On Thursday, September 23, we discussed if a “less trade-restrictive” values-based trade policy can be achieved within a rules-based international trading system. We asked questions if trade policy should address legitimate social, humanitarian and environmental goals, and can it be done in a way that stays true to the non-discrimination principles of the original GATT Agreement? Can these objectives be achieved in a way that is consistent with the GATT Agreement on Technical Barriers to Trade, that they are not “more trade-restrictive than necessary to fulfill the legitimate objective[s]?”

Katrin Kuhlmann, President and Founder, New Markets Lab; Visiting Professor of Law, Georgetown University Law Center

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Trade Around the World

By: Madelyn Cunningham

The concluding panel of the 2020 Washington International Trade Conference was “Trade Around the World,” a discussion featuring ambassadors H.E. Fitsum Arega, Ambassador of Ethiopia, H.E. Rosemary Banks, Ambassador of New Zealand, H.E. Stavros Lambrinidis, Ambassador of the European Union, and H.E. Ashok Kumar Mirpuri, Ambassador of Singapore. Laura Lane, President of Global Affairs for UPS, moderated the discussion through trade relations and FDI between their countries and the United States and the dissolution of the Appellate Body in the WTO.

Laura Lane opened the panel by discussing the relationship between Singapore and the United States, asking Ambassador Mirpuri to talk about this partnership and possible trade interests of Singapore in the future. Ambassador Mirpuri starts by stating the growing importance of trade in the political sphere, acknowledging that while the audience may have some familiarity with Singapore whether that be through business or the trade relationship with the United States, Singapore is a hyper-globalized country driven by trade.

Trade drives the Singaporean economy, but H.E. Mirpuri brought up the new challenges regarding issues of trade and expressed the need to identify where global trade will be going because of geopolitical conflict, recent anti-globalization and protectionist efforts, and the fourth wave of industrialization. To address these issues and changes, Mirpuri expressed that through the U.S. – Singapore trade relationship, Singapore has shifted its mindset towards future problems and adjusting in this age of digitization and global changes.

Ambassador Mirpuri stressed the need for a rules-based system in the WTO, explaining that for small countries especially, there must be an established system of rules and operations in order for the world dispute settlement process to be fully functioning. To account for the current instability in the WTO and the changing trade atmosphere with digitization, Ambassador Mirpuri identified how Singapore has been adapting.

Mirpuri stated that last month, partnered with New Zealand and Chile, Singapore concluded the Digital Economic Partnership Agreement (DEPA), and hopes agreement will act as a “pathfinder” for e-commerce. Another significant change was the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is currently going through the ratification process.

Moderator Lane then shifted the conversation to bring in New Zealand Ambassador, H.E. Rosemary Banks, asking where she saw the U.S. – New Zealand relationship currently, and the issues on New Zealand’s trade agenda. Ambassador Banks brought up research recently done on the relationship between New Zealand and the United States, which concluded that the first time the country asked for a reciprocal trade agreement with the U.S. was in 1939. She stated that while trade relationships can take a long time, 80 years is a little excessive.

Ambassador Banks then brought up the direction of New Zealand trade policy, she stated that over the last 25 years, there has been significant emphasis on negotiating comprehensive bilateral agreements, establishing relationships with Asian Pacific countries, and maintaining global influence through existing trade agreements. While this has worked in favor of New Zealand, there is worry over taking assumptions of the three-pronged system for granted and the response to encourage the “open-pluralism approach”. Banks called back to Zoellick’s point in his remarks regarding the gap in systems for the process of creating new laws and rules.

Ambassador Banks expressed New Zealand’s excitement to head as the APEC Chair of 2021 in the form of a work program to be established this year, stating that there is a great need for multilateral trade relationships and a functioning and comprehensive dispute settlement system for trade issues. Banks concluded by answering a question asked in Ambassador Zoellick’s session regarding the importance of international trade.

To this, she brought up the “Trade for All Initiative”, a country-wide exercise that involved a consultation to listen to the entire population about their vision for trade policy. Through this consultation, it was found that there is a great divide as to thoughts on current New Zealand trade policy and whether or not it should be shifted in regard to the values of sustainability and equal economic empowerment.

Lane then brought Ambassador of Ethiopia, H.E. Fitsum Arega, into the conversation. With the recent push towards a multilateral trading system and the African Continental Free Trade Agreement (ACFTA), Lane asked how this would tie into a future trade relationship between the United States and Ethiopia.

