WTO celebrates 25th anniversary, but warns of challenges ahead [1]
Wednesday, January 8, 2020 - 16:05. Updated on Thursday, January 9, 2020 - 11:28.
By Pesi Fonua
The World Trade Organization faces challenges today that are unmatched in its 25 years, Director-General Roberto Azevedo stated on the WTO's 25th anniversary on 1 January 2020.
At the same time the WTO had achieved much during the past 25 years, he said in a special message.
“It is not a coincidence that the past 25 years have seen the fastest poverty reduction in History. In 1995, over one in three people living around the world fell below the World Bank’s $1.90 threshold for extreme poverty. Today the extreme poverty rate is less than 10%, the lowest ever.
"The rise of Global Value Chain GVC has been a key factor in enabling rapid catch-up growth in developing economies, while facilitating increased purchasing power and consumer choice in all countries.
“However, despite these considerable achievement, it is no exaggeration to say that the WTO faces challenges today that are unmatched in our relatively short history.”
Azevedo expressed his great concern that during the past two years governments had introduced trade restrictions covering a substantial amount of international trade – affecting $747 billion in global imports in the past year alone. The rising uncertainty about market conditions is causing businesses to postpone investment, weighing on growth and the future potential of our economies.
"How WTO member governments face up to these challenges will shape the course of the global economy for decades to come," he stated.
164 members
Tonga is one of the countries that has trade challenges. We became a member of the WTO on 27 July 2007; one of the 164 members who represent 81% of the 202 countries in the world.
However, Tonga's contribution to the success of the WTO since it became a member in 2007 was spelled out on 15 April 2019 by a director of the WTO Agriculture and Commodities division, Dr Edwini Kessie who was in Nuku’alofa on April 2019 to run a three-days workshop on the World Trade Organization Notification Requirements.
Dr Kessie pointed out the trade challenges that Tonga was facing. He stressed the importance for Tonga to notify the WTO, at least six months before it implemented legislation or a Cabinet decision relating to trade, saying that the last time Tonga notified the WTO on an issue relating to its Trade Policy was during 2010-11.
“I think Tonga should be able to fulfil its obligation, and I hope that after this workshop, Tonga clears the backlog that it has got,” he said at the time.
Dr Kessie pointed out that according to a report of a review of Tonga’s Trade Policy by the WTO in 2014, Tonga faced a ‘backlog of reforms’ that are required to modernize and streamline its legal and regulatory frameworks for economic development.
Tonga’s imports were reported to outstrip its exports by at least 10:1 annually, and over 50% of its imports are for fuel and food.
Tonga derives an increasing share of government revenue from excise taxes and a broad-based consumption tax.
In 2012-13, government raised almost $55 million in revenue from the consumption tax on imports and domestic production, compared with nearly $30 million from excise taxes and $14.7 million from import duties.
Trade agreements
However before Tonga became a member of the WTO in 2007, Tonga had ventured out and signed trade agreements to export agricultural products to Fiji and Samoa during the 1980s.
Because of changes of governments in Fiji and Samoa these agreements could not be implemented and died a natural death.
Then in June 2017, Tonga under former Prime Minister, Hon. ‘Akilisi Pohiva together with leaders of other Pacific Islands countries, excepting Fiji and Papua New Guinea, in Nuku’alofa signed the PACER-Plus Development and Trade Agreement with New Zealand and Australia. After the late Pm signed PACER-Plus in 2019 it still needed to be ratified before it could come into force. Tonga has not ratified the PACER-Plus Agreement yet.
Then on 12 November 2018, the former Prime Minister, Hon. ‘Akilisi Pohiva and the Chinese Ambassador to Tonga HE Wang Baodong signed the Belt and Road Initiative Memorandum of Understanding in Nuku’alofa on 12 November 2018.
So with regards to World Trade, the only organization that Tonga had signed a Trade Agreement with is the World Trade Organization WTO.