History of Global and Economic Trade Meetings – Will This Week Be Different?
September 27, 2019
By Timothy P. Speiss
With the United Nations in session in New York the week of September 23, global trade talks have not gone well – they have faced significant challenges since 2001 and the trend is downward still.
Investors may need to plan for a low-trade future. The sentiment expressed is that observations of weaker growth in both advanced and developing countries could pose a risk of a global recession in 2020. In a flagship report, the UN’s trade and development body, the United Nations Conference on Trade and Development (Unctad), said 2019 will endure the weakest expansion in a decade, and there was a risk of the slowdown turning into contraction in 2020. The UN cited trade wars, significant currency fluctuations, the possibility of a no-deal Brexit, and movements in long-term interest rates; however, there has been little discussion among policymakers regarding consensus or policies to overcome these challenges.
Global growth is forecasted to fall from 3% in 2018 to 2.3% in 2019, the weakest since the 1.7% contraction in 2008, according to the report. Several large emerging countries were already in recession and some advanced economies, including Germany and the UK, were dangerously close to one. Central banks, including the U.S. Federal Reserve and the European Central Bank, have recently announced interest cuts in an attempt to stimulate activity, but the UN report was pessimistic about the chances of success.
Considering the September 2019 UN session and the current economic climate, a reflection upon history reminds us that during the 2008 global financial crisis, when plunging economies and rising unemployment created pressures to protect domestic industries, the World Trade Organization (WTO) was credited with stopping a descent into the types of protectionism that countries engaged in during the Great Depression. However, in 2008 and since that time, despite the WTO’s endeavors, a changing international economic environment created significant challenges for it and other similarly focused organizations.
Consider also the Doha round talks, overseen by the Trade Negotiations Committee and chaired by the WTO Ministerial Conference, that officially began in 2001, committing all countries to negotiations regarding opening agricultural and manufacturing markets, as well as trade-in-services, expanded intellectual property regulation, and more. In numerous Doha meetings since 2001, the majority of the meetings collapsed due to impasses, suspicions, and protests. In 2008, the talks in Geneva were especially turbulent; and Brazil, one of the founding members of the G-20, broke away from the positions held by other countries. The intent of the round, according to its proponents, was to make trade rules fairer for developing countries.
Regarding the WTO (with 164 members), at the October 2018 meeting the United States was not present. This is yet another example of the difficulty, and into 2019, of the challenges faced by countries and regions that desire to work together within a framework of effective global financial policy meetings, to address enhanced international economic coordination and multi-lateral consensus among nations.
The UN appears to face similar challenges.