Ambassador Arega responded with increasing public investment of the Ethiopian government, both social and economic, strengthening the education sector and industrial infrastructure of the country. There is a growing preparation for global trade agreements and relationships in Ethiopia, and Arega identified Africa as the next frontier for business investment and trade because of these changes both domestically and continentally.

In addition to domestic reform, Ambassador Arega stated that the newly elected prime minister, Abiy Ahmed, has made Ethiopian involvement in the World Trade Organization and global trade has a priority in recent years. Arega also identified the vast potential for a United States trade partnership with Ethiopia, as it builds its infrastructure, it has also been building an environmentally sustainable textile market. The African Continental Free Trade Agreement is also a turning point for the continent, Arega explained, allowing for greater opportunities for processing and attractive investment.

Lane turned to H.E. Stavros Lambrinidis, Ambassador of the European Union, she asked whether or not the optimism for a US-EU trade agreement and future policies is warranted. Ambassador Lambrinidis responded that there is good reason to believe in the negotiations of future policy. He stated that when talking about the relationship between the United States and European Union, the benefits of this relationship could demonstrate that free trade can work in a globalized system and not in a way that would isolate certain countries.

Ambassador Lambrinidis identified the single European market as the biggest deregulation experiment in the world, allowing for an open market without borders of the most profitable businesses globally. The key focus of negotiations of a free market should be on the future, and special attention should be placed on the functions of said market from the grassroots of the economy to measure its effectiveness.

Lambrinidis also stated that the success of the single market is also reliant on the European progressive, values-based system; as trade is not only about making money, but about assigning values. GSP+ agreements establish that in order to negotiate and maintain a relationship, countries must also ensure human rights and sustainability practices.

Ambassador Lambrinidis then brought up the need for an established, rules-based system in the WTO and broader world order, as it is not only important to small countries, but also to large markets. Lambrinidis expressed great disdain for unilateral efforts to “destroy” the WTO, and while it is not easy to reverse protectionist and mercantilist policies and economies, he argued that the WTO must become stronger in the face of these issues and enforcing these changes.

With the changing world order comes new standards according to Lambrinidis, and no matter where countries are in their development, he believed there should be no exceptions to the implementation of these standards.

To further this point, Lane asked the panel to expand on their thoughts on the need to strengthen international systems and reforming the dispute settlement system of the WTO into this decade. Ambassador Rosemary Banks started the discussion, she stated that the first challenge of reforming multilateral organizations is having absolute commitment from major players of said organization.

Lane then moved on to special treatment for developing nations, especially as China, while a trade “powerhouse”, still receives exceptions from the WTO due to its first introduction as a developing country. Ambassador Lambrinidis identified this fact as a significant area of the WTO in need of reform as well as transparency and the Appellate Body.

He then stated that the WTO will always be in danger of collapsing as long as countries believe they are powerful enough to perform unilaterally and outside of its systems. He argued that without a neutral referee or party prosiding, dispute settlement will never work multilaterally, no matter how developed a rules-based system may be. China must play a bigger role in demanding rights but also in accepting obligations, and must be on board with future reforms.

Featuring:

H.E. Fitsum Arega, Ambassador of Ethiopia to the United States 

H.E. Rosemary Banks, Ambassador of New Zealand to the United States

H.E. Stavros Lambrinidis, Ambassador of the European Union to the United States

H.E. Ashok Kumar Mirpuri, Ambassador of Singapore to the United States

Laura Lane, moderator, President, Global Public Affairs, UPS

To view more details about the event, visit the event page here.

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The event began with remarks from Andrew Gelfuso, Vice President of Trade Center Management Associates and Kenneth I. Levinson, Executive Director of WITA. We were fortunate enough to hear Roberto Azevêdo, Director-General of the World Trade Organization, as he discussed the dissolution of the appellate body and his thoughts on global dispute settlements going forward. This was followed by an armchair discussion with Ambassador Rufus Yerxa, president of the National Foreign Trade Council.

The U.S. China panel was primarily focused around how China had changed its own image within the last 20 years and the radical shifts it has made from being relatively closed off to countries who were not direct allies to joining the WTO in 2001. From joining the WTO to now, China has significantly increased its dominance in global trade, economic, and financial markets and has now become a credible threat to U.S. hegemony due to large economic pressure.

