WTO DG calls for a ‘new multilateralism’ - but how would it work?

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The World Trade Organization feels there could be a future for better collaboration between nations, despite claims to the contrary.

Multilateralism has been facing considerable criticism in recent times, with some even saying the systems in place to unite countries since the end of World War II are outdated and no longer fit for purpose.

However, the director-general of the World Trade Organization Ngozi Okonjo-Iweala has spoken out in a recent speech to defend this type of trade relationship, saying it is crucial yet also admitting alterations must be made.

So, is multilateralism dead, or does it just need reform? If the latter is the case, how could this happen? Here, we’ll take a look at some current perspectives.

The WTO viewpoint

Ms Okonjo-Iweala was addressing diplomats in Brazil this month and used the platform to acknowledge the fact that multilateralism is facing significant challenges. She said the war in Ukraine, the global COVID-19 pandemic and climate change have all contributed to a sense of dissatisfaction with globalization and multilateralism in particular.

“To many, the interdependence built up by globalization and the multilateral trading system now seems to be a threat rather than a benefit,” the director-general said.

Indeed, the US pulling out of the Paris Agreement, the lack of dispute resolution in the WTO, Donald Trump’s ‘America First’ protectionism and Britain’s exit from Europe are all events that have contributed to this sense of disillusionment in recent years, while coronavirus has undoubtedly accelerated trade tensions and a sense of inequality.

However, Ms Okonjo-Iweala explained that she fears this will lead to a decoupling of the world economy into self-contained, self-sufficient trading spheres, because the WTO’s stance is that multilateralism is essential for world trade.

“This is in fact not a time to start retreating from multilateralism, but a time to strengthen it,” she insisted, quoting WTO statistics that suggest world GDP could fall by five per cent if the world divided up into two self-contained economic blocs.

This may be followed by increases in trade barriers and more vulnerability to natural disasters, the WTO believes.

However, these remarks are not to say that the WTO believes things can go on exactly as they were. Ms Okonjo-Iweala suggested reforms that include ‘re-globalization’ and trade as a tool to tackle climate change, as well as an overhaul for the WTO’s dispute settlement facilities.

“We need to strengthen multilateralism by reimagining and reforming it to fit the economic and political realities of the 21st century,” she concluded.

Other perspectives

This is not the first time that reforming multilateralism has been addressed. At the UN’s 75th anniversary session in September 2020, the UN General Assembly stressed the link between peace, security and development and called upon member states to agree on a coherent and sustainable approach to building new relationships.

Writing for the Observer Research Foundation, professor of the German Institute for Global and Area Studies Amrita Narlikar also recently said a new narrative and a “fundamental renegotiation of multilateral institutions” is necessary.

“This narrative will have to convey clearly why reformed multilateralism is of direct benefit to citizens across the board. Alliances with partners that share first-order values will be key to making multilateralism meaningful again,” she added.

Meanwhile, the Foundation for European Progressive Studies states in a published report that multilateralism does still have a place in the 21st century, albeit with renewal of international cooperation led by progressive and committed forces.

“The key point is that we must keep alive an institutional network so that we have a global system that is resilient enough to react to crisis in a positive way,” it concludes.

What is the future for multilateralism?

So, perhaps it’s fair to say that analysis suggesting multilateralism is dead is an exaggeration. Instead, what we could be seeing is an evolution from the system borne of the fragile peace following the Second World War to one that’s progressive enough to exist in the 21st century.

Whether it will be rules-based, coalition-based or something else entirely remains to be seen, but who knows - perhaps multilateralism 2.0 could end up more effective than its predecessor.