Indian Prime Minister Narendra Modi with WTO director general Ngozi Okonjo-Iweala ahead of the G20 Summit in New Delhi on September 9 last year. The state of the WTO reflects the lack of global cooperation and compromise. Photo: AFP
Opinion
Outside In
by David Dodwell
Outside In
by David Dodwell
It’s the year of living dangerously as risks rise and cooperation falls
With prospects of a Trump 2.0 looming, the WTO zombified and experts warning of mega threats and a ‘polycrisis’, the absence of cooperation makes one fear the worst
Ian Bremmer, founder of consultancy Eurasia Group, which has just released its global risk report, does not mince his words: “2024. Politically it’s the Voldemort of years. The annus horribilis. The year that must not be named. I’d love to sugarcoat it, but I can’t: from a global political risk perspective, this is the most dangerous and uncertain year I’ve covered in my lifetime.”
Other forecasters’ expectations for the year might not be quite as literary, but appear universally grim. The World Economic Forum’s 2024 Global Risk Report echoed the gloom: 2024 has opened “against a backdrop of rapidly accelerating technological change and economic uncertainty, as the world is plagued by a duo of dangerous crises: climate and conflict”. It foresees things worsening in the decade ahead.
While economist Nouriel Roubini warns about mega threats and historian Adam Tooze talks of a “polycrisis”, Martin Wolf in the Financial Times captured the mood. “It is not so much that anything can happen. It is rather that a sizeable number of quite conceivable somethings might happen, possibly at much the same time,” wrote Wolf. “Ours is indeed a messy and unpredictable world.”
Wolf focuses on the “fragilities” across the world which, if untended, will enable this polycrisis to wreak harm on a scale not seen for almost a century.
He notes four fragilities that stick out: environmental, as we engage in “an irreversible experiment with the biosphere”; financial, as we juggle eye-watering debt while interest rates are rising sharply; domestic politics and the “democratic recession” that provides the backdrop for more than 60 elections this year; and geopolitical conflict, amid changes in relative economic power in the wake of China’s rise.
It is this last “fragility” which might, especially in view of the increasing possibility of Donald Trump resuming tenancy at the White House, be the most dangerous of all. Deteriorating US-China relations will destroy any possibility of the international cooperation essential in tackling every other risk and fragility.
It is dangerous and tragic that the capacity to cooperate has evaporated just as this fast-developing polycrisis gathers steam. The multilaterally underpinned agreements made over the past 70 years that have provided the primary momentum for strong economic growth worldwide, lifting millions out of poverty, would never have been possible without comprehensive cooperation – and a willingness to make compromises in the interests of the wider global good.
The grim consequences of this collapse in cooperation are in clear view as the zombified World Trade Organization gathers its 164 members in Abu Dhabi next month for the 13th WTO Ministerial Conference, a meeting generally held every two years.
Since the WTO’s establishment in 1995, which historians say was the high watermark of multilateralism and globalisation, its meagre achievement still amounts to only a Trade Facilitation Agreement signed in Bali in 2013. Despite optimism in 2022 that breakthroughs might be made, progress towards final agreements on e-commerce, fisheries subsidies and dispute settlement has been glacial. WTO officials have watched helplessly as protectionism rose, accelerated by Trump’s eccentric nationalist initiatives, and an unwillingness for often difficult compromises that make multilateral deals possible and beneficial.
14:45
An unwinnable conflict? The US-China trade war, 5 years on
An unwinnable conflict? The US-China trade war, 5 years on
Worse, it has overseen the castration of its pivotal role as an arbitrator of international trade disputes, a function that European Trade Commissioner Valdis Dombrovskis described as “critical for the overall legitimacy of the WTO”. Since 2017, 29 trade disputes have been “appealed into the void”, to float unresolved until the WTO’s trade dispute settlement process can be restored.
Top of the agenda at the WTO ministerial meeting is the restoration of the dispute settlement process, but as Keith Rockwell, retired head of WTO communications, suggests, officials are preparing for disappointment.
Disappointment is also expected on a deal on e-commerce trade rules, on controls on harmful fisheries subsidies, and on farm trade liberalisation – which have been under negotiation for decades, but trapped by the WTO’s consensus voting rules, under which a single veto can frustrate initiatives.
The longer the WTO remains zombified by international reluctance to cooperate and make compromises, the more entrenched the unilateral tariff-riddled deals so preferred by “strongman” leaders like Trump, and the more the global economy will become a tangle of inconsistent and irreconcilable trade and investment rules.
Call it decoupling, “de-risking” or deglobalisation. Whatever the term, the result is economic inefficiency, product shortages, supply chain disruption, less competition, higher costs to consumers and an inflamed risk of international conflict.
And this is but the beginning of Bremmer’s annus horribilis. The emergence of Trump as a possible US president-in-waiting is casting a heavy pall not just over US politics, but over countries across the world. There is no commitment President Joe Biden can make that will not be second-guessed. What confidence will there be in Biden’s friend-based diplomacy if all might unravel from January next year?
The geopolitical landscape is set to shift as leaders hedge bets on a Trump victory, or on the need to build stronger links with China, Brics and the Global South – or on the need to stay firmly non-aligned.
That forecasters have written off 2024 does not mean doom is an inevitability. After all, false predictions have earned forecasters a terrible reputation over the decades. But there is one thing I am sure of: cross-border cooperation (and compromise) remains indispensable if we are to navigate the polycrisis swirling around us. The absence of cooperation makes me fear the worst.
David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades
