Hanging Together or Hanging Separately?

By Alan Wolff*

A little over a year ago, before anyone had heard of a novel coronavirus, United Nations Secretary-General Antonio Guterres warned of the risk of a “great fracture.” Instead of a shared global economy with common multilateral institutions, he feared a world divided, particularly with respect to the largest economies creating “separate and competing worlds, each with their own dominant currency, trade and financial rules, their own internet and artificial intelligence capacities, and their own zero‑sum geopolitical and military strategies.”   Yet the shock of the pandemic, together with the sheer scale of the collective response, represent a window of opportunity to address the fundamental problems Secretary-General Guterres correctly identified.

To these, nature has added the pandemic, and the dangers it presents to life and health, and for all too many, to economic survival. COVID-19 has already set back years of progress on hunger and poverty reduction, and provoked the deepest economic downturn since the Second World War. It threatens to deepen existing fault lines, exacerbating geopolitical tensions as well as inequalities of every kind.
Yet the shock of the pandemic, together with the sheer scale of the collective response, represent a window of opportunity to address the fundamental problems Secretary General Guterres correctly identified.

While the trading system alone cannot solve the problems facing us, it can contribute to finding solutions. Trade is already helping countries gain access to much-needed medical supplies and rekindle growth. WTO data show that global trade in personal protective equipment (PPE) more than doubled between May 2019 and May 2020. The chaotic trade blockages seen early in the pandemic exposed the fragilities that come with economic interdependence, but subsequent months have revealed its strengths, with resilient value chains driving rapid supply responses. If a future COVID-19 vaccine requires ramping up production of cold chain equipment, leveraging existing value chains will be more efficient and cheaper than the alternative.

"The fact is that more trade, not less, will bring essential medical supplies, drugs, and soon, we earnestly hope, vaccines to where they are needed."

At the WTO, one response to the pandemic would be an agreement on open trade in medical supplies, medicines, and medical equipment. For instance, members could remove tariffs on pharmaceuticals and medical supplies, by expanding the scope and coverage of the 1996 Pharmaceutical Agreement, and updating the Information Technology Agreement to cover medical equipment. Export controls could be subject to an agreed code of conduct, with governments required to consider how proposed measures would impact other countries, and provisions for duration and opportunities for consultation and review.ajectory at all, and not in 2021. Economic policy choices – including trade policy decisions - will continue to matter.

WTO monitoring of trade policies in response to the pandemic has allowed governments and other actors to make informed decisions.  The fact is that more trade, not less, will bring essential medical supplies, drugs, and soon, we earnestly hope, vaccines to where they are needed.  More trade, not less, will assure food security in the face of both the pandemic and severe climate events. More trade, not less, will help deliver economic growth as it has over the last seven decades. Closing off markets would only make us more vulnerable, and less prosperous.
A well-functioning WTO would serve as a forum for governments to bridge differences, define shared rules for international markets, and build trust that would help them address other global challenges.

To get there, we need a strong recommitment to multilateralism. The generation that created the post-war international architecture had lived through the devastation of two world wars and the Great Depression. The San Francisco and Bretton Woods conferences, which gave rise to the United Nations, the International Monetary Fund, the World Bank, and the precursor to the WTO, were shaped by the belief that international cooperation and economic interdependence offered the most promising path to reconstruction, job creation and development, and sustained peace. We must rekindle the spirit that animated the leaders that created the institutions that underwrite global prosperity and repair and update the frameworks they bequeathed us to make them ready for whatever tomorrow holds in store.

What might this look like in practice?

At the WTO, one response to the pandemic would be an agreement on an open trade in medical supplies, medicines, and medical equipment. For instance, members could remove tariffs on pharmaceuticals and medical supplies, by expanding the scope and coverage of the 1996 Pharmaceutical Agreement and updating the Information Technology Agreement to cover medical equipment. Export controls could be subject to an agreed code of conduct, with governments required to consider how proposed measures would impact other countries, and provisions for duration and opportunities for consultation and review.
Additional reforms are needed to make the WTO more effective as a place where trade agreements are not only negotiated but enforced through dispute settlement deemed legitimate and binding for all. Entrusting executive functions for administering the multilateral trading system, including proposing initiatives, to a proactive Secretariat responsible to the organization's Members would help achieve this goal.

Failing to update the WTO to make it respond to members’ needs and business realities will cause governments to look elsewhere. This is a recipe for fragmentation – or worse, a wide-scale return to economic nationalism.
Science tells us that pandemics will again occur, climate change will continue, and technological change will not end.  History tells us that geopolitical tensions will never in our lifetimes be completely banished. To borrow a phrase from Buckminster Fuller, it is only by working together that we can be the architects of our future. Otherwise, we will be its victims.

*Alan Wolff is Deputy Director-general of the World Trade Organization. This piece is a shorter version of an essay originally published on the WTO's website.