Reform of the World Trade Organization

by Trevor Kennedy – Director, Trade and International Policy, Business Council of Canada

Submission to the House of Commons Standing Committee on International Trade on reform of the World Trade Organization.

Madam Chair, committee members, thank you for the invitation to take part in your meeting on Reform of the World Trade Organization.

The Business Council of Canada is composed of 150 chief executives and entrepreneurs of Canada’s leading enterprises. Our member companies directly and indirectly support more than six million jobs across the country and hundreds of thousands of small businesses.

Representing different industries and regions, these men and women are united in their commitment to improve the quality of life for all Canadians.

We are a trading nation. Our prosperity and living standards depend on it. 65 per cent of our GDP is tied directly to trade. The post-war rules-based system, under General Agreement on Tariffs and Trade and now its successor the World Trade Organization, propelled economic growth and facilitated the expansion of our firms into new markets. Throughout that period, global merchandise trade grew by an average 6 per cent per year among its members. Today WTO members account for 98 per cent of global trade.

While bilateral deals, including NAFTA (now CUSMA), CPTPP and CETA, have helped to grow the pie, many of our firms continue to rely on the global system to access critical markets and to ensure there are common, predictable, and enforceable rules around the world.

As Canada looks to rebuild its battered economy. The global system will be even more important for Canadian exporters to succeed in a post-pandemic world. Merchandise exports to the world fell 12.3 per cent in 2020, a decline of $70 billion.

As with any relevant organization, the WTO requires both maintenance and modernization. Unfortunately, because of disagreements around key elements like dispute settlement, we have not been able to advance this organization for some time.

Given the recent challenges it faced, some have questioned the long-term viability of the WTO.

But not Canada. In an effort to be constructive and provide steps toward modernization, Canada took the lead by creating the Ottawa Group. With EU members, Japan, Australia, South Korea among other important countries on board, the Ottawa Group represents a critical mass of likeminded partners that are serious about reforming the system.

Canada played another important role in establishing the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), which includes many Ottawa Group members and several economies outside of that group. The MPIA is a critical stopgap measure to ensure the WTO dispute settlement mechanism continues to function among some leading economies. But we know this is not an alternative to WTO reform.

The Business Council of Canada has been supportive of both the Ottawa Group and the MPIA. For the past year, our President and CEO, Goldy Hyder, has proudly served as WTO business advisory council co-chair to the Minister of International Trade. In this capacity, we have supported the government in its effort to drive more private sector engagement in Canada and with our international business counterparts in the Ottawa Group process.

Last year we organised roundtables on issues including e-commerce and dispute settlement. The latter included high-level participation from the U.S. private sector, a key stakeholder if we are to achieve meaningful WTO reform.

Dispute settlement is by no means the only thing that the WTO does. But due to long standing disagreements over its function, it has become a roadblock to moving the rest of the organization forward.

It is critical that we bring the U.S. back to the table and we believe Canada and the Ottawa Group is well positioned to do that.

Early signs from the Biden administration, such as its support for the new Director General, and openness from Congress is encouraging. At the same time, many of my counterparts in the U.S. consider WTO reform and restoring its functionality a priority.

The Council and its members are eager to support efforts to engage the U.S. government and private sector to achieve reform. If we work together in good faith, I believe we can overcome our disagreements.

Beyond repairing dispute settlement, the WTO needs to change with the rapidly evolving global economy. As an example, we believe recent developments such as the WTO Joint Statement Initiative on Electronic Commerce negotiations can liberalize and create a level playing field for Canadian firms in fast growing areas of our economy, including digital trade and e-commerce. We were pleased to join the International Chamber of Commerce and a wide group of international business groups in a letter supporting these negotiations earlier this year.

In conclusion, Canadian business leaders value the role the WTO plays in our economy and support reform and modernization to ensure it remains a relevant institution. We encourage Canada to continue its important work within the Ottawa Group.    

Thank you for this opportunity. I look forward to answering your questions.