Analysis: Way to go, WTO

The World Trade Organisation’s recent success in achieving agreement on a package of deals deserves recognition and praise from the financial sector. Director-General Ngozi Okonjo-Iweala merits particular praise for corralling an organisation of 164 members where any single one can veto an entire negotiated agreement.

In such conditions, any agreement, let alone a far-reaching one, is an achievement. It’s as much about vindicating the principle and the process as it is on the result.

The package agreed on food trade and food emergencies addresses the global food crisis created by Russia’s invasion of Ukraine. The agreement on fisheries subsidies enables protection of ocean ecosystems and the livelihoods of poorer fishing communities. And the broad declarations on WTO reform itself presage further support for the institution, and for multinationalism per se.

As Valdis Dombrovskis, the European Commission’s executive vice-president and commissioner for trade, said: “Ultimately, this is about restoring trust and the political buy-in of all members, and upholding the rules-based multilateral trade system.”

It’s good to see genuine multilateral agreement in a macroeconomic system that’s been under hostage for years to unilateralism and trade wars, achieved by one of the international organisations that populists and nationalists are always railing against.

The Uruguay round of the WTO defined so much of the global economic system since 1994 that its successor looks likely to do the same, and that should interest and encourage all financial players – unless of course, you believe that the world is better served by a Balkanised network of competing autarchies, or a Luddite anarchy capable only of supporting a fraction of the world’s current population.

Just remember where so much of the inflation that is now spooking the financial community is coming from. Disruptions to the global trading system, first from Covid-19 and then from Russia’s attack on Ukraine, are chief among the international causes. Clearer guidelines for international trade, and a rules-based network for administering and regulating it, are likely to reduce that inflationary pressure. Those rules are going to be in place for a long time after the current inflation spike has passed.

Yes, the WTO talks left some groups disappointed. Yes, the result isn’t perfect. But the only alternative to international cooperation is hegemony – like Russia is trying to achieve in Ukraine. Climate change and the planet’s ills are only going to be solved at a multinational level, and a victory for multilateralism deserves a welcome, even from as notoriously short-sighted a sector as the investor community.