KINGSTOWN, St. Vincent, CMC – The Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, on Tuesday, said that the global community is facing very challenging times concerning trade and that this is probably the most disruptive period in international trade since the 1930s.
But regional countries, like Dominica and Antigua and Barbuda, have warned that unless the rules of engagement are observed, “these institutions will not work for us.
“In the first place. There is no real benefit to us because of the structure of our economies. However, if we are to play a part and ensure that there is fairness around the world, we will not achieve the desired objectives of the WTO.
“So I appreciate very much the leadership and the commitment of our dear Secretary General, and I believe that with her election to the post and what she’s able to do thus far, it has brought some level of confidence in us, but the reality has also tempered that,” Dominica’s Prime Minister Roosevelt Skerrit said.
Antigua and Barbuda’s Foreign Affairs, Immigration and Trade Minister, E.P. Chet Greene, said that while the Caribbean remains a peaceful corner of the world given the wars taking place in Ukraine, Gaza, Israel, and Iran, among other regions, “our danger is… (the) slow suffocation of our economies and the attendant stagnation of our societies.
“The forces that are shaping today’s world have no patience with small island developing states, and our vulnerabilities are not acknowledged, not to mention that our situation elicits no special consideration, Greene said, noting that “many of the major institutions that used to underpin the international order are no longer equal to the challenges that confront them.”
Addressing the Seventh Meeting of the Organisation of Eastern Caribbean States (OECS) Assembly, Okonjo-Iweala said the decision by the United States to impose a tariff on countries, including those in the Caribbean, could result in a contraction of global trade by about 0.2 percent.
“And this is a huge turnaround from the 2.7 percent growth in global merchandise trade that we had projected for this year,’ she said, telling government and opposition legislators from the sub-region that the uncertainty created by the whole situation could result in a ‘contraction of about 1.5 percent which is a huge dent on global trade growth”.
United States President Donald Trump has implemented trade tariffs in a move that economists and other traders say is designed to dismantle much of the global economy’s architecture and trigger broader trade wars.
Okonjo-Iweala stated that the WTO has been modeling every single change, with the uncertainty between the US and China bringing a tremendous amount of uncertainty back into the global trading system.
“But we are so glad they had the meeting in Geneva, the one in London, and …when we add the impact of the China-US de-escalation, we have a turnaround of global merchandise trade growth to 0.3 percent, but then if we add the 50 percent steel and aluminum tariffs that were recently brought in and the impact of a possible 50 percent tariff on the European Union, we go back to a contraction of 0.5 percent”.
The WTO Director-General said that for the OECS countries, their economies are service economies, “and therefore, mainly, are not as impacted by these tariffs as they could have been.
“But services don’t escape because anything that happens to global goods trade has some impact on services, but maybe not as much as one would expect,” she said.
Okonjo-Iweala said in her discussions with the United States representatives, including Ambassador Jamieson Greer and Howard Lutnick, the Secretary of Commerce, the reasons they gave for going unilateral, “I thought that the approach of unilateralism to solve the problem was probably not the best one to take” and that a “more cooperative approach…would have given us a better answer for all WTO members all round”.
She said Article 28 of the General Agreement on Tariffs and Trade (GATT) enables a member who is no longer pleased with the situation of the tariffs to come back and say to other members, “We want to relook at this.
“But they’ve chosen to go the unilateral way. They have some valid criticisms, and we must ask ourselves, how did we arrive at this point? What we do about it has a lot to do with this question.
“First, WTO members should recognize that the trade of the United States is 13 percent of world trade. So 87 percent of world trade is among other members. And they should continue to trade among themselves on WTO terms, the most-favored-nation tariff terms.
“And one of the things that other WTO members can do about the situation is to come together. Come together to say we will continue to respect the system. We will continue to do our trade on most-favoured-nation terms to strengthen the system.”
She acknowledged that small island economies can be very vulnerable, and they need the stability and predictability of the system.
“So making your voices heard on the importance of that stability and predictability is very important, and that’s one action you can take in banding with other members to make sure that your voices are heard on this issue.”
Okonjo-Iweala said the OECS countries would have an opportunity to do so at the 14th Ministerial Meeting of the WTO in March next year “so that we can safeguard the system.”
She said that OECS countries must also ask themselves, “as uncomfortable as it may be,” whether there are any things the US says it is doing through these unilateral actions because it wanted some reforms at the WTO and other members were not forthcoming in supporting those reforms.
“They’ve made criticisms of unfair trade practices, on level playing field issues, use of subsidies in ways that are not fair to others, against certain other members, like China. China itself has made criticisms of the system about those who have agricultural subsidies.”
She said that developing countries, such as those in the OECS, have also been critical of the system because it hasn’t delivered as much for them.
“So all these are criticisms members have, and if these criticisms are the reasons why the US decided to take unilateral action, well, maybe we should turn this very uncomfortable situation into an opportunity, this crisis into an opportunity to say, what action can we take as members to reform the organization and make it fit for purpose and fit for the 21st Century.”
She said she believes that some of these reforms need to be very deep.
