Rabat – Protectionism is not a viable option for global prosperity because, as the COVID-19 pandemic taught countries across the world, economies are interconnected and interdependent, said Liam Fox, the UK’s candidate to be the next director-general of the World Trade Organization (WTO).
In a press briefing on Monday morning, Fox presented the reasons why protectionist economic measures cannot help global stability.
The international trade expert criticized the rise of protectionism over the past decade, especially among G20 members.
“In the end of the financial crisis in 2009, only 0.7% of G20 imports were covered by restrictive measures. In the end of 2019, it reached 10.3%,” Fox revealed.
Following the crisis, most economic powers attempted to protect themselves from future setbacks. Increasing tariffs on imports was one of their first reactions in the aims of preventing their markets from saturation.
The rise in tariffs represents a barrier preventing developing countries from entering large global markets and thus affect global prosperity, Fox continued.
“Trade is not an end in itself. It is a means of creating prosperity,” he said. He pointed to the geopolitical importance of prosperity, one that transcends borders and affects more than the economy.
“Prosperity underpins social cohesion. Social cohesion underpins political stability. And, political stability is the bedrock of our collective security,” he explained.
According to the Conservative Party MP, protectionism can lead to or exacerbate challenges such as mass migration and radicalization.
“If you don’t allow people to trade their way out of poverty, … don’t be surprised if you end up with more mass migration, more radicalization, … leading to security risks,” he added.
WTO’s lack of political weight
Fox, who is a former UK secretary of state for defense and for international trade, intends to work on lowering global trade barriers if the candidate becomes director-general of the WTO.
According to him, the WTO has good technical skills, human resources, and institutional memory. However, the organization lacks political weight.
“Most of the [WTO’s] blockages have been political rather than technical,” he said, hinting at the recent resignation of WTO’s former director-general, Robert Azevedo.
The Brazilian diplomat resigned on August 31, a year before the end of his second mandate as head of the WTO.
International media cited disagreements between the US and the WTO as the main reason behind the resignation.
In December, US President Donald Trump blocked the appointment of judges to the WTO’s Appellate Body, preventing the organization’s ability to settle international disputes.
According to Fox, such occurrences could have been prevented if the WTO had more political weight. The British politician believes that the UK, as a G7 country, has the potential to make the WTO politically stronger.
Representing a country actively withdrawing from the European Union, Fox announced his intention to establish a functioning dispute resolving mechanism within the organization. This would ensure countries obey all the rules and not only those that serve their interests.
Advocating for an inclusive WTO
Fox plans to launch an internal reform within the WTO that would allow all member countries to express their opinions and concerns.
“A lot of small countries who make a lot of noise get heard. Bigger economies get heard. However, lots of developing countries, including many in Africa, respect the [WTO’s] rules and support the organization, but they don’t get their voice properly heard,” he emphasized.
To solve the issue, Fox suggested grouping member countries based on the type of their economies, rather than their geographic size or development status.
For instance, landlocked countries, which would have similar economies, are likely to share the same issues and can jointly express their voices, he explained.
“We need to create an agenda tackling issues that target the different categories of economies,” Fox said. The UK’s nominee for WTO director-general is running against candidates from both developed and developing economies.
Finally, recalling the interdependence of the global economy, the expert recommended that the WTO collaborate better with other international bodies, through properly-structured relationships, defined deadlines, and annual reports.
“We live in an integrated, interconnected, interdependent global economy. It is time to make our global institutions reflect that reality,” he concluded.
The WTO voting process to determine the future director-general of the organization began today, September 7.
Over the following weeks, the WTO’s 164 members will evaluate the UK candidate, alongside candidates from Nigeria, Egypt, Moldova, Kenya, Saudi Arabia, and Mexico.
The WTO is set to elect its new director-general before the end of the month. The new head of the organization will serve for a renewable mandate of four years.