July 16, 2019 1:45PM

We Need A Way Back To Multilateralism In Trade

As trade restrictions mount and as major trading countries remain mired in commercial impasse, an approaching global gathering in Central Asia next summer could prove to be the climax to the current battle between continued multilateral cooperation and increased unilateral confrontation in trade.

The World Trade Organization, with its commitment to international cooperation, has been struggling with the headwinds of unilateralism and protectionism. If a way back to multilateralism in trade is not soon found, the entire trading system may unravel, with grievous economic consequences for all the world.

So far, the developed countries of the world have been unable to counter the current trend toward the ultimately self-defeating insularities of economic nationalism. Thus, it may be left to the developing countries to play a decisive role in turning the tide. At this point, most developing countries understand – perhaps better than some of the developed countries – the considerable economic and geopolitical stakes they share in supporting the existing global trade regime.

While the rest of the world has been struggling to save the multilateral trading system overseen by the WTO, many of the developing countries that comprise most of the 164 members have just now started to benefit fully from their participation in the rules-based WTO system. The lower barriers to trade and the added links to global supply chains provided by membership in the multilateral trading system are helping further growth and feed prosperity by freeing and facilitating trade throughout the developing world.

One among numerous examples is Kazakhstan, which has grown rapidly through trade in the four years since it became a WTO member in 2015, and which has been chosen to host what could be a fateful WTO ministerial conference in its capital of Nur-Sultan in June of 2020. It can be argued that Kazakhstan and other developing countries that are just now climbing the economic ladder toward prosperity have the most at stake in saving a multilateral trading system that provides mutual market access under the rule of law. In the rules-based WTO, all countries are equal no matter the size of their economies or the extent of their trade. In the WTO, there is the rule of law instead of the rule of power. For developing countries, above all others, it would be ill-advised to undermine the international rule of law in trade.

The first President of Kazakhstan, Nursultan Nazarbayev, offered his country’s capital as a site where it is hoped that common ground may be found next summer in maintaining the rule of law in the trading system while improving the current trade rules to meet the new challenges of the 21st century. As one European trade diplomat, Luc Levigne, put it recently, “We are engaged in WTO reform, we want success, there is no alternative, there is no second trading system. Kazakhstan will have a great responsibility in this regard. Building bridges is important.”

Located at the center of the Eurasian continent – neighbor to China to the east, Russia to the north, Europe to the west, and the Middle East to the south – Kazakhstan is well-placed for building bridges. Indeed, it has long held itself out as the ideal place for doing so. The Astana International Financial Forum and the Astana Economic Forum are two of the numerous ways in recent years that trade, investment, finance, culture, and other bridges have been built by Kazakhstan. The upcoming WTO ministerial conference can be next.

Kazakhstan is likewise well-placed to emerge as an influential economic voice for developing countries in the WTO, especially those in Central Asia. For millennia, the steppes of Kazakhstan have been a crossroads for Eurasian trade. Since becoming the 162nd country to join the WTO four years ago, it has been engaged in a gradual transition toward a more open economy. For “ease of doing business,” the World Bank ranks Kazakhstan 36th in the world. This opening up has enabled Kazakhstan to become ever better positioned to maximize its gains from trade, and, importantly, coupled with other reforms, this opening up can also help broaden the opportunities and possibilities for the Kazakh people beyond trade.

In a sure signal of trade arrival, Kazakhstan is now a participant for the first time in WTO dispute settlement in a dispute with Ukraine over Kazakhstan’s anti-dumping duties on steel pipe. The larger the volume of the international trade of a country, the more disputes are likely to occur with other countries over trade. The growing volume of Kazakh exports has increased from about $41 billion in 2015 to $61 billion in 2018 since the country joined the WTO. For now, exports remain mostly natural resources – petroleum, copper and other minerals, and natural gas – but diversification is a priority.

Kazakhstan’s per capita GDP of $24738.40 (PPP) puts it ahead of most developing countries. Only 2.7 percent of Kazakhs live below the poverty line. Trade is rightly seen by the Kazakhs as a means of further improving these already improving numbers. They seek increased trade with Europe, Russia, China, the United States, and, not least, other developing countries in the rapidly growing Central Asian region and beyond.

These trade circumstances and these trade aims add to Kazakhstan’s placement as a potential bridge builder in the WTO. Looking ahead to their next ministerial conference, other WTO members should look to their host, Kazakhstan, to emerge as a new leader in helping resolve the current crisis by building the new and better bridges needed to secure and strengthen the multilateral trading system.