Since the Trump administration’s Phase One deal, China has become more cautious as to its approach to its relationship with the United States and there were voiced concerns from all panelists as to China’s willingness to follow through with their end of the agreement let alone get to a Phase Two before the end of the coming general election cycle. The panelists were Wendy Cutler, Vice President of the Asia Society Policy Institute, Professor Ann Lee, author of  “What the US Can Learn from China” and “Will China’s Economy Collapse?”, Ambassador Kurt Tong, Partner at The Asia Group, Clete Willems, Partner at Akin Gump Strauss Hauer & Feld LLP, and Douglas M. Bell, Global Trade Policy Leader at Ernst & Young.

The NextGenTrade panel was centered around the evolution of trade due to advanced technologies such as AI, blockchain, 3D printing, as well as financial technology developments. While 3D trade was not as disruptive of an invention as was expected with regards to its ability to rapidly manufacture and place highly developed countries over developing ones, the ability of AI to do that was discussed in depth. Another issue that was brought up was blokchain’s ability to carry out anonymous, financial transactions that could skew U.S. financial markets with disruptive, malicious financial technologies from China, Russia, and Iran.

While illegal and purposefully harmful technologies were discussed, there could also be a market for legal and productive digital trade surrounding financial tools bolstered by AI and insured in its ability to be untampered with by blockchain based networks. Which type of digital trade economy develops over the next few years is dependent on which country holds dominance in both financial and economic markets. The panelists were Susan Lund the Director of Research at the McKinsey Global Institute, Julia Nielson the Head of the Development Division at the Trade & Agriculture Directorate, OECD, Paul Triolo the Practice Head of Geo-Technology at the Eurasia Group, and Jake Colvin, Executive Director of the Global Innovation Forum.

The next morning panel was the press roundtable, “Meet the [Trade] Press.” With trade on the forefront of many news outlets, this year was particularly interesting to hear from members of the press. From senior experts to junior correspondents, Ambassador Susan C. Schwab of Mayer Brown LLP moderated a discussion between prominent reporters on current trade topics and trends. Not only were the discussants able to share their experiences with the press, but they also gave their personal insight and predictions for how key trade issues will progress and be resolved. The featured panelists were Jenny Leonard, a junior reporter at Bloomberg News, David Lynch, the Global Economics Correspondent at the Washington Post, James Politi, the World Trade Editor of the Financial Times, and Ana Swanson, a Trade and Economics Correspondent at the New York Times.

Rich Thau, President and Co-Founder of Engagious, started our afternoon sessions with a presentation on his research, “The Swing Voter Project,” which analyzes the thinking and opinions of swing voters of the past two presidential elections. In addition to discussing trends and the demographics of the voters interviewed, he also touched on the issues they found to be most important and most decisive for the upcoming 2020 Presidential Election. He found that in regard to trade policy, it was not necessarily the concept of open trade that these voters were wary about, but more so immigration policy that might accompany it. This was followed by a conversation with Kimberly Ellis, Principal at the Monument Policy Group. They discussed the implications of his research, as well as his predictions for the upcoming election cycle.

Next on the afternoon agenda was, “A Fireside Chat: ‘Tarrified’ of Trade Talks?” Hosts of the Trade Talks podcast Chad Bown, Reginald Jones Senior Fellow, Peterson Institute for International Economics and Soumaya Keynes, the Trade and Globalization Editor for the Economist gave commentary on the troubles of the appellate body of the World Trade Organization. Using a more historical lens, Bown and Keynes analyzed policy of the WTO and gave insight as to what could be done to restore a balanced dispute settlement system in trade.

Ambassador Robert Zoellick gave his remarks in the next session. Zoellick discussed both his pessimism towards the Trump Administration’s global trade plans as well as the degradation of U.S. relations to a multilateral system. Ambassador Zoellick also spoke on the strategic harnessing of all types of trading systems, specifically that the best and most strategically competent trade policy measures would be the ones that can harness regional, bilateral, and multilateral trade networks together instead of dogmatically chasing one. He also advised business owners to innovate supply chains that are more rigid and flexible to the coming era of trade uncertainty. His remarks were followed by a conversation with Ambassador Rufus Yerxa, president of the National Foreign Trade Council.

