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Analysis

What Should the G20's Anniversary Present Be to the World Trade Organization for Its Silver Jubilee?

Sonja Dobson, G20 Research Group

This year marks the 25th anniversary of the World Trade Organization (WTO). It has been a quarter century since the organization was created, yet it is hard to say that it has aged well. The WTO's three key functions – as a negotiating forum to liberalize trade and establish new rules, monitoring and administering multilateral trade policies, and resolving disputes among the 164 members – have not matured in line with the evolution of international trade. In an attempt to address this stagnation, G20 leaders committed to reforming the WTO at the 2018 Buenos Aires and 2019 Osaka summits.

WTO reform rests on the dispute settlement system and the Appellate Body, the negotiating functions and improving the work of the regular bodies. The Appellate Body has been stuck in its own stalemate since late 2019 with the United States blocking new appointments. Recently, due to the Appellate Body's inability to function, G20 members have begun to seek out their own bilateral or multilateral agreements for dispute settlements. As well, the negotiating and the regular bodies' functions have fallen behind the progress experienced across the world, specifically in digitalization and e-commerce. Without establishing new rules on digital trade, e-commerce, subsidies and environmental sustainability, among other policies, the WTO may become obsolete before it hits its thirties.

The COVID-19 pandemic dampened the celebrations of the WTO and pushed WTO reform to become even more necessary. With the pandemic came constraints on production, consumption and international trade: the WTO estimates a drop in international trade of between 13 per cent and 32 per cent in 2020. Trade restrictions have been implemented, as have measures reducing or eliminating tariffs, and expediting the process to push necessary goods and services through borders and new trade agreements. With so many new problems and solutions arising, WTO reform is becoming more and more pertinent. The pandemic also postponed the 12th WTO ministerial conference from June 2020 to potentially June 2021. However, this does give the WTO, and the G20, more time to prepare reform measures that can be agreed on next year.

In the face of the pandemic, the G20 has not given up on its commitment to ensuring WTO reform. G20 leaders have committed to the G20 Action Plan on Supporting the Global Economy through the COVID-19 Pandemic, which underlined the G20's dedication open trade and notifying the WTO of trade-related measures. Then the Saudi Arabian presidency launched the Riyadh Initiative on the Future of the WTO. Other G20 members have embraced their role in reforming the WTO including by making proposals on resolving the Appellate Body stalemate and filling the vacant seats, prohibiting unilateral trade, emphasizing new development-centric policies and creating a temporary dispute settlement mechanism. It is a step in the right direction.

For two years in a row, the G20 has made commitments to reform the WTO, which has led to some significant progress. However, the commitments have been broad: "we therefore support the necessary reform of the WTO to improve its functioning" and "we reaffirm our support for the necessary reform of the WTO to improve its functions." The 2020 Riyadh Summit continued this trend with the commitment to "reaffirm the objectives and foundational principles of the multilateral trading system as well as to demonstrate our ongoing political support for the necessary reform of the WTO, including in the lead up to the 12th WTO Ministerial Conference." Hopefully the G20 makes good on their promise and the WTO is able to implement concrete reform by the 12th WTO Ministerial Conference.

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Sonja Dobson holds a master's degree in conflict studies and human rights from Utrecht University. She has worked with the G20, G7 and BRICS Research Groups since 2015, and has served as a compliance director for all three groups. She attended the University of Toronto and graduated with a bachelor of arts and science in African studies and political science.