Late last year, members of the World Trade Organization (WTO) agreed that the WTO’s 13th Ministerial Conference (MC13) would be held in February 2024 in Abu Dhabi, the capital of the United Arab Emirates (UAE). bottom. The WTO is undoubtedly facing headwinds and aggressive progress is needed. The UAE’s success in transforming itself into a global trade and digital hub and a leader in trade in services could help boost its success at MC13.
The UAE has chosen to pursue open trade and investment policies to promote economic growth, diversification and competitiveness. The majority of UAE Most Favored Nation (MFN) tariffs are 5% or duty free.1 And we are now working on an ambitious strategy to further reduce these tariffs through bilateral and plurilateral trade agreements. The UAE has bilateral trade agreements with India, Indonesia and Israel, and is in negotiations with Cambodia, Colombia, Chile, Georgia and Turkey. These trade agreements are in addition to those previously signed with the European Free Trade Association and Singapore through the Gulf Cooperation Council (GCC).
As noted by the WTO Secretariat, “Attracting foreign investment is an essential component of the UAE’s strategy to diversify its economy and strengthen the country’s position as a regional trade and investment hub.”2 With this in mind, the UAE has made a major overhaul of the Commercial Companies Act, allowing 100% foreign ownership in many areas outside the free zones.3 Foreign direct investment (FDI) inflows to the United Arab Emirates have grown 116% over the past decade and were expected to reach $22 billion in 2022.Four This inward FDI is flowing into high-tech and high-growth sectors such as healthcare, pharmaceuticals and life sciences, e-commerce, space and space travel, agritech, education and related technology, hydropower technology, smart mobility, and information and communication technology. (ICT) and artificial intelligence.Five
The United Arab Emirates is also actively exploiting the opportunities offered by the transition to a digital economy and a green economy.6 Thanks to these and other efforts to diversify the economy, the non-oil sector has grown significantly, accounting for over 70% of the UAE’s Gross Domestic Product (GDP).
Refocusing on promoting openness to trade and investment and enabling WTO members to take advantage of the opportunities created by the transition to a digital and green economy is exactly the type of initiative that revitalizes the WTO. am.
Most of us recognize MC12 as a success. Despite mostly pessimistic projections, WTO members were able to reach consensus on a series of agreements. But as important as that consensus was politically, in practice these agreements did little to advance the WTO’s core objective of promoting economic well-being through increased trade and investment. rice field.
Davos reports a growing list of concerns and new requests for flexibility as potential issues with MC13. MC13 provides an opportunity to refocus his WTO on its fundamental objectives of reducing tariffs and other market access barriers to trade in goods and services and facilitating cross-border trade flows. In today’s world, this must necessarily include digital trade and leveraging instruments of trade to support climate change mitigation efforts and greener policies.
Continuing tariff reductions on information technology products is one of MC13’s priorities. Lowering the cost of the products that underlie the digital economy will boost digital trade and the global economy. The Information Technology Agreement (“ITA I”) and its successor, ITA II, provide a flexible template that will enable major groups of countries to move forward while extending benefits to all WTO members. A 2021 study estimates that ITA III will add about $800 billion to global GDP over 10 years.7 Even on flexible terms, more developing countries should be encouraged to participate. Entrepreneurs in these countries will benefit most from lower tariffs on these products, as they will be able to participate more fully in the digital economy.
ITA I and II also provide a template for negotiations to reduce tariffs on environmental goods. There is no better way to get people to use greener products than to lower the cost. Calls for the WTO to have an environmental agenda are now commonplace. Most agree that trade and environmental protection must be mutually supportive, and that the WTO has a role to play in helping member countries meet current environmental challenges. Reducing tariffs on environmental goods is perhaps the policy option that fits most clearly within his WTO mandate and expertise.
Agreeing on a list of products that would benefit from tariff reductions presents several challenges. Yet ITA I and II show that it is possible. Also, as with ITA I and II, WTO members can agree to an initial list and then agree to expand the list in subsequent rounds of negotiations. Indeed, this approach seems the most sensible, given that new products are created through innovation and technological improvements.
There is also great potential to promote environmental services through sectoral negotiations. Other sectors with large positive externalities, such as home delivery services, may also be ripe for sectoral negotiations.
Reducing barriers to digital trade should be another MC13 priority if the WTO is to remain relevant. There are signs of cautious optimism emerging from discussions of joint initiatives on e-commerce. His WTO members participating must move forward. Given the potential importance of this area, it is imperative that one or two countries not stand in the way of progress in this area.
Technology and innovation are key to driving economic growth and meeting today’s challenges, including climate change. Since 1995, the WTO has promoted innovation-friendly policies through the implementation of her TRIPS agreement. WTO members must resist the temptation to weaken intellectual property (IP) rules. A robust IP regime provides the incentives and legal certainty needed to stimulate the large investments needed to develop technology to meet today’s challenges.
Finally, MC13 must address WTO reform, including the current challenges facing the dispute settlement mechanism.
WTO delegations will return from Davos to Geneva this week to resume discussions on various issues on the WTO agenda. MC13 will take place in 2024, but it is important that the discussion progresses significantly in 2023. Input and outreach from the private sector is also important. The private sector can help make the case for these initiatives stronger.
With its open and innovative policies and strong tradition of consensus-based internal decision-making, the UAE is an ideal host for MC13. There may never be another opportunity to reactivate the WTO.
1 UAE Trade Policy Review, Report of the Secretariat, WT/TPR/S/423/Rev.1, 19 September 2022, para. 13.
2 Ditto Para. 11.
3 Ditto Para. 11.
Four https://www.gulftoday.ae/business/2022/11/20/uae-top-choice-of-investors-as-fdi-inflows-to-hit-$22b-this-year.
Five United Arab Emirates Trade Policy Review, Government Report, WT/TPR/G/423/Rev.1, 19 September 2022, para. 2.12.
6 Ditto Para. 3.3-3.14.
7 S. Ezell and L. Dascoli, “How the Information Technology Agreement 3.0 Will Enhance Global Economic Growth and Opportunity,” 16 September 2021, https://itif.org/publications/2021/09/ Available at 16/how-an-Information Technology Agreement-3-0-Enhancing Global Economic Growth and Opportunity/.
