Why the CBI pushed for a WTO reboot at the B20

There is lots of talk about trading on World Trade Organisation rules from certain quarters in the UK, but there’s little knowledge about what this means – particularly since the WTO is creaking at the seams.

The WTO is a relatively poorly understood aspect of the Brexit debate. Business has been crystal clear that leaving the EU without a deal and trading on WTO terms would be catastrophic for our economy and an unmanageable scenario for the government and thousands of businesses, large and small, up and down the country.

Yet we still need a strong and efficient WTO, as its rules are a vital global baseline for businesses operating in countries where we don’t currently enjoy the benefits of a free trade agreement.

Indeed, a world without the WTO would mean an international trading system that resembles the Wild West, without the numerous liberalising agreements we currently enjoy covering goods, services, intellectual property, and dispute settlement. Businesses would lose the closest thing they have to a set of rules that provide a level playing field around the world, and which allow them to operate and expand internationally with extra certainty, safe in the knowledge that the WTO will enforce its rules and protect their interests impartially.

This is why reform of the WTO was one of the CBI’s top priorities when our Director-General Carolyn Fairbairn travelled to Tokyo last month as the UK’s representative to the B20 Summit – the business version of the G20.

Because this vision of a Wild West is not as far away as you might think, since the WTO is under significant pressure. Judicial appointments to the WTO’s dispute settlement system, its Appellate Body, are being blocked and we face the very real prospect of it falling into disarray without enough judges to make rulings. There is a risk the WTO quietly turns into a rules-based organisation without the means of enforcing those rules.

This disaster scenario could be reached by the end of this year, so action is needed – and needed now.

But how can we save the WTO and the rules-based trading system?

Naturally we will need to find a solution that works for all major international economies, from China and India to the UK and US. However, progress on trade liberalisation must not be held hostage by individual countries, and we are in favour of plurilateral talks to bring down barriers in important areas such as e-commerce.

Nevertheless, with China set to dominate the economic landscape of the 21st century, it is natural to assume it will need a larger stake in the rule-setting that governs our modern economies. Business faces some real challenges in China, and there must be more efforts at securing a level and transparent playing field, but is there an opportunity to get China to buy into this vision with the prospect of increased influence in the formation of new global rules and international institutions?

For example, would the World Bank or the International Monetary Fund consider Chinese appointees to lead them in the future, if, and only if, China tackles head-on the widespread concerns over its statist approach to the domestic economy and international investments?

The UK also has to define its role on the world stage post-Brexit. Without a doubt we need to continue striving for the liberalisation in trade that creates jobs, attracts investment and drives prosperity, with close partners like the EU, with whom we will continue to share the same values and much common cause after Brexit.

The UK has an opportunity to take the lead and act as an honest broker at the WTO, and to work with international partners to identify areas where we can build support and consensus to lead real change on global political, social, environmental, and economic challenges.

Take for example our efforts to achieve the Sustainable Development Goals by 2030, and to continue defending the Paris Agreement and market-based mechanisms to provide the framework for businesses to invest with confidence along the sustainable low-carbon path.

A truly multilateral approach to these issues has the best chance of success. The B20 has multilateral cooperation in its DNA, and we in the UK will maintain a resolute commitment to support similar multilateral solutions to global challenges.

International supply chains that criss-cross borders may not be the most exciting topic for most people, but the result is far from dull. We have affordable, high-tech and diverse product choices at our fingertips thanks to the links between our countries. The enhanced prosperity trade has brought about has lifted over a billion people out of poverty in the last 25 years. And since the turn of the millennium, average life expectancy around the world has risen by five years.

We cannot forget that international trade works for the many, not the few.

Whether or not we are trading on WTO with some or almost all of our trading partners within the next weeks or months, the work of the WTO has an impact on all of us. And it is a clear example of the value of multilateral collaboration, common rules, and of shared global prosperity. It needs to be better valued, protected and re-invigorated with new reforms, that take into account the shifting sands of the global economy.