This article first appeared in Forum, The Edge Malaysia Weekly on March 11, 2024 - March 17, 2024

I recently led Malaysia’s delegation to the World Trade Organization’s (WTO) 13th Ministerial Conference (MC13), a biennial event which took place from Feb 26 to March 2 in the United Arab Emirates.

MC13 — which brought together nearly 4,000 officials and participants from WTO’s 164 members — was productive for Malaysia on a number of fronts.

The ensuing Abu Dhabi Ministerial Declaration will help grow our modern digital economy by continuing an existing moratorium on the imposition of customs duties on electronic transmissions for two years (that is, basically until the next ministerial meeting, MC14). This will facilitate Malaysia in attracting investment in data-processing activities, advanced semiconductor manufacturing and software development.

The WTO has also committed to keep working on the appeal review mechanism of Dispute Settlement Reform by 2024. This is very much needed to protect our Malaysian exporters by ensuring a fair and effective, rules-based multilateral trading system that promotes transparency, fairness and stability globally.

Malaysia, together with 123 other WTO members, also unanimously adopted the Investment Facilitation for Development (IFD) Agreement, which will help create a favourable investment environment by enhancing transparency in policies and streamlining administrative procedures.

I also had the honour of submitting Malaysia’s Instrument of Acceptance for the Agreement on Fisheries Subsidies (FSA) at MC13. To date, 71 countries have accepted the FSA after the unanimous agreement during the 2022 MC12. This will underscore our commitment to sustainable fishing practices on a global scale.

Apart from the cordially agreed upon resolutions, MC13 was actually a pretty intense affair, with talks having to be extended, injury-time style. But I wouldn’t go as far as some have to label MC13 as a failure. There were outcomes that Malaysia will benefit from.

But MC13 — and indeed the WTO as a whole — could have achieved so much more. For example, there has been precious little progress on long-standing issues such as the Work Programme on e-Commerce and the ongoing deadlock in the agriculture negotiations.

The opportunity cost of kicking the can down the road is hefty and heavy. Concluding the agriculture negotiations would ensure fairer competition, as well as facilitate equal access to trade, contributing to the common goal of achieving global food security.

Malaysia also looks forward to the reform of the dispute settlement system. This is important to create a level playing field for developing countries and to ensure that the rules can be enforced equitably.

Without a fully functioning dispute settlement system, in particular the Appellate Body, the WTO is at risk of losing its relevance. A fully functioning system provides stability and security for companies to invest and export. This is critical in growing global trade, which according to the World Bank grew 0.2% in 2023, the slowest pace in the last 50 years.

The irony is that, internationally, the time for shared commitment to global trade and economic cooperation has never been more crucial, particularly while growth is still fragile. The International Monetary Fund predicts modest 3.5% growth in trade for this year, while the Organisation for Economic Co-operation and Development is forecasting 2.7%. The WTO, focusing solely on merchandise trade, predicts 3.3%, while the World Bank has forecast 2.8%. Although reasonably commendable, this forecast is expected to face challenges from new protectionist trade measures.

The problem was played out in Abu Dhabi and, regrettably, across many international platforms these days, reflecting the growing divide between the developed and developing world.

Global institutions like the WTO must balance the priorities between both polars. Global trade must be more equitable, sustainable and inclusive. There should be no double standards.

The WTO ought to help address challenges that transcend traditional trade boundaries, such as integrating micro, small and medium enterprises into the global market, increasing women’s participation in trade and creating resilient supply chains. It should be a force of stability in these times of uncertainty.

The problem is that we repeatedly see developed economies unfairly drag their feet and push for consensus only when it benefits them. The latter must work for the good of global trade and not for the select few.

Take, for example, the agriculture sector. It seems like it’s all right for the West to heavily subsidise their agriculture producers but anathema if the Global South does it.

These developed economies — who are mostly major subsidisers — are enjoying the benefits of an agreement that was inked more than 25 years ago. Many of the rules are no longer relevant to this era and need to be updated. However, these countries would prefer the status quo, but this causes an imbalance that is detrimental to developing countries’ growth needs.

Still, it would be unwise to jettison the WTO. Malaysia — across all the international platforms it participates in — has consistently pushed for an environment that encourages investment, stimulates economic growth and uplifts the standards of living for our people.

Perhaps what is needed is for everyone to remember why the WTO was founded in the first place. Its predecessor, the General Agreement on Tariffs and Trade, was limited to mainly trade in goods, whereas the successor body was to cover services and intellectual property, as well as create new procedures for dispute settlement.

The WTO, indeed, defines itself as providing “… a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development”.

Losing sight of those three noble objectives — reducing obstacles, a level playing field for all, economic growth and development — may result in catastrophic outcomes for many developing countries, with climate risks potentially exacerbating those outcomes.

The developed countries must have a sense of responsibility to create a more stable trade ecosystem — one where the pie is constantly growing rather than countries having to scramble for a piece. They must be the ones to make the first move, precisely because they are way more advanced and better off than the rest.

More importantly, the WTO must be more responsive to the current trends and global trade dynamics. While past wins should be acknowledged, the WTO must not be stuck in past ways. It must prioritise sustainability, while also anticipating and addressing the needs of the broader membership, not just a select few. It must be more inclusive to remain relevant in a world where freer trade could hold the key to fostering innovation, as well as global security, peace and sustainability.

Two years will pass by in a flash. Let us hope that when MC14 rolls around, the WTO will be able to make the progress the world truly needs.

Tengku Datuk Seri Zafrul Abdul Aziz is the minister of investment, trade and industry

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