MC14: A failure to reach consensus on even the “Lowest of Low Hanging Fruit” suggests limited future role of institution absent urgent reform

Key takeaways

Impact of the E-Commerce Moratorium Lapse. The immediate impact of the lapse in the e-commerce moratorium is likely to be muted.  The e-commerce moratorium lapsed once before, in 1999, for a two-year period, until it was renewed in Doha in 2001.  Implementing the legal mechanisms to impose and collect duties on electronic transmissions can take time.  Further, many WTO members are already parties to plurilateral and bilateral agreements that prohibit the implementation of tariffs on electronic transmissions.  Indeed, as described above, the e-commerce agreement does so as well as several U.S. bilateral agreements.  Similarly, last week, the United States and 22 other WTO members including Japan, Korea, Mexico, and United Kingdom, took action agreeing to refrain from imposing customs duties on electronic transmissions at least until the WTO's next General Council in May.

However, it may prove difficult for members to renew the moratorium in the near term.  Indeed, the value of WTO ministerial conferences is their ability to convene trade ministers vested with decision-making authority. As these negotiations are punted to the General Council, non-ministerial officials, who have unsuccessfully worked for the past two years to forge agreements on these issues, are unlikely to make progress. 

Major Setback for WTO and Secretary-General.  MC14 represented a missed opportunity to make meaningful progress on important issues affecting the international trading system.  While expectations were low for MC14, the failure to extend the e-commerce moratorium, an agreement consistently extended for almost 25 years, represents a disappointing setback for the WTO.  In addition, the Secretary-General worked feverishly throughout the weekend in hopes of getting consensus but was unsuccessful. 

The United States was substantively engaged.  Ambassador Greer attended the meeting for three days—a robust commitment of time and resources.  This follows U.S. decisions to allow Jennifer Nordquist to serve as deputy director-general at the WTO and pay the institution $25 million in overdue contributions.  Further, the United States has circulated two papers on reform and seems to have constructively participated in the reform discussions at MC14.  Any U.S. refusal to participate at the WTO would seriously undermine its relevance.  Fortunately, at least through MC14, the United States continued to demonstrate a willingness to engage.

However, the failure to deliver any demonstrable success did not go unnoticed by the U.S. delegation.  In a statement following the ministerial, Jamieson Greer, the United States' top trade official, said MC14 “confirmed that [the WTO] will play only a limited role in future global trade policy efforts.”  Yesterday, in a Wall Street Journal op-ed, Ambassador Greer offered an even bleaker assessment of the institution’s future explaining that the United States will “chart[] its own course on trade policy—working regionally, bilaterally and, where necessary, unilaterally.”

Coalitions of the Willing.  If the WTO continues to be a forum for inaction, countries will assuredly disengage and turn to other mechanisms to address challenges to global trade.  Indeed, members are already using other venues they view as better suited to negotiate agreements between smaller like-minded coalitions of the willing, undermining the WTO's functional relevance.  For example, as referenced above, 66 countries implemented the e-commerce agreement on an “interim” basis as a workaround to the WTO's consensus requirement.  In addition, the EU and members of the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) members launched a trade and investment dialogue in November. The fracturing of countries and coalitions will only continue absent immediate, institutional reform.