Changing face of WTO
Among the many international organisations that have recently fallen-foul of Trump is the WTO, his 'punching bag' of choice when it comes to airing his many problems with the way America has done business under previous US administrations. But even if Trump and his take-no-prisoners nationalistic view of trade deals are taken out of the equation, the WTO has been caught up in a serious crisis of identity and credibility for quite some time now.
To appreciate how far the body has fallen in recent times, it is important to note that the WTO, unlike most international bodies, actually had power and influence. Its decisions and arbitrations could force nations on to their knees with threats of retaliatory tariffs against those who broke the rules of international trade. Indeed, in its role as not only framer but also the preserver of the rules of international trade, there are no true equals to the WTO.
In its glorious past, it was envisioned as the culmination of the American dream of the worldwide spread of unfettered capitalism. WTO was part of the promised land of capitalism that America, the sole superpower at the time, promised on the other side of the fence. But, soon enough it emerged that WTO would not be an exact solution. Indeed, over time, WTO was seen to decisively swing in the favour of corporate interests, sometimes at any cost. Trade protectionism, worker rights, clean energy, basically anything that got in the way of international commerce was to be suppressed and discouraged. Over time, WTO came to the face of truly problematic decisions such as big pharma extending their patents, agricultural companies getting GM crop bans lifted worldwide, etc. In recent years, it was even noted to have turned a largely blind eye to many economic and trade malpractices of China that were called out by several of the world's biggest economies. Indeed, it may well have been the WTO's lackadaisical regulation of China's economic practices that may have first spawned discussion that the once-powerful if the misguided body was now a mere shadow of itself.
The true beginning of what may be the end of the body was its stance in the tremendously damaging fiasco of the US-China trade war. Most experts have noted that Trump's trade war style engagement with China has been a colossal failure. Aside from the obvious economic damage, the all-important US trade deficit with China that was so critical to Trump has now slid back to the record levels it reached in 2008. At the same time, Chinese purchase of American goods is falling far short of the promised level that was pledged to Trump in his phase-one trade deal. It is the very core function of a body like WTO to kill the momentum of such happenings that affect the flow of global trade to such an extent. Unfortunately, not only has the body very publicly failed, it is now the focus of the US administration that seeks to portray the body as one that has completely been overrun by China and can no longer safeguard American interests. As such, the US has opposed the nomination of former World Bank economist Ngozi Okonjo-Iweala for the job of the new Director-General, even though she enjoys widespread support from all other nations. Leaderless, belittled and cut-off from American influence, the future of the WTO is inexpressibly dark.
As such, there is no clear way forward at this point. While Biden may play-along with the WTO, his way to walk back the China tariffs is not clear. Walking back from the tariffs may be beneficial but is likely also politically expensive for Biden and for America who cannot afford to look weak. It is precisely in such cases that a strong WTO could have forced a stand-down with the dignities of the respective nations intact. WTO, the greatest impediment against governments making bad economic decisions that are politically popular, no longer has this power. Perhaps what is truly required is a considered restructure of the entire body to reflect the new realities of modern capitalism. At least on that, the present and oncoming US administration can find agreement, This may be why Trump's trade chief has decided to reopen the question of WTO leadership in the twilight of the Trump presidency, emphasising the importance of the US in revamping the body. As the oncoming Biden administration is not likely to weigh in on the new WTO chief election for some time, it is unknown as to what the true future direction of the WTO would be.
