Knocking at a closed door: the WTO and Argentina

If recent column choices have been pretty automatic in the light of upcoming events (the United Nations on the eve of its General Assembly, or the International Atomic Energy Agency just ahead of the election of its new Director General starting last Thursday), no international body obviously springs to the fore today. By default – not the best choice of words, given Argentina’s horrendous debt overhang – we will now look at the World Trade Organisation (WTO), because the tariff wars between Donald Trump and China (celebrating the 70th anniversary of the People’s Republic last Tuesday) have a constant news presence and because the last WTO Ministerial Conference was held here in this city in late 2017 (shor tly af ter the Mauricio Macri administration’s impressive midterm triumph, which seems like a long time ago now).

The WTO is the direct heir of the General Agreement on Tariffs and Trade or GATT (1948-94), upgrading a periodic multilateral negotiation arrangement excluding the Communist world into a permanent international organisation. Starting life in the New Year of 1995, the original WTO membership consisted of the 123 Marrakesh Agreement signatories – including Argentina (a GATT participant since 1967) but not China, which only entered the WTO in this century (late 2001 while Russia only entered in 2012, 19 years after first applying). A further 41 countries have joined in the succeeding quarter-century (with Afghanistan the latest recruit in 2016) and today the WTO contains over 85 percent of the world’s population while regulating 96-plus percent of its trade.

While replacing a negotiating forum with a permanent organisation complete with somewhat cumbersome dispute resolution mechanisms, the WTO has observed a certain continuity with GATT (which still exists as the umbrella treaty for merchandise trade), giving its seven rounds – from the Kennedy Round to the Uruguay Round (1986-94) – a new lease of life with the Doha Development Round as from 2001 (no end in sight), seeking to widen the agenda with non-tariff barriers and the agricultural subsidies of the United States and the European Union in order to make globalisation more inclusive.

T h e w h o l e thrust of the WTO has been to create a structured negotiating forum capable of adding a new dimension to trade agreements so the frustrations with the ambitious but ailing Doha Round would suggest a failure at that level. Yet perhaps the inability to make any major breakthrough in freeing up multilateral trade should not be the only measure of success – the value of the WTO rather lies in the negative achievement of defusing innumerable trade wars over the years. If the global financial meltdown of 2008-2009 was not followed by the collapse of world trade following the 1929 Wall Street crash (with the Smoot-Hawley tariff of 50 percent), the WTO definitely played its part towards that with the average tariff around the world falling fourfold from 35 percent to single digits since its creation – even if more recently it has fought a losing battle against the retaliatory protectionism spearheaded by Trump’s “America First” policies with at best regional or bilateral trade agreements in the last decade. In short, no clear verdict as to whether the WTO is a success or failure, with arguments on both sides.

The WTO has a defined set of objectives such as maximising reciprocity and transparency in international trade while minimising discrimination but all decisions are made by its member governments and all its rules negotiated among them. Even so, the WTO has brokered around 60 different agreements which it oversees. The headquarters are in Geneva with a 640-strong staff under a directorgeneral. The first directors-general – Ireland’s Peter Sutherland basically passing on the baton from GATT, Italian Renato Ruggiero (1995-9), former New Zealand premier Mike Moore (1999-2002) and Thailand’s Supachai Panitchpakdi (2002- 5) – were relatively short-lived but France’s Pascal Lamy (2005-13) and Brazilian Roberto Azevedo since 2013 have provided more continuity.

The WTO’s highest decision-making body is the Ministerial Conference, held every two years or so and bringing together all members. There have been 11 held so far, of which the most memorable have been Seattle in 1999 (because of the violent anti-globalisation demonstrations) and Doha in 2001 (which admitted China and launched the Doha Development Round) but the most recent was held here in this city.

That 11th Ministerial Conference (December 10-13, 2017) was not much of a milestone for the WTO – even the protests were peaceful – but was nevertheless the highlight of its relationship with Argentina. Azevedo openly expressed “disappointment” while European Union Commissioner for Trade Cecilia Malmström deplored the lack of multilateral results. Slightly more upbeat was US Trade Representative Robert Lightizer who detected progress on the China front (with a temporary truce one of the successes of the next year’s G20 summit) and in favour of Washington’s preference for regional over global agreements, a disruptive factor at the Conference. Within local politics the event was seen as a staging-ground for the G20 summit in general and the ultimately abortive United Nations Secretary-General ambitions of then Foreign Minister Susana Malcorra in particular – Malcorra unduly protagonised the event by chairing a huddle of trade ministers outside her portfolio. The Conference (with some 4,000 participants) officially reported agreements on fisheries (although not according to Malmström) and on e-commerce whose growing importance was recognised at the event – especially as a threat to jobs, according to Malcorra.

Before 2017 very little has been written about Argentina in the WTO. A prime reason why Argentina’s footprint there has been so small is, quite simply, that this country is not much of a trader as one of the most closed economies in the world. While around four out of every seven dollars worldwide is earned from trade (some US$50 trillion), international commerce accounts for just 31 percent of Argentina’s gross domestic product – only eight other countries in the world have a lower percentage – while its exports are a mere 0.3 percent of the world total. Argentina thus did not have much to bring to the table, not even complaints – even where it overlapped with the Doha Round in opposing the farm subsidies of the developed world, it generally preferred more focussed channels such as the Cairns Group. Complaints were minimal during the commodity price boom of the last decade while there were also other priorities in both the prelude to the 2001 default in the first years of the WTO and its fallout until finally concluded in 2016 – with another default now threatening.

Greater interaction with the WTO than hosting a Ministerial Conference would be good news because it would mean that Argentina is finally raising its head as a trading country.