WTO Public Forum On Innovation Opens With Hope For New Ideas

Innovation holds a centre stage at the World Trade Organization Public Forum this year. During the opening plenary today, the WTO director general said the organisation needs updating. And some participants said international trade is at a crossroads, with much to gain or lose.

The WTO Public Forum is taking place from 1-3 October under the theme: expanding trade through innovation and the digital economy. A plenary meeting opening the three-day event convened WTO Director General Roberto Azevêdo, keynote speaker Michael Froman, United States trade representative, and a panel of government and intergovernmental agency officials and industry representatives, including: Alexander Stubb, minister for European affairs and foreign trade of Finland; Francis Gurry, World Intellectual Property Organization director general; Talal Abu-Ghazaleh, chairman of Talal Abu-Ghazaleh organisation; Luo Feng, CEO of IZP technologies.

Azevêdo said both trade and innovation have a role to play in promoting social inclusion and development. He encouraged the audience to think about “what role the WTO should play in fostering those links.”

The WTO functions with outdated rules, Azevêdo said, having been created in the early days of the internet in 1995, and the multilateral system needs an urgent update. A change of atmosphere in the WTO is also desirable, he said, so that the organisation can begin to deliver multilateral negotiated deals. The first of such opportunities will be in Bali, Indonesia, in December.

Froman underlined the necessity of an evolving international trade system. “Can we be nimble enough, can we be creative enough to innovate when it comes to the global trading system?” he asked.

US Believes in WTO

In many ways, Froman said, “the WTO has fulfilled its initial promise.” “The rules and principles negotiated back in 1947 with the establishment of the GATT [General Agreement on Tariffs and Trade] are enduring and essential,” he said, adding that those principles helped countries to hold true during the “worst economic crisis since the 1930s”. “A descent into spirals of protectionism” can be avoided, he said. He also commended the work of the WTO Dispute Settlement Body “for the resolution of international frictions.”

However, Froman said “there is one, yawning gap in the WTO’s record: in its nearly twenty-year history, the WTO has never once produced a new, fully multilateral trade agreement.” Talking about the Doha Round, he said, “for 12 years, we have too often had to say: it’s stuck.”

“When President Obama came into office in January 2009, the fact that Doha was deadlocked was well-established. It’s just that no one wanted to say it.” “After reviewing the state of the negotiations, the President made clear, and we made clear here in Geneva, that we saw no possibility of concluding the agreement by just pursuing the same approach as we had been for the last decade.“

“It is precisely because we believe in the WTO that the United States has been unwilling during this Administration to let it continue down a path toward certain failure.” According to Froman, “the seeds of change began to sprout two years ago, at the WTO’s 8th Ministerial Conference,” during which trade ministers declared the need for an innovative approach.

A concrete result in Bali is possible, the US trade representative said, and “a strong, binding trade facilitation agreement clearly is doable. It could be the first multilateral trade agreement the WTO produces.”

“Development is in the bloodstream of US trade policy today,” he said, illustrating his statement by mentioning that “97.5 percent of all exports from least-developed countries in Sub-Saharan African enter the US duty free, quota free.”

Dichotomy between Capitals and Geneva

“I am sometimes struck by the dichotomy I sense between capitals and Geneva when it comes to trade facilitation,” he remarked. “Every time I go to Africa … it is clear that trade facilitation is a central goal of every government with which I have met, the focal point of domestic, bilateral and regional work.”

“In Geneva, trade facilitation is too often a bargaining chip in the great game of multilateral trade negotiations, a pivot point for tactical manoeuvring.”

A Lot Depends on Bali Outcome, US Says

The US believes that plurilaterals and bilaterals trade deals do not compete with the multilateral system, Froman said. “They are meant to complement, and ultimately to strengthen the multilateral system. But if Bali shows that the WTO is not a viable forum for negotiations, bilaterals and plurilaterals will likely be the only avenue for trade negotiations.”

“No one should blame the proliferation of bilateral and plurilateral trade negotiations for the state of the WTO today. Bilateral and plurilateral negotiations in or out of the WTO are not

the context of our negotiating failure here – if anything, they are a consequence instead,” he said. For many countries the attraction of those agreements is that they offer a way forward, he added.

“The loss of the WTO as a negotiating forum of course, would have the greatest impact on the smallest countries and the poorest economies,” he said. “Big countries will always have options. Fair or unfair, that’s a reality.”

The positive scenario of a successful Bali outcome would, on the other hand, “beat market expectations,” and “surprise a sceptical global audience,” Froman said. “The success or failures of negotiations in this room over the next four weeks will write the future of this institution.”

Growing Tension between Competition and Cooperation, Gurry Says

Innovation in information and communication technology (ICT) is very important but “innovation also touches everything that we do,” said Gurry. There is long recognition of the positive benefits of innovation, he said, but that recognition has reached a new stage of conscientiousness. There is a rising trend of collaborative innovation. One of the reasons for that trend is the complexity of technology, he said, and another one is ICTs which enable social innovation and cooperation.

However, there is growing tension between competition and cooperation and that is going to be one of the major issues to be sorted out in a rules-based system in the future, Gurry said.

“Where does cooperation end and where does competition start?” he said. “Intellectual property plays an important role in sorting out that particular tension.” On one hand, it captures the economic advantage of innovation, but on the other, it is a mechanism for establishing rights and obligations in relation to multiple participants in a knowledge-generation project, he said.

Legislators Need to Break Mould, Finland Minister Says

Stubb, referring to a WTO publication, said that about 300 free trade agreements currently active is good news as they promote free trade and bad news as they might induce fragmentation. He noted the current negotiations between the US and the European Union for a free trade agreement. The WTO, in its World Trade Report 2011 found that the number of preferential trade agreements in force in 2010 was close to 300.

The EU-US negotiations for a Transatlantic Trade and Investment Partnership have raised concerns on the transparency of the negotiations (IPW, Bilateral/Regional Negotiations, 12 July 2013). Concerns have also been raised on the Trans-Pacific Partnership agreement to which the US is also party (IPW, Public Health, 30 July 2013).

“Legislators are lagging awfully far behind in the whole trading scheme,” said Stubb. “The Doha round is simply antiquated,” he said. Moving toward a digitalisation of the economy is inevitable, he said. “You might want to call it an application-economy or a 3D printing -economy,” he specified.

Borders are not going to matter any longer, he said, adding that “customs officials are going to be the geriatrics of the future trade community.” Legislators and decision-makers need to break out of the mould, he concluded.

Azevêdo: Industry Welcome; Can’t Forget Disadvantaged Nations

On innovation and ICT, Azevêdo said the WTO needs updating, and needs to move in a faster way but this cannot be done forgetting those who are not well equipped today to deal with the digital era. It is easy for people in the room, he said, who are “pretty much abreast” of development and technology. Some countries which experience difficulties should not be left behind but be helped to come to the forefront, he said.

“We have an obligation to look beyond the traditional ways of negotiations,” he said. WTO should remain a negotiating forum. This is what the organisation does, along with resolving disputes, he said, but it could also be a place for brainstorming where business which is at the forefront of technology and trade could interact at the WTO. Member states could listen to those conversations. Governments are sometimes seen as a wall between business and international organisations, but governments should be a channel, he said, not a wall. Governments represent the interest of businesses. When industry representatives knock on his door, he advised them to also knock on their government’s door.