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Efficient globalization to save world’s economy

Efficient globalization to save world’s economy

03 Sep 2020

Roberto Azevedo stepped down as director-general of the World Trade Organization on Monday, becoming the first WTO chief to leave office ahead of time.

Azevedo’s surprise announcement in May that he would end his second term 12 months ahead of schedule has forced the organization to speed up its usually lengthy process of selecting a new head. Now eight candidates from Africa, Asia, Europe and Latin America are vying for the post. There is no candidate from the United States.

A new WTO leader will be appointed on Nov 7, but with the US holding presidential elections on Nov 3, the outcome becomes hard to predict. If Donald Trump wins a second term, he might create obstacles, and if Joe Biden wins, one will have to wait and watch to see whether he will continue Trump’s WTO policies.

Founded in 1995, the WTO was born out of the General Agreement on Tariffs and Trade to resolve trade disputes and disagreements between countries. It was originally a temporary and non-permanent agency. However, the mechanism to settle trade disputes between the US and major European countries was found inadequate as globalization led to the participation of an increasing number of emerging economies.

Thus globalization helped upgrade and create a powerful WTO, but it has also created problems for it. Since 2018, the US administration has become a major cause of the WTO’s decline. The US government keeps saying “no” to the WTO’s structure, the way it operates, and its rules and fees-sharing system.

Since 1995, the WTO has devised three mechanisms-for multilateral trade negotiations, disputes settlement and trade policy supervision. The multilateral negotiations mechanism has now reached a dead end. The disputes settlement mechanism, which originally consisted of seven judges, is now left with just one, bringing its functioning to a halt. And since there are no multilateral negotiations, the policy supervision body exists only in name.

Thanks to the US’ unilateralism, the WTO’s multilateral efforts have been in vain. To some extent, the WTO is facing the same problems that globalization is.

The world may have to face the fact that multilateral cooperation is being replaced by geostrategic competition, which may cause different countries to form “cliques” and then establish new dispute settlement mechanisms. Compared with a globally recognized dispute settlement body like the WTO, such “cliques” will undoubtedly continue to be bogged down by frictions.

We expect the new WTO leader to reverse the organization’s downslide and save globalization, but we must be fully prepared to embrace the new geostrategic competitions. The post-pandemic world needs a robust global industrial chain and high-speed market operation to offset losses. Only a fairer and more efficient globalization can help the world economy’s recovery.

Source: China Daily