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Session 1:WTO AFTER MC 11:

HOW INDONESIA AND CANADA SHOULD POSITION OURSELVES?

Jakarta, Indonesia

27 April 2018

Wenguo CaiDirector, International ProgramsThe Conference Board of Canada

Presentation Outline(1) WTO – one of the pillars of global economic governance: trade rules, trade negotiations, trade policy review, and dispute settlement

(2) WTO Ministerial Conferences: From Singapore (MC1) to Doha (MC4), to Bali (MC9) and to Buenos Aires (MC11)

(3) The Future of the WTO? Multilateral vs Bilateral; WTO vs FTAs

(4) How should Indonesia and Canada position ourselves in the post-MC11 era?

WTO & Multilateral Trade System

• WTO is the core to the world trading system, responsible mainly for:

➢ Multilateral trade rules making and implementation

➢ progressive trade liberalization negotiations - goods and services

➢ trade policy review - to improve transparency and accountability

➢ Trade dispute settlement

WTO & Trade Rules Making

• WTO is responsible for making multilateral trade rules through trade negotiations:

➢ rules on tariffs and non-tariff barriers

➢ Rules of origin

➢ TBT and SPS rules and measures

➢ Rules on trade remedies (antidumping, countervail and safeguards)

➢ Intellectual property rights (IPR)

➢ Domestic regulations on services, etc.

WTO & Multilateral Trade Negotiations

• GATT/WTO is responsible for multilateral trade negotiations through various rounds:

➢ Under the GATT, 8 rounds of negotiations were conducted and the last one was the Uruguay Round (1986-1995) – WTO was also born to replace GATT 1947

➢ Under the WTO, the Doha Round was launched in 2001 and still on-going

➢ WTO is a member-driven organization for trade negotiations. The Ministerial Conference is the highest decision-making body – meets every two years

➢ From 1996 to 2017, 11 Ministerial Conferences were held – from Singapore to Buenos Aires

WTO & Trade Policy Review

• WTO conducts trade policy reviews on its members:

➢ Purpose: to improve transparency of the trade and investment regimes of WTO members

➢ Every 2 years for big economies/traders (USA, EU, Japan) + China – Canada used to be reviewed for two years but now four years

➢ Every 4 years for other advanced economies, such as Canada and Australia

➢ Every 6 years for most developing countries and transition economies, such as Indonesia

➢ Every 8 years or more for least developed countries

WTO & Dispute Settlement

• WTO is responsible for settlement of trade disputes among WTO members:

➢ WTO has its teeth because of the dispute settlement mechanism.

➢ The WTO dispute settlement mechanism is an important part of the world trading system, providing possible solutions to trade disputes between WTO members.

➢There are many trade dispute cases in the WTO between WTO members.

➢ WTO is also burdened with so many dispute cases among WTO members.

WTO Ministerial Conferences

• WTO Ministerial Conference is the highest decision-making body of the WTO

➢ WTO Ministerial Conference is held about every two years.

➢ The 1st WTO Ministerial was held in Singapore in 1996

➢The 4th WTO Ministerial was held in 2001 in Qatar where the Doha Round was launched.

➢ The 9th WTO Ministerial was held in Bali in 2015.

➢ The 11th WTO Ministerial was held in Buenos Aries in 2017.

WTO Ministerial Conferences

➢ The WTO Ministerial Conference is the topmost decision-making body of the WTO – highest authority – meets at least every two years - trade ministers are leading the negotiations

➢ Compared to APEC, G20 and G7 where the heads of the states are attending.

➢ WTO belongs to its members. WTO members make their decisions through various councils and committees – then Ministerial Conferences

➢ Between two ministerial conferences, day-to-day work of the WTO is handled by:

❖ General Council (many councils, committees and working groups)

❖ Dispute Settlement Body

❖ Trade Review Body

The Future of the WTO

➢ WTO at a crossroad?

➢ WTO versus FTAs: Friends or Foes

➢ WTO and mega-regional trade agreements (TTP-CPTTP, RCEP, TTIP )

➢ Many regional and bilateral trade agreements (so-called “spaghetti bowl”)

➢ What holds the future for the WTO?

The Future of the WTO

➢ Doha Round negotiations - uncertain

➢ RTAs and BTAs (Customs Unions and Free Trade Agreements)

➢ Plurilateral trade agreements (government procurement, civil aircrafts)

➢ Preferential agreements for LDCs or ACP

➢ Sectoral agreements (ITA, TiSA, environmental goods, etc)

The Future of the WTO

➢ Multilateral trading system versus bilateral trade agreements?

➢ Trump effect – “America First”

➢ Rise of trade protectionism

➢ What Impact on the WTO?

➢ Three-tiered trading system – multilateral, regional and bilateral

➢ Challenges to the WTO and its Members

The Future of the WTO

➢ WTO also needs reforms?

➢ consensus versus “veto power”

➢ clear guidelines for FTAs – make the WTO and FTAs mutually supportive

➢ clear guidelines for plurilateral negotiations – more transparency

➢ bring common FTA and plurilateral issues into the multilateral forum (WTO)

➢ increase efficiency and inclusiveness – to address development issues

How Can Indonesia and Canada

Position Ourselves?

➢ Indonesia and Canada have a lot in common:

❖ middle powers in the world trade system

❖ both attach great importance to trade and investment

❖ strongly support the WTO multilateral trade system

❖ Also actively engaged in regional and bilateral FTA negotiations

How Can Indonesia and Canada

Position Ourselves?

➢ There are some differences between Canada and Indonesia too:

❖ Canada is a developed nation. Indonesia is a developing country

❖ Canada: proximity to the US market – but uncertainty of NAFTA; Indonesia: close to Asian emerging markets (ASEAN, China and India) – but less competitive

❖ Canada is a member of CPTTP & NAFTA; Indonesia is negotiating RCEP & ASEAN++, possible for higher level FTAs?

How Can Indonesia and Canada

Position Ourselves?

➢ It is in the best interest for Canada and Indonesia to support the WTO

➢ Also actively pursue regional and bilateral FTAs –adopt a three-tiered approach to trade negotiations

➢ Select potential trade partners for high-level FTAs – possible FTA between Canada and Indonesia (or ASEAN)?

➢ Conduct domestic reforms to make Canadian and Indonesian economies more competitive (Canada’s dairy sector; Indonesia’s industries and services)

Q&A and Discussion

Thank you for your participation.