Monday, 30 May 2016

Roberto Azevedo speaketh with forked tongue

Here we have Roberto Azevedo, director general of the WTO, in the Wall Street Journal exalting the virtues of the Trade Facilitation Agreement.
The agreement itself is not actually news and this is largely PR fluff already in the public domain, but Azevedo is doing his bit to raise awareness of it. What makes it news is that two major business organizations, the International Chamber of Commerce and the B-20 (the private-sector arm of the G-20) approached the WTO requesting a platform to discuss current trade issues and present their thoughts to WTO members.

That meeting, the first of its kind, will take place on Monday in Geneva. Business leaders from small and large enterprises, from developed and developing countries, along with other stakeholders, will brainstorm with WTO members. "We hope" says Azevedo, "that this interaction will help their governments as they shape the WTO’s future agenda".

And indeed it will. We are already seeing seismic shifts in the make up of global regulatory bodies. They will provide the forums for regulatory harmonisation and cooperation. It's no exaggeration to say that we are witnessing the birth of a global single market. When you look at the potential and the work already in progress it's hard not to find it compelling.

One significant development of this is the WTO Agreement on Technical Barriers to Trade which has it that "Where technical regulations are required and relevant international standards exist or their completion is imminent, members shall use them, or the relevant parts of them, as a basis for their technical regulations". That is where UNECE, Codex, IMO, ITU and the likes come into play. The EU is no longer in control of the regulatory agenda. The Trade Facilitation Agreement is now the engine of global development. 

Mr Azevedo makes it sound like anything is possible and a brave new world awaits. But not when pressed into service to speak in defence of the status quo. There we find he has a different message, slavishly repeated by the Financial Times
Britain would face tortuous negotiations to fix the terms of its membership of the World Trade Organisation if it votes to leave the EU, its director-general has warned. Leading campaigners for Brexit have proposed that the UK should leave the EU’s single market and could rely on WTO rules to access European and other markets if it was unable to secure replacement trade deals.
But in an interview with the Financial Times, Roberto Azevêdo signalled this would not be straightforward. He said a British exit from the EU would lead to unprecedented negotiations between the UK and the Geneva-based institution’s 161 other members. Britain joined the WTO under the auspices of the EU and its terms of membership have been shaped by two decades of negotiations led by Brussels.
If Britain voted to leave the EU it would not be allowed to simply “cut and paste” those terms, Mr Azevêdo said. Britain would have to strike a deal on everything from the thousands of tariff lines covering its entire trade portfolio to quotas on agricultural exports, subsidies to British farmers and the access to other markets that banks and other UK services companies now enjoy.
“Pretty much all of the UK’s trade [with the world] would somehow have to be negotiated,” he said.

The WTO had never gone through such discussions with an existing member, he said, and even the procedures for doing so remained unclear. But the likely complexity of such talks, Mr Azevêdo said, made them akin to the tortuous “accession” negotiations countries go through to join the WTO. Even a small economy such as Liberia, which last year became the WTO’s 162nd member, took years to agree the terms of membership.
Here there is much to discuss. Firstly we must dispense with the notion that we will leave the single market. It's not going to happen. Consequently we can bin the grim prognostications on that score, even if Vote Leave persist in pressing home the idea that we will sever all ties. 

What's crucial is the complexity paradox. Negotiations will be fairly straightforward because they are otherwise complex. If it takes two years to bring Liberia into the fold then there's no chance that we can open up everything for discussion with a complex developed economy like the UK. So we won't. We will use the principle of presumption of continuity which could be applied on the basis of the Vienna Convention on Succession of States in respect of Treaties.

Since we are already members of the WTO, and act in the same way as all other members, only with our position dictated by the EU, there is no reason for expulsion. All it means is that we are no longer bound to abide by EU instructions. If however, Mr Azevedo is saying the UK necessarily will be expelled from the WTO for the seemingly criminal act of leaving the EU then we must question his motives and sincerity, not least when accession talks for Belarus are underway. For an organisation concerned with facilitating trade, he seems quick to create complications. 

But to quote a tweet from Mr Azevedo, "Clearly the WTO can do things - so the question at hand is to figure out the best approach to do them". Quite. And since the Vienna Convention is the weapon of choice for such eventualities, causing the least disruption, that is what we can reasonably expect and demand of the WTO. 

Moreover, since we will stay in the single market and our regulations in any eventuality will continue to be those created by UNECE, Codex etc, there is no obstacle to maintaining existing mutual recognition agreements or piggybacking EU deals. 

Admittedly the boneheaded approach of Vote Leave invites such pessimistic speculation, but no real world scenario sees us making drastic moves and certainly not all in one go. There are enough instruments available to us to ensure a seamless transition and there is every expectation that the WTO will seek to minimise disruption specifically because of the UK's considerable involvement at all levels. If not, then the WTO is clearly not the vehicle for trade facilitation he pretends it is.  

I strongly suspect that what we are seeing is yet another denizen of our global elites rushing to the defence of the status quo at the request of the EU, possibly with motivations of his own. Since the UK government is to be bound by Purdah rules in the final four weeks, the best way to get around it is to have senior officials from global bodies do their dirty work for them. Conspiracy? Not when you look at the government's track record so far in pressing every strata of civil society into service.

But since Mr Azevedo is free to indulge in wild speculation, I might offer some of my own - that there are perhaps influences who would really rather not see the UK flexing its muscles on the world stage. Given how coalitions and ad-hoc alliances can wield greater influence than even the EU or USA, there might well be vested interests in play seeking to exclude the United Kingdom. 

Or maybe it is something more straightforward - the usual corporate fear of change reinforced by ignorance. After all, Brexit is a field of study in its own right and there is no reason to expect expertise from the likes of Azevedo. Nothing of this nature has ever been done before - and nobody's interests are served by making it more complex than it needs to be. That is why the Vienna Convention will be talk of the global village should we vote to leave. What is certain is that Azevedo needs to make up his mind. Does the WTO want to facilitate trade or not?

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