The current state and future of the world trading system
This event discussed the current state of the multilateral trading system and how it might evolve in the future.
VIDEO & AUDIO RECORDINGS
At this event, panellists shared and discussed their view on the current state of the multilateral trading system and possible ways forward.
Xia Xiang highlighted that the multilateral trading system is made by commitments to rules of all members, and it is naturally challenged by unilateralist measures. He added that China is both a beneficiary and a driving force of the global economy, has accepted the rules of the game, in particular when accessing the WTO, and has been promoting them over time. This is because the world economy is irreversibly globalized, and a multilateral system is a natural institution that guarantees prosperity.
Everton Vargas argued that the economy would be worse off without the WTO, whose benefits are built from consensus-based rules, and despite a sense of disappointment arising from the recent lack of multilateral results, no major disruptions have taken place. He stressed that unilateral measures are not a solution to the problems they seek to address and are against the natural course of action in a multilateral system. He pointed to a comprehensive discussion to define a trade agenda as a possible way forward (for Brazil, reform of agricultural disciplines remains a priority). He also addressed the risk of paralysis of the dispute settlement system, and temporary solutions might be advised before a final agreement is reached.
Marc Vanheukelen argued that the state of the system is critical, in all the three pillars of the WTO. However, a crisis may lead to addressing the underlying problems, even if it hard to get consensus. This is central in his view as unilateralism as an alternative to consensus-based rules might lead to trade wars. He also stressed that while there are big players, all members should play a role. He pointed to open plurilateral agreements of a critical mass as a valid alternative if first-best (multilateral) outcomes are not feasible.
André Sapir argued that we should not be surprised of the poor state of the system, as a great transformation, induced by globalization, led to redistributions between and within countries. Within the backdrop of the Great Recession, this created discontent among many, which started demanding populism, which in turn is often accompanied by protectionism. Moreover, he stressed that we should be worried, as the multilateral system can be regarded as a common good, and we stand to lose in case of disruptions. Finally, he argued that in order to tackle critical issues, leadership and serious actions are needed. Priority should be with the rules part of the WTO and their certainty, as well as on the dispute settlement.
The discussion highlighted several issues including, among others, subsidy disciplines (legal if conformed to WTO rules, but there is scope for higher transparency), reduction of steel overcapacity (minimizing social costs), plurilaterals (maybe a result of the abuse of the consensus rule, which may have contributed to the paralysis of negotiating functions of the system), national security for steel (critical, as either way WTO ruling goes, it might trigger strong reactions), and compatibility of economic models (as economic diversity should be accommodated in a rules-bbased system).
Event notes by Francesco Chiacchio
Check-in and lunch
Chair: Iana Dreyer, Founder and editor of Borderlex
André Sapir, Senior Fellow
Marc Vanheukelen, Ambassador of the EU to the World Trade Organisation in Geneva
Everton Vargas, Ambassador of Brazil to the EU
Xia Xiang, Minister, Economic & Commercial Affairs, the Mission of the People's Republic of China to the EU
Founder and editor of Borderlex
Ambassador of the EU to the World Trade Organisation in Geneva
Ambassador of Brazil to the EU
Minister, Economic & Commercial Affairs, the Mission of the People's Republic of China to the EU
Location & Contact