The World Trade Organisation (WTO) faces a deep crisis that has paralysed its three main functions: negotiating new rules, notification of measures adopted by Members to assess compliance with existing rules, and settlement of disputes. The WTO's 164 Members are largely split on a North-South axis. Consensus decision-making has been displaced by groupings of mainly governments of the global North who are negotiating new agreements among themselves with no mandate. To understand this crisis and where it will lead, it is necessary to take a short trip through history (apologies to those already very familiar with this).

The origins of the WTO trace back to the General Agreement on Tariffs and Trade (GATT), which industrialised countries adopted to restore trade routes that were closed off during the 1930s' Depression and World War 2. The GATT genuinely started as a trade agreement that targeted border taxes (tariffs), although it was cautiously extended to regulations, such as product standards, that affected commodity trade. Decision-making was by consensus. In practice, capitalist economies continued to control the GATT as newly decolonised countries joined.

The 1970s saw a massive transformation of capitalism: traditional industrial production relocated largely to Asia, services became the mainstay of rich countries' economies, new technologies made transnational enterprises more profitable and intellectual property rights cemented their technological dominance. Structural adjustment programmes opened the global South to these developments, while neoliberalism enabled them in the North.

Transnationals, and the US as their patron state, demanded new global rules to advance and protect their interests. The Uruguay Round of GATT negotiations from 1986-94 extended the term "trade" to non-trade areas, restricting governments' policy space to regulate services and related foreign investment, finance and telecommunications, and guaranteeing monopoly rights over intellectual property.

Poorer countries expected access to rich countries' agriculture and textile markets in return. Instead, they got limited "special and differential treatment" - for example, longer implementation periods, lower expectations of commitments made by them, and (often unfulfilled) commitments by richer countries to make concessions that advance their trade interests - and promises of better to come. The Doha "development" Round launched in 2001 never delivered.

Rich Countries Pursue Their Own Interests

Rich countries unilaterally declared the Doha Round dead in 2015. They have since launched breakaway negotiations to serve their 21st Century interests, notably an e-commerce agreement that will restrict governments' ability to regulate digital services, technologies and data. Their plan to incorporate this in the WTO aims to bypass the WTO's consensus requirements. In addition, they want to redefine how countries are designated as "developing". In parallel, outside of the WTO they have promoted deeply unpopular mega-regional agreements like the Trans-Pacific Partnership Agreement (TPPA) and Trans-Atlantic Trade and Investment Partnership (TTIP) to expand their global rules.

India and South Africa have challenged the legality of the WTO plurilateral negotiations, fearing that rich countries will continue to make global rules for themselves and deepen the long-standing development asymmetries. Paradoxically, developing countries are now fighting to retain the existing skewed system, because new processes of unilateral/plurilateral rulemaking will leave them even worse off and without any functional dispute forum in which to challenge them.

In another symbol of the WTO's crisis, Director-General Azevedo resigned in 2020, a year early. Objections from the Trump Administration meant it took a year to appoint Nigerian Ngozi Okonjo-Iweala as his replacement. Hopes that an African woman might turn the tide were short-lived when she endorsed most of the North's agenda. Still, she had spent 25 years at the World Bank.

2021 Ministerial Conference

Despite the ongoing pandemic, and the negligible vaccination rates in a majority of the WTO's 164 member states, the Director-General and Secretariat insisted that the 12th Ministerial Conference (MC12) should proceed in person in Geneva from 29 November to 3 December. Aside from the obvious health risks, trade ministers from a number of poorer countries were not able to attend.

Those that are vaccinated may have used vaccines that are not recognised in Switzerland. The logistics and costs of quarantine and transit are impracticable. Some, including Pacific Islands, don't even have commercial flights into and out of their country. The "MC 12" became a rich countries' forum where any decisions that are made lack even more legitimacy than usual.

But the prospect that a waiver of the patent rights of Big Pharma under the Agreement on Trade-related Intellectual Property Rights (TRIPS) for Covid-19 vaccines and medical supplies might be secured in return for concessions, such as recognising the unmandated plurilateral negotiations, was dangled in an attempt to stop South governments and activists from objecting.

The WTO's crisis was utterly predictable for geopolitical and systemic reasons. There was never any intention to rebalance the rules to address the long-standing development asymmetries wrought by colonialism and imperialism. Powerful states simply assumed that the geopolitics of the 1990s that ensured the WTO's consensus decision-making processes worked for them would prevail. That fell apart with the rise of the BRICS (Brazil, Russia, India, China, and South Africa), and more fundamentally after China's accession and ascent as a global power. The US continues to exercise its old-style leverage, but in doing so has deepened the North-South divide.

Systemically, the WTO's rules were always politically, socially, economically and ecologically unsustainable. The hyper-globalisation model empowers corporate greed while restricting governments' policy space. That has fuelled the massive inequalities and instability we see today, generating populist backlash even in the US and European Union. Successive financial crises, and now the refusal of European states in particular to agree to the TRIPS waiver, are further evidence the system is broken.

This Regime Has To Collapse Before It Can Be Replaced

Even if the WTO stumbles on, its "glory days" are truly over. We are now in an interregnum. Thinking and talking about alternatives that are fit for people and planet in the 21st Century and which restore policy space to elected governments, such as the Green New Deal, are crucial. Realistically, however, powerbrokers whom the WTO serves will not just surrender. Normally I am not a believer in the Armageddon strategy. But this regime has to collapse before it can be replaced. In the interim, governments need to feel empowered to adopt such policies at the local, national and regional levels, irrespective of the WTO.

Since this was written, the outbreak of the Omicron Covid-19 virus variant caused the very last minute, and indefinite, postponement of the WTO Ministerial Conference. Ed.