The Russian invasion of Ukraine turns the WTO meeting upside down

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The Russian invasion of Ukraine turns the WTO meeting upside down

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On February 23, members of the World Trade Organization (WTO) decided to reschedule an important meeting, known as the 12th Ministerial Conference (MC12), which had been delayed by COVID-19. The next day, Russia invaded Ukraine.

Prior to the invasion, MC12, now set for the week of June 13, had to focus on how the WTO was still relevant. After the invasion, MC12 risks turning into a debate over whether the WTO is just an obstacle to blocking trade. Not just with Russia in wartime, but with opponents more generally.

The meeting was aimed at obtaining some victories, such as fishing and facilitating trade. Now, trade officials will discuss the merits of lifting Russia’s most favored nation (MFN) status and whether to suspend, or even expel, Russia from the WTO.

Canada was the first country to revoke Russia’s MFN status on March 3. This means that Canada will not grant Russian imports the same tariff treatment, for example, that it accords to imports from other members. The US and Europe promise to do the same, adding targeted import and export bans. Other countries will certainly follow.

The speech at MC12 will not be limited to the revocation of the Russian MFN. There are widespread calls to suspend, or even expel, Russia. These threats are not credible, which means that the WTO will take the political heat for not having a mechanism to oust Russia. Critics will say this is yet another institutional flaw. Proponents will insist that the WTO, like other international institutions, was designed to expand, not contract. In the court of public opinion the critics will win.

The biggest risk is that these snowballs will go beyond Russia’s punishment. As Rufus Yerxa and Wendy Cutler explain, “such action against China is not unthinkable”. Not because of the war, mind you, but because of the Chinese state economy, poor human rights situation and Lithuania’s bullying. They warn that “market-oriented democracies” may choose to go it alone, with or without the help of the WTO.

The OMC is not meant to select and separate friend from foe. That is why it provides a national security exception to be used during an “emergency” in international relations.

There is a centuries-old debate as to whether trade follows the flag or the flag follows trade. The authors of the General Agreement on Tariffs and Trade (GATT), predecessor of the WTO, are betting that the flag follows trade. The Russian invasion of Ukraine does not prove otherwise. Friends trade more than enemies, but even during the Cold War, the United States imported critical materials from the Soviet Union, just as it imports most of its rare earths from China today.

To be clear, the United States and its allies can and must punish Russia. Doing so in the legal manner of the WTO is important, just as it is important to give Russia a clear path to claim NPF status, if and when it withdraws from Ukraine.

MC12 needs to score the victories it was aiming for before Russia invaded Ukraine. The meeting will fail if trade officials fixate on how to make the WTO more likely to block trade, rather than create it. Russia should be sanctioned for its blatant violation of Ukrainian sovereignty. But it would be wrong to infer from this tragedy that trade can only work between friends, not enemies, and only in good times, not bad times.

Marc L. Busch is Karl F. Landegger Professor of International Business Diplomacy at Georgetown University’s Walsh School of Foreign Service. Follow him on Twitter @marclbusch.

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