Ministers didn’t reach any new agreements in Argentina this week, but they did put a lot of sticky notes on the wall.
Biennial Trade Leadership Retreats
WTO Ministerial Conferences are held every two years. They aren’t really strategy retreats, like the management team off-sites that companies hold, but maybe they should be.
Though some amount of posturing at company retreats is inevitable, the point is to create an environment where different perspectives are heard and decisions made that reflect alignment around the future direction of the enterprise. Saying no to some opportunities is okay. To chart a course forward, participants must articulate what the company isn’t going to do, to help clarify and focus efforts on what activities it will pursue based on the value they can best deliver to their customers.
Viewed this way, the eleventh WTO Ministerial Conference that concluded this week in Buenos Aires wasn’t necessarily a failure, but it didn’t set a clear course either. New initiatives were proposed and some options taken off the table by virtue of lack of agreement. No clear strategic vision was offered, leaving the day-to-day business of the WTO without an action plan, something the organization must have if it is to improve the speed of its responsiveness to millions of customers around the world.
A Work Breakdown Structure, Not a Breakdown
Sometimes a commitment is too big a leap, so members agree to just be friends. In different configurations, they create groups comprised of countries that prioritize certain issues and that are willing to put in thought leadership to get new initiatives underway or advance negotiations. They work to develop proposals for all members to consider.
Notably, more than sixty members – the “Friends of Investment Facilitation for Development” – backed a work program to facilitate investment by promoting greater regulatory transparency, efficiencies, and predictability for investors. Foreign direct investment is the largest and most consistent source of financing for developing economies when compared with sources such as remittances and official development assistance. Investment rules, however, have not been developed in any significant way in the WTO despite the important role investment plays in global economic growth and in shaping trade flows.
Over eighty members became “Friends of MSMEs,” seeking a work program to improve the regulatory environment in ways that would make it easier for micro, small, and medium-sized enterprises to participate more fully in the global economy. Ministers also eked out agreement to renew the temporary (going on twenty-years) moratorium on imposing customs duties on electronic transactions. E-commerce, however, is so prevalent in all facets of commercial relations that many members want to get on with discussing rules on the proliferation of regulatory approaches to areas such as fraud prevention, protection of intellectual property rights in the e-commerce marketplace, and privacy.
In a company and in our everyday lives, we break down our work into tasks, doing some of it ourselves and relying on others to fill different roles according to their skills, interest, and capacity. Why not do the same in the WTO, with smaller groups working through differences, developing proposals, and taking the lead to socialize them.
What Do We Need to Improve?
Every leader has to ask their teams to reflect on this question – how can we improve? Are we at an inflection point? How do we sustain growth?
Directed largely at China, the European Union and Japan joined with the United States to take aim at government-sponsored industrial capacity expansion through subsidies and other forms of support that create unfair competitive conditions and distort global markets. They included forced technology transfer and local content requirements among the offending practices. Is the WTO actively promoting reforms or enabling the continuation of practices antithetical to the principles of non-discrimination? That’s an inflection point.
The largest emerging economies have world-class industries alongside hundreds of millions of impoverished people outside the mainstream economy. They are different from other small countries that are among the “least-developed”. Coalitions give them bargaining power, but do they speak with one voice? That’s an inflection point.
Transparency is a bedrock principle of the WTO, but agreements can’t function properly unless members notify their practices to one another. In many areas, such notifications are significantly lacking or so delayed as to lack benefit. The WTO created effective dispute resolution. The dispute settlement body has been more active in producing outcomes than the negotiation function of the WTO. These are also inflection points.
The Importance of Creation Stories
Entrepreneurs and customers alike are attracted to the creation stories of successful enterprises. These stories about the garage invention, the dorm room idea, the scrappy immigrant start-up from nothing, often take on mythical proportions, but they serve an important purpose – to give us inspiration that anything is possible when you have a good idea and others buy into your vision.
Mr. Clair Wilcox served as the chief U.S. negotiator and chair of conference that produced the General Agreement on Tariffs and Trade (GATT). In recalling the mood at the opening of the negotiations in Havana in 1947, he wrote:
“The [Havana] conference opened with a chorus of denunciation in which the representatives of thirty underdeveloped nations presented variations on a single theme: the Geneva draft was one-sided; it served the interests of the great industrial powers; it held out no hope for the development of backward states. Some eight hundred amendments were presented, among them as many as two hundred that would have destroyed the very foundations of the enterprise. Almost every specific commitment in the document was challenged.”
They managed to lay a solid foundation for a system that has reinforced peaceful commercial relations for the last 70 years. It was a great idea then. It’s still a great idea that should serve as inspiration for the next 70 years.
Work on the Vision Statement
Whether deals are signed at each ministerial meeting may be less important than the mere act of gathering in these uncertain times – an act that affirms members still believe in the WTO’s mission and share a vision for its future.
That said, far from symbolic, a declaration routinely updated with the support of every member’s trade minister, is an important opportunity to articulate a shared vision and a clear strategy for the organization, answering the questions of what we want the WTO to become, how it should grow, and what transformational initiatives will get us there.
Move the sticky notes around, take some down, but then roll it up into a real plan so the rest of us can get down to business.