Russia’s invasion of Ukraine turns WTO meeting on its head

On Feb. 23, members of the World Trade Organization (WTO) agreed 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.

Before the invasion, MC12, now set for the week of June 13, was meant to focus on how the WTO is still relevant. After the invasion, MC12 is at risk of turning into a debate over whether the WTO is just an obstacle to blocking trade. Not just with Russia in time of war, but with adversaries more generally.   

The meeting was meant to deliver some wins, like on fisheries and trade facilitation. Now, trade officials will discuss the merits of revoking 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 give Russian imports the same tariff treatment, for example, that it gives to other members’ imports. The US and Europe vow to do the same, adding in targeted import and export bans. Other countries are certain to follow. 

Talk at MC12 won’t stop at revoking Russia’s MFN. There are widespread calls to suspend, or even expel, Russia. These threats aren’t credible, which means that the WTO will take political heat for not having a mechanism to oust Russia. Critics will say that this is yet another institutional defect. Proponents will insist that the WTO, like other international institutions, was designed to expand, not contract. In the court of public opinion, critics will win. 

The biggest risk is that this snowballs beyond punishing Russia. As Rufus Yerxa and Wendy Cutler explain it, a “similar action against China isn’t unthinkable.” Not due to war, mind you, but because of China’s state-led economy, poor human-rights record and bullying of Lithuania. They warn that “market-oriented democracies” might choose to go it alone, either with or without the help of the WTO. 

The WTO isn’t meant to sort and separate friend from foe. That’s why it sets out a national security exception to be used during an “emergency” in international relations.

There is an age-old debate about whether trade follows the flag, or the flag follows trade. The authors of the General Agreement on Tariffs and Trade (GATT), the WTO’s predecessor, bet that the flag follows trade. Russia’s invasion of Ukraine doesn’t prove otherwise. Friends trade more than foes, but even during the Cold War, the U.S. imported critical materials from the Soviet Union, just like it imports most of its rare earths from China today.

To be clear, the U.S. and its allies can and should punish Russia. Doing so in WTO-legal ways is important, just as it is important to give Russia a clear pathway to reclaiming MFN status, if and when it withdraws from Ukraine.

MC12 needs to score the wins it set its sights on before Russia invaded Ukraine. The meeting will fail if trade officials fixate on how the WTO can be made more amenable to blocking trade, rather than creating it. Russia ought to be sanctioned for its egregious violation of Ukrainian sovereignty. But it would be wrong to take from this tragedy that trade can only work among friends, not foes, and only in good times, not bad.

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