stay tuned for more and thank you for listening.