The Omicron variant of Covid-19 has put the World Trade Organisation's ministerial conference on ice – yet another unwelcome problem for an organisation struggling to live up to its stated purpose at a time when the trading system is facing an existential crisis
In recent years, the World Trade Organisation and its members have had more than enough problems of their own making to deal with.
Yet as has so often been the case since early 2020, the Covid-19 pandemic has provided an added layer of complexity to an already fraught international environment.
The organisation’s 12th ministerial conference, due to take place in Geneva this week, has been put on hold indefinitely after Switzerland joined other countries in tightening border restrictions to prevent the spread of the Omicron variant.
The conferences usually take place every two years, but ministers have not met since 2017 in Buenos Aires due to the pandemic, and yet another Covid hiccup is one the WTO can ill afford.
Now in its 26th year of existence, the organisation has increasingly struggled to win consensus on any meaningful reforms from its 164 member states, while a push to lift intellectual property rules on Covid-19 vaccines has laid bare the divisions between developed and developing countries.
University of Auckland law professor Jane Kelsey and NZ International Business Forum executive director Stephen Jacobi agree on precious little when it comes to trade, but both are of a similar mind when it comes to the WTO.
Kelsey describes it as facing “an existential crisis”, while Jacobi offers a telling quip when asked if the organisation has had a tough year: “It’s been a tough decade.”
Even before Omicron, some countries faced challenges in simply getting to the ministerial conference, with the WTO secretariat and host country Switzerland having faced criticism for a hardline approach to vaccination certificates.
Only those who have vaccines approved by the European Medicines Agency are able to receive a Swiss certificate which allows them to enter freely, while other unrecognised vaccines – including those produced by India and China and used in a number of developing countries – must undergo Covid tests every 72 hours if they wish to attend, with virtual attendance not an option.
“There's very clearly a differential treatment that is emerging of rich country and poor country delegations, and that's going to affect as well the ability to move quickly between buildings, because there's going to be huge long queues,” Kelsey says.
Tripping over waiver push
That inequity is emblematic of the division between countries over one of the most critical issues at the conference – a push for a ‘Trips waiver’ to temporarily suspend intellectual property rules preventing the production of generic versions of Covid vaccines and other pandemic essentials.
Wealthier members like the United Kingdom, European Union and Australia have opposed a waiver of the type being sought, and WTO director-general Ngozi Okonjo-Iweala told media last week that negotiations were “stuck”, adding: “If we take an all-or-nothing attitude, then it means potentially we all walk away with nothing.”
Jacobi says a political compromise will need to be struck, with the broad scope of the waiver proposal an issue along with the need to provide a credible response to the pandemic.
“Facilitating trade in vaccines and essential medical supplies, APEC can exhort [for that to] happen, but it’s the WTO that can actually make that happen by agreeing a package of measures.”
The Omicron variant's spread through southern Africa demonstrates the vaccine inequities which still need to be addressed, and while there are question marks about how effective current vaccines will prove against it, the current scare could provide further ammunition for developing countries who argue an IP waiver must be granted.
The other two major topics of discussion which were to be traversed, tackling subsidies for the fisheries and agriculture sectors, are not without some wrinkles.
The WTO has been discussing the need to eliminate government funding which contributes to overfishing since 2001, yet has had no meaningful success, while agriculture subsidies have likewise proved a sensitive topic.
India has strongly resisted efforts to reach an agreement on cutting agriculture subsidies, with the country’s leader Narendra Modi recently announcing a U-turn on domestic farm reforms which sparked a year-long protest by farmers.
But with India also keen to secure a permanent agreement allowing “public stock holding” – where governments stockpile essential food items at fixed costs, in theory for food security but with possible ‘dumping’ of surplus supplies onto the international market – some trade observers were hopeful that concessions in that area could lead to some progress on other agriculture subsidies (albeit minor, given neither the US nor the EU are minded to address agriculture).
One particularly contentious issue unlikely to have been resolved regardless of Omicron was the state of the WTO’s appellate body, a dispute settlement mechanism which has been inoperative since late 2020 due to an ongoing block on new appointments by the United States.
While there were hopes Joe Biden’s defeat of Donald Trump could lead to progress, and new US Trade Representative Katherine Tai spoke glowingly last month of the WTO’s role as “a force for good that encourages a race to the top”, that has not been accompanied by any proposals for reform which would lead the US to lift its effective veto.
“It’s hugely disappointing: we understood that the previous administration was not favourable to the WTO, we understand the current administration is favourable, and the dispute settlement system is the jewel in the crown,” Jacobi says of the ongoing impasse.
The US has also failed to resume its leadership role within the WTO more broadly, at a time when everyone is clear the organisation cannot continue as it has but no one has come up with a solution.
The meeting delay has come as a blow to Okonjo-Iweala, who was due to oversee her first event atop the WTO and had put pressure on members to reach consensus and help her get a high-profile win.
"This has not been an easy recommendation to make … But as Director-General, my priority is the health and safety of all MC12 participants – ministers, delegates and civil society. It is better to err on the side of caution," she said of the delay in a statement last week.
“Who knows what its future will look like? But it's certainly not going to be the global rule-making consensus-based body with 164 countries that you get from looking at the front page of the website.”
While there is no new date set down for the conference, Okonio-Iweala said the uncertainty was no excuse for negotiations to stop.
"On the contrary, delegations in Geneva should be fully empowered to close as many gaps as possible. This new variant reminds us once again of the urgency of the work we are charged with."
But where the organisation is heading in the longer term is less clear.
Kelsey predicts a fracturing of the WTO, largely along ‘North-South’ lines, with self-selected groups pursuing plurilateral agreements and much of the blame for the split going to developing countries.
She says that is in part due to the flawed assumptions about the body at the time of its inception, with an overstretched approach to trade and a push for endless expansion without proper consideration of how to meet the needs of new members who are largely developing countries and unwilling to meekly agree to the status quo.
“Now, who knows what its future will look like? But it's certainly not going to be the global rule-making consensus-based body with 164 countries that you get from looking at the front page of the website.”
Jacobi agrees that some WTO members have underestimated the extent to which they needed to work with the developing world, but is less pessimistic about its future.
“I find it hard to believe that the organisation will reach the breaking point ... because members are ultimately going to find it in their interest to have some system to fall back on, especially when they enter into disputes.”
Instead, it seems more likely the WTO will muddle along for the time being, delivering what Jacobi terms “dribs and drabs” – not unimportant issues, but falling far short of the more systemic problems facing the international trading system.
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