The concluding panel, “Trade Around the World,” featured a conversation between foreign ambassadors to the United States on both the conflict surrounding the dispute settlement process of the WTO as well as their take on relations between their countries and the U.S. From discussing the need to establish a rules-based system in trade relations to their countries’ stakes in the global market and foreign direct investment from and into the United States, the panelists gave interesting insight as to the climate of trade policy in years to come. Moderated by Laura Lane, President of Global Public Affairs at UPS, the featured panelists were H.E. Ashok Kumar Mirpuri, Ambassador of Singapore, H.E. Stavros Labrinidis, Ambassador of the European Union, H.E. Rosemary Banks, Ambassador of New Zealand, and H.E. Fitsum Arega, Ambassador of Ethiopia.

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To view Bruce Stokes’ presentation slides on American views on Trade in Year Three of the Trump Administration, please click here

Featuring:

Kimberly Ellis, Partner, Monument Advocacy

J.D. Grom, Executive Director, New Democrat Coalition

Robert Moran, Partner, Brunswick Insight

Bruce Stokes, Director of Global Economic Attitudes, Pew Research Center

To view more details about the event, visit the event page here.

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What’s Next For The World Trade Organization?

By: Mariana Jo-Bonilla

On November 8th, the Washington International Trade Association hosted the event “What’s Next For The WTO?” featuring a panel of experts that included Terence P. Stewart, Managing Partner at Stewart and Stewart; Ronald Lorentzen, Senior International Trade Advisor at Kelley Drye & Warren LLP; Grant D. Aldonas, Executive Director of the Institute of International Economic Law at Georgetown University; and Dorothy Dwoskin, Principal at d2Strategies examined the future of the WTO and discussed the prospects to reform the organization.

Terence Stewart began the discussion by framing the importance of the WTO within the tremendous changes and technological transformations that have taken place in the global trade system over the past few decades. He used this analysis to highlight his concerns about the trading system, saying that, ”this system contains 20th century rules for a 21st century world …the loss of effective negotiations capabilities within the WTO, since it flows from a consensus-type of approach that historically has worked with a smaller group of countries”. He emphasized how nations are increasingly joining together through meetings to consider some of the issues that the U.S. has with the system and bringing a broader reform to the table. These initiatives are reflected in the EU paper, published last September and the Canadian paper published this October, which highlights the necessity mention to reform the WTO. He emphasized on the “mini-ministerial” meeting in Ottawa where 13 countries gathered to discuss whether there were ideas that they agreed to, to reach out to other countries to see if there could be a reform about these ideas. Furthermore, there have been trilateral initiatives such as U.S.-EU-Japan to help deal with distortions that flow from a state-control economies, like China.

Next to speak was Ronald Lorentzen. He asserted that the WTO matters because, “it is the most efficient way to maximize adherence to a single set of rules to deal with disciplines that affect trade. If you want a baseline that’s going to work for everyone you need something like the WTO”. He believes it is a worthwhile time investment to seek improvements for the WTO. He laid out 2 areas that could cover the reformation of the WTO, these being: 1) Functioning of the current system and 2) Scope and content of agreements. As for the functioning of the system, Ron mentioned 3 pillars that are supposed to be the underpinning of the WTO’s mission: negotiation, implementation and dispute settlement. These pillars are considered fundamental to the WTO’s role, so it is important to know how to implement more rules efficiently. He said it was important to notice that implementation does not only occur domestically, but it can also be applied in the regular work of the committees and the bodies of the organization.

As to the scope and content of agreements, Ron noted that these need to reflect ongoing trade production and political developments. He argued that different factors should be considered. Principal among these are the growing importance of addressing state-led economies, the need to include global value chains and a reconsideration of the founding principles of the WTO.  Ron provided suggestions on what should be done if the WTO is to be reformed. His first suggestion was to establish definitions according to each country’s economic system (state-led or market-oriented). Second, we need to distinguish the difference between state-led economies and developing economies in order to apply fair treatment. Third, Ron talks about trade and competition, how to compete but in a fair manner. Fourth, identify which factors are  not going to change in a state-led economy and which rules the WTO should apply as to not affect others within the system. Fifth, include issues such as subsidies in services, restructure antidumping and countervailing measures to better reflect the reality of global supply chains and take into an account the prevalence of multinational competitors having production facilities situated in different jurisdictions. His final suggestion is to reconsider the founding principles of the WTO.