“We have issues, as I said, about some of our rules that may not be fit for purpose, to make sure that members are open, transparent, and fair with each other and declare their trade policies and practices in a way other members can gauge and see.
“We need to look at our negotiations function to make sure that we can use all instruments at our disposal, be it the multilateral instrument or the plurilateral. We need to look at our dispute settlement system that is still working but not working as well because the appellate body has been humbled for some years now, and say, ‘How do we bring all these things together into a deep reform?'”.
Dominica’s Prime Minister, Roosevelt Skerrit, said while the Director General has been able to “carve out a special sitting for us within the WTO…the reality is the while we have moved to this multilateral system, the new world order is moving towards a unilateral system.
“We can be as articulate as we can be or should be. But the reality is that’s all we can do. We have a case that’s more than 15 years old involving Antigua and Barbuda. It went through the process as enshrined in the WTO, but nothing has happened,” Skerrit said.
He said that the United Nations is also talking about reform and that while times have changed, “it has not changed at all.
“Unfortunately, the WTO has followed in that path; it was created to address some issues in the world. The objectives were noble, and extensive consultation was conducted. But the reality is, it is not functioning for people like us, and this is why you will see, Madam Secretary General, that there is not much involvement on the part of countries like ours, not only in the OECS but globally, in the deliberations at the WTO, to the extent to which we should be.”
Skerrit said that if you are knocking on a door and it’s not going to be opened, “then your question is, do you continue expending your energy seeking to knock the door down?
“So, and for somebody like myself, who’s been around for some time, one can understand my constellation because I have seen the world change dramatically over the last 20, 25 years.
“The world is a more difficult place for countries like ours, and I believe that not to pre-empt the bills that are before us, but I believe these are the kind of things that we need to be looking at for us to see how we can keep more of the money that we have generated within our economies to remain in the union.
But the OECS is at a juncture where more pragmatic and urgent decisions need to be taken. The lecturing and the bantering of words will not help us. This is a time for action on our part, and we need to look within ourselves for our survival.
“And so where we and the WTO are concerned, that is to say, the OECS. The OECS needs to have a serious conversation. And the reality is, with all of these international organizations, is there a need for us to be members?
“I mean, the sheer cost of going to these conferences, you know, plane tickets, a hotel and per diem and so on. I mean, what’s the resultant benefit? And so I believe that the OECS needs to have — I think it has to be a collective action. It can’t be an individual action. It has to be a collective discussion and collective action on this and to determine what is our role in this,” Skerrit said.
“We have to close ranks. If we don’t close ranks, you’ll have a challenge. And so I want to say to my dear sister, whom I have the highest personal and professional respect and admiration for, and who I voted for, Dominica. We will continue to support her in her efforts towards seeking to make those changes.
The structure and governance model needs to be reviewed. How do you implement the decisions of the WTO and ensure that everyone respects it and everyone fulfills his obligation?
“And unless that happens, you’re going to have a challenge. We are feeling a bit mamarginalizedfor one to a better word, and for the G7, I’ve said to them, bilaterally and otherwise, that they have a crucial role to play because that’s where the decisions are made,” Skerrit said.
Greene told the OECS Assembly that many of the major international institutions are in a state of decline and are collapsing, “and so many others are now openly marked by rogue states that grind international law and equity under the jackboots.
“The point I’m making here, Madam Speaker, is that no one is coming to our rescue, and therefore we must rescue ourselves. Rescue ourselves from the hurricane of economic conflict that is now bearing down on us.”
He stated that the OECS countries are grouped with other small and vulnerable economies, and some of these countries have populations exceeding 25 million.
“It almost makes a joke of our presence. The consensus that is built at the WTO often does not extend out far enough to take into consideration the peculiar situation of micro states such as ours,’ Greene said, adding in “considerable measure, the WTO has become a theatre for the playing out of conflict long in the making between great powers.
“We in the Caribbean and the OECS run the risk of being collateral damage in the economic and trade war that is waging everywhere alongside the shooting, but with all of its imperfections, the WTO is still our best hope, best hope for countries of the OECS to have a stable and secure system under which to conduct international trade.”
Greene said that he would not delve into the Antigua case, in which St. John’s successfully challenged the United States at the WTO regarding cross-border online gambling.
While Antigua won the right to retaliate by suspending US intellectual property rights, the US has not fully complied with the WTO’s rulings, and the dispute remains.
Green said that despite that, the Caribbean country continues to advocate for a reconstruction of the WTO that respects modern realities.
“Already, 75 percent of world trade takes place under WTO rules, and we need to keep it this way. We need to modify and modernize our WTO rulebook. We do not recommend throwing it out at this stage.
“At the heart of the rule book lies the WTO dispute settlement system. Already, we have heard it is partially paralyzed. For Antigua and Barbuda, we see that being fully paralyzed, the system cries out for reform and would render it fit for purpose in a modern world.
“We want a system that can protect the weak against the strong, that will be fair in its application of the rules, and that can reach just and equitable decisions quickly and efficiently. If the WTO reform looks like this, count us in. We will support it,” Greene said.
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