International trade is facing increasing headwinds in the post-pandemic age. The Ukraine invasion, worsening climate change, and unequal vaccination rates are among the factors adding strain on the multilateral trading system (MTS) and the World Trade Organization (WTO).
The 12th RSIS-WTO Parliamentarian Workshop held from 10 to 12 May 2022 provided a platform for lawmakers to better understand these hot-button issues and contribute to trade policy. The workshop was co-organised by RSIS and the WTO, with support from the Temasek Foundation.
As the bridge between the WTO and national constituents, parliamentarians play a critical role in crafting and communicating trade policy. For that reason, Mr Lim Hock Chuan, Head, Programmes, Temasek Foundation International; Ms Angela Ellard, WTO Deputy Director-General; Ambassador Ong Keng Yong, RSIS Executive Deputy Chairman; and Mr Tan Chuan Jin, Speaker, Parliament of Singapore, all stressed in their opening remarks the need for parliamentarians to support the WTO in improving international trade cooperation while eschewing the political expediency afforded from peddling anti-globalisation and protectionist narratives.
In the first session, panellists spoke on international trade in a climate-concerned era. According to Ambassador Dacio Castillo, Permanent Representative, Permanent Mission of Honduras to the WTO, the WTO is working to address worsening climate change even as it focuses on institutional reform and vaccine equity. This includes the agreement on fisheries subsidies. Mr Martin Chungong, Secretary General, Inter-Parliamentary Union, meanwhile stressed the need for parliamentarians to use trade to serve the environment and strengthen the MTS for post-pandemic economic recovery. Some concrete actions that could be taken include legislation and budgeting that support sustainable development climate targets, clean energy transitions, and green jobs. There is likewise space for parliamentarians to support regional economic organisations such as the Asia Pacific Economic Cooperation (APEC) forum, whose initiatives inform the WTO’s negotiations and direction. Dr Rebecca Fatima Sta Maria, Executive Director, APEC Secretariat, noted that APEC is pursuing climate-friendly trade capacity-building and technical assistance on top of climate-friendly trade. Besides this, APEC is also working on a list of environment and environment-related services for further liberalisation, discussing inefficient fossil fuel subsidies, and studying how non-tariff measures contribute to emissions reduction.
Mr Martin Raiser, Country Director for China, Korea, and Mongolia, The World Bank, added that the WTO should collaborate with other institutions— like the G20— to reduce import and export restrictions that affect medical and environmental goods and services. In his view, the WTO should also facilitate discussions on how to incentivise the creation, diffusion, and affordability of new technologies for climate change and health crises. Ms Céline Charveriat, Executive Director, Institute for European Environmental Policy, echoed that the WTO can do more to ensure green and just global economic resilience. The WTO should thus look at phasing out the brown economy, co-creating green standards and green supply chains, as well as having an independent panel of scientists make science-based recommendations for a world trading system on track to net-zero emissions.
The second panel focused on the global economic headwinds and business responses, particularly in the Asia-Pacific. Mr Lee Yung Sheng, Executive Director, Global Division 1, Singapore Business Federation, discussed the high, negative impact of the Ukraine War on Singaporean businesses through, for instance, rising costs. Technology and supply chain diversification are some avenues to mitigate this impact. Ms Selena Ling, Head, Treasury Research and Strategy, Global Treasury Division, OCBC Bank, elaborated on other significant headwinds such as inflation, contractionary monetary policy to stave off inflation, US-China geopolitical rivalry, food insecurity, and new COVID variants. Owing to these factors, stagflation is already occurring and there is a real risk of recession as early as 2023.
Ms Lin Shiumei, Vice President, Public Affairs & Sustainability, UPS Asia Pacific, added that supply chain disruptions are severe due to two factors. First, not enough attention was paid to surveilling and managing the transportation ecosystem and its linkages with trade. Second, the inability of transport and logistics to keep pace with the boom in e-commerce, partly because it is an insufficiently digitised industry. Both air freight and ocean freight are equally constrained. Consequently, shipping fees are four to five times higher than pre-COVID times and most capacity has been rerouted to serve more profitable trade routes (e.g. Asia to US), which leaves others (Latin America to Asia, or intra-Asia) underserved. Small and medium enterprises feel these price hikes hardest. Overall, considering digitalisation’s usefulness in helping businesses weather the pandemic and other headwinds, Ms Eunice Huang, Head of APAC Trade Policy, Google Asia Pacific, added that policymakers must facilitate cross-border data flows and digital inclusion, as well as harmonise digital regulations.
The final session delved into WTO reform and how WTO members can push the reform agenda forward. According to Ambassador Li Chenggang, Permanent Representative, Permanent Mission of China to the WTO, WTO reform will gain momentum if developing countries are allowed greater flexibility to deal with mounting challenges, such as technological divides and food security. Ambassador Brajendra Navnit, Permanent Representative, Permanent Mission of India to the WTO echoed that the WTO must enable low- and middle-income countries to better climb the development ladder. Further, the WTO should not shy away from revisiting old rules or introducing short-term “escape clauses” where new rules are trialled for several months to see if they can solve the problems facing countries today.
Ambassador Tan Hung Seng, Permanent Representative, Permanent Mission of Singapore to the WTO added that members must rejuvenate the WTO’s negotiating function so the multilateral trade rulebook can be updated for 20th and 21st century issues. This should be prioritised at the 12th WTO Ministerial Conference, which provides a timely opportunity for ministers to take stock of the WTO and give their delegations guidance. Mr David Bisbee, Deputy Permanent Representative, Permanent Mission of the United States to the WTO pointed out, however, that making new rules will not be easy, because of diverging interests within a wide membership. Hence, trade ministries and governments must find areas to cooperate and hold more and better conversations to understand outstanding differences.