Next to speak was Grant D. Aldonas, who focused on the political aspects of the reform. He mentioned that if they go back to the GATT, there has always been the factor of “reciprocity” in multilateral and bilateral agreements and relations. Grant also added that there is an assumption to how the US bargained, which is why it is important to know  the perspective the current Administration has on the principle of reciprocity. Grant talked about the actual role of Congress in trade and how their main interest is getting deals for workers in trade agreements. Additionally, he talked about what was on the news that calls for attention such as the Brazil’s President-Elect Bolsonaro and how he is taking a similar approach as President Trump with bilateral trade deals. There is also a deep resistance to what China represents as a deviation from the norms of the system, making the U.S. a victim of the trading system instead of a beneficiary of the trading system. Post-Brexit proposals are not taking into consideration a multilateral perspective either. May of these examples illustrate  several measures that are not reflective of the WTO rules, but rather more bilateral approaches. At the Ottawa meeting, countries didn’t talk about actual reform, but it was only a discussion about what new issues should they include or should they talk about. They acted based on assuming that they had support from other WTO Members on the idea of negotiating under a reciprocal basis, rather than actually identifying whether or not is it possible.

Dorothy Dwoskin  compared Free Trade Agreements (FTAs) in relation to WTO rules, then posed the question, “is it time to look for different kinds of agreements?”. Dorothy noted that FTAs can be negotiated at a plurilateral level but results have to be implemented on a MFN basis. She found it interesting that for the Tokyo Round, like-minded countries got together to discuss subsidies, procurement, licensing, and other issues concerning the countries at that time. She also mentioned that in regard to special and differential treatment countries need to really consider if they still need it. Regarding transparency and notification, countries don’t negotiate in public but all of the documents that are meaningful in the WTO are just job documents, and not necessarily public documents, so other Members can’t see the proposals that have actually been made. One interesting thing that the U.S. has done, according to Dorothy, is the move from e-commerce to digital trade and taken moratorium on customs duties on electronic transmissions and put it at the center at the digital chapter.

During the second round of discussion, Terry mentioned that the likelihood of reform is not bright. He also noted that if the talks move in a multilateral manner, then the MFN principle is an impediment to that because of the existence of “free-riders”. As  for preferential treatment, the EU and Canada papers talk about encouraging countries to graduate themselves or to agree that on new agreements preferential treatment will be based on need and not self-classification. Ron suggested to clarify which agreements they are looking for within the system: market access agreements or rule-based agreements. There is also a need for a deep dive on definitions and labels. Grant talked about how the current U.S. Administration should focus in on one goal,  such as preventing free riding in the agreements. He said there is a way to achieve such goals without bringing the system down. He noted that if the U.S. uses a bilateral approach, it actually reduces the tools and arguments in support of a multilateral system. By pursuing bilateral agreements, they maintain a smaller degree of leverage compared to trying to do the right thing with plurilateral agreements.

At the end of the Q&A with the audience, Dorothy asked what are some of the positive steps that the U.S. can take to initiate examination of long term issues with the WTO. Terry argued that enhanced dispute settlement was crucial to meaningful reform. Ron talked about transparency and forcing countries to show how they come to their decisions. Finally, Grant agreed with Ron on the importance of transparency since it is good for the system because the information provided in the market allows for the political market to work.

Panel Discussion Featuring

Grant D. Aldonas, Executive Director, Institute of International Economic Law, Georgetown University Law Center; former Under Secretary of Commerce for International Trade, Department of Commerce

Ronald Lorentzen, Senior International Trade Advisor, Kelley Drye & Warren LLP; former Principal Deputy Assistant Secretary Enforcement & Compliance (E&C), Department of Commerce

Terence P. Stewart, Managing Partner, Stewart and Stewart

Moderator, Dorothy Dwoskin, Principal, d2Strategies LLC; Former Assistant USTR for the World Trade Organization (WTO) and Multilateral Affairs, Office of the US Trade Representative

To view more details about the event, click here.

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To celebrate the  70th anniversary of the signing of the GATT, WITA held a reception. The event payed homage to the belief of the 23 nations that signed the original GATT in October 1947 that international trade is essential to “raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, developing the full use of the resources of the world and expanding the production and exchange of goods.”

Featuring

Rufus Yerxa, National Foreign Trade Council

Ambassador Tim Groser, Embassy of New Zealand

Ambassador Susan Schwab, Mayer Brown LLP

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