Can the Multilateral Trading System Survive (and How)?
A panel of international trade experts discuss the accuracy of threats to free and open trade and whether our existing global trade model is in jeopardy.
- Marc-André Blanchard, Canada's Ambassador and Permanent Representative to the United Nations
- Anabel Gonzalez, Global Expert on Trade, Investment and Economic Development; Former Minister of Trade of Costa Rica
- Harsha Vardhana Singh, Former Deputy Director-General, World Trade Organization; Chairman, IKDHVAJ Advisers; Senior Fellow, Tufts University
- Moderator: James Mackintosh, Senior Market Columnist, The Wall Street Journal
Experts are worried that everything – from President Donald Trump’s policies, to the rise of China, to new technological developments – could have a dramatic impact on the future of trade, but they say it is essential to preserve the existing system in some form.
“Global trade has brought about a billion people out of poverty and created a very large middle class,” said Anabel Gonzalez, the former Minister of Trade in Costa Rica. “Last but not least, it has prevented the Great Recession from becoming another Great Depression, so this is very, very important.”
Understanding Trump’s trade decisions
Trump has made trade a centerpiece of both his campaign strategy and his presidential agenda. He has renegotiated NAFTA (North American Free Trade Agreement), decisively pulled the United States from the Trans-Pacific Partnership (TPP), and threatened to leave the World Trade Organization (WTO). For him, global trade is seen as being harmful to US job creation, rather than as a wealth builder. This is an important shift that trade negotiators need to realize, said Marc-André Blanchard, Canada’s Ambassador to the United Nations and a veteran of many trade talks.
“From the US perspective, it’s actually pro-jobs, not necessarily anti-trade,” Blanchard said, adding that, in the past, it has usually been members of Congress who were against trade agreements rather than the president. He noted that even before Trump was elected, the United States opposed international dispute mechanisms such as the WTO on sovereignty grounds. “When you understand where they're coming from and what they're trying to address, I think it makes it easier for future negotiation,” he said.
China and developing countries take the stage
Any global trade talks have to take the ascent of China as an economic power into consideration, panelists said. “One of the issues today is that the United States does not want to accept the fact that China should be treated as a market economy,” said Harsha Vardhana Singh, PhD, former Deputy Director-General of the World Trade Organization.
The United States also sees trade with China through a different lens, Blanchard added. “If you look at what Vice President Mike Pence said – that Chinese security agencies are masterminding the theft of US technology – it's clear that it's also a security issue for them,” he said.
New discussions on what shape the WTO might take also need to account for the rise of developing and emerging countries, Blanchard said, because their agenda will not necessarily be aligned with Western nations.
Another formidable challenge is the rise of technology, such as artificial intelligence (AI) and e-commerce.
“In the next five years, we’ll have a huge disruption in the labor market because of AI,” Blanchard said, noting that much of the resistance to globalization can be linked to the stagnation of middle class wealth in developed countries. “You put AI into that and we’re going to have a bigger problem.”
How to find common ground
Even if the WTO were to disappear through US withdrawal or another event, global trade still needs rules, panelists said, and regional mechanisms such as the TPP or United States-Mexico-Canada Agreement (the replacement for NAFTA) may not be sufficient.
“If you feel somebody isn’t playing fairly, then you need to develop rules,” Singh said. “That’s best done through the WTO.”
Blanchard called on trade negotiators to adopt an inclusive perspective, and to have patience. “We will not be able to arrive at a top-down solution,” he said. “We will have to make sure it comes from the bottom. That will take a little bit more time and discussion to get there.”
Explore the Summit
NAFTA refers to the North American Free Trade Agreement, an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.
The Great Recession was a period of general economic decline observed in world markets during the late 2000s and early 2010s. The scale and timing of the recession varied from country to country.
The Trans-Pacific Partnership (TPP), also called the Trans-Pacific Partnership Agreement, is a defunct proposed trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States signed on 4 February 2016, which was not ratified as required and did not take effect.
WTO refers to the World Trade Organization, an intergovernmental organization that regulates international trade.
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