The selection of Roberto Carvalho de Azevêdo of Brazil as the next director-general of the World Trade Organization (WTO) comes at a moment of truth for the organization. With the emergence of hundreds of bilateral and regional trade deals worldwide, the Geneva-based WTO has recently been eclipsed as a forum for the negotiation of agreements that eliminate trade barriers.
However, the U.S. business community needs the WTO today more than ever. Our strong preference has always been to pursue multilateral trade agreements, which tear down trade barriers comprehensively across the globe.
Together with its predecessor, the General Agreement on Tariffs and Trade, the WTO has ushered in a 40-fold increase in world trade since the Second World War. Global trade topped $22 trillion last year, and the worldwide exchange of goods and services has allowed incomes to rise in country after country.
Ambassador Azevêdo is well prepared to tackle the WTO’s challenges. Representing Brazil before the WTO since 1997, he has won respect in Geneva for his keen insight into the WTO’s rules and its members’ interests. He may be just the bridge builder the organization needs.
Since the Doha Round negotiations bogged down more than five years ago, the WTO has been at an impasse. Clearly, we need to think about alternative ways to generate momentum in Geneva.
The good news is that negotiators are finally focusing on a discrete package of deliverables with a specific deadline. The WTO’s 9th Ministerial Conference — to be held in Bali, Indonesia, on December 3-6 — is a critical opportunity to demonstrate that the organization can deliver new trade openings.
The top priority for Bali is to finalize a Trade Facilitation Agreement, which would promote economic growth and raise living standards around the world. Such an agreement would recognize that businesses today create goods by tapping into a web of “global value chains” that provide access to raw materials and intermediate goods from all around the world.
In this new reality, chokepoints at the border — including excessive customs paperwork, redundant security programs, and burdensome regulation — have the same detrimental impact on trade as tariffs. Cutting red tape at the border through a Trade Facilitation Agreement could boost the world economy by as much as $1 trillion and generate more than 20 million jobs, according to the Peterson Institute for International Economics.
In addition, the WTO is poised to show its value in negotiations to expand the product coverage of the Information Technology Agreement (ITA), which has helped deliver a cornucopia of technology products to the world. Seventy countries are parties to the ITA, and they account for 97% of world trade in IT goods.
Today, however, a host of tech products invented since the ITA was negotiated in 1996 are not included: Among these are GPS systems, game consoles, Bluetooth devices, and flat-panel televisions. Extending free trade to these new products would multiply the ITA’s benefits.
The Chamber also strongly supports negotiations for a new Trade in Services Agreement (TISA) underway in Geneva. Nearly 50 countries are pursuing a free-trade agreement in services.
A focus on services is a natural for America, which is by far the world’s largest exporter of services ($632 billion in 2012). The U.S. is home to large numbers of highly competitive services firms in such sectors as software, engineering, architecture, banking, insurance, express delivery, e-commerce, and telecommunications.
The TISA is needed because services companies have seen regulatory barriers multiply in recent years. New challenges are particularly prevalent in the digital economy, which is driving a significant share of U.S. economic growth. Tearing down the barriers that shut these American companies out of foreign markets will generate growth and jobs here at home.
While the TISA isn’t a WTO agreement, Ambassador Azevêdo should continue the WTO’s practice of supporting such agreements to open markets among a subset of member states and consider how to eventually bring them within the organization’s body of rules.
In short, the WTO must shake off the gridlock of recent years and embrace these new ambitions. Success depends first on the WTO’s member states, but the incoming director-general is ideally suited to broker a deal in Bali and support work on the ITA, the TISA, and other new initiatives. The Chamber pledges to do all it can to help Roberto Azevêdo restore the organization’s status as the premier forum for market-opening trade negotiations.
Myron Brilliant is the executive vice president and head of international affairs at the U.S. Chamber of Commerce.