The Fourth 1+6 Roundtable: “Promoting openness, stability and high-quality development of the world economy”

I.  World economic outlook and appropriate policy responses

Premier Li and international organization colleagues,

The WTO appreciates the opportunity to join you today to address the current challenges facing the world economy. I welcome your words of support for the multilateral trading system and free trade. I fully subscribe to the trade and structural reform called for by World Bank Group President David Malpass and IMF Managing Director Kristalina Georgieva. 

The issues that you have asked us to address are vitally important. I am optimistic about the future of the multilateral trading system. But the uncertainties for the year 2020 are still great. 

• WTO economists last month estimated that global merchandise trade would grow by only 1.2% this year. As recently as April, the projection was 2.6%. Next year the result is still in doubt. Much depends on whether trade restrictions are rolled back and not expanded. 
• We now see a synchronized slowdown of growth and trade across regions.

A major contributing factor to these negative developments is the growth of trade restrictions, generated to a large extent by tensions among the largest trading partners.

This creates uncertainty for businesses. As a result, they are postponing investment. This means less trade, less output and less job creation now and in the future.

Global value chains have led to increased efficiency and supported the world economy, with widespread benefits. National and international policies should facilitate the movement across borders of goods, services and information. The adoption of appropriate policies will provide an environment that is necessary to foster innovation. 

The times call for enhanced multilateral co-operation to promote openness and in doing so to achieve robust, sustained growth in the world economy — growth that is environmentally sustainable and inclusive.

All WTO members have stressed the importance of maintaining the multilateral trading system. The world's leading economies meeting as the G-20 have called for WTO reform.

To achieve these objectives requires a net positive contribution from all WTO members in line with their capabilities. The level of contribution will vary. 

Even the least-developed economies can contribute their ideas on practical ways to improve their economic conditions through further integration into the world economy. 

The benefits for major trading countries are greater and correspondingly so are their responsibilities for improving the multilateral trading system. 

II.  China's economic growth, reaching a higher standard of openness

In terms of appropriate domestic policies, China must continuously aim to optimize the business environment through fostering the functioning of markets. 

China's future economic trajectory, however, cannot be viewed in isolation from the international context. China's prosperity depends upon global integration at all levels: goods and services, and data exchanges across borders as part of the emerging digital economy.  

Being an outlier in any of these areas is something no country can afford if it seeks to be an advanced 21st-century economy.

An immediate goal must be for China and its trading partners to begin to work out solutions to contentious issues that are affecting the global economy. The concerns raised by WTO members regarding trade with China are not confined to a single member. 

It would be a disservice to this forum and to the future prospects for harmonious international relations to avoid citing some of these concerns. 

WTO members have, for example, raised issues regarding Chinese policies in the areas of industrial subsidies, support for state-owned enterprises, protection of intellectual property, and data flow restrictions. 

In addressing these issues, Chinese authorities should find ways forward that would be good for China's own business environment and good for the world economy. The WTO can play a constructive role — both as a place in which new understandings can be reached and a place where any bilateral agreements that include rules that may be of broader application can be considered for inclusion in the multilateral trading system.

Beginning to roll back the trade restrictions introduced over the past two years would be an important start, but it would be wishful thinking to believe that this would occur in the absence of important reforms both in terms of domestic policies and international rules.

III. Advancing global economic governance reform

The multilateral trading system has evolved in stages. It was created in 1947 following the Second World War to avoid the policy errors made after the First World War that led to a second global war.

In 1979, the next generation added agreements reducing non-tariff barrier to the system.

In 1995, the following generation created the WTO, addressing rules on services and on intellectual property for the first time, and creating enhanced disciplines for agricultural trade.  During this period, a major negotiation brought China into the WTO.

It is time to plan for systemic reform to update the trading system and to improve its governance. This includes its rulemaking capabilities, how to resolve disputes more expeditiously with fully acknowledged legitimacy, and how the members and their Secretariat can better provide management of a much larger trade institution.

Members want the WTO to be faster, and more responsive, but achieving multilateral consensus is difficult. Members have recognised this and started to find new ways to move forward. In addition, while existing rules are an essential baseline for global trade, they do not reflect new technologies and ways of doing business.

Three areas need to be addressed.

1. The WTO rulebook needs an update.

There are positive developments to report from Geneva.

• On the multilateral front, members are continuing intensive work towards a deal to curb harmful fisheries subsidies. This would deliver a major improvement for the health of the marine environment.
• Joint initiatives of members representing three-quarters of the world economy are actively working in a setting open to all who wish to join. They are addressing new rules for:
  • electronic commerce
  • domestic regulation of services
  • the facilitation of investment, as well as
  • seeking to make world trade more accessible for women and
  • small and medium sized enterprises. 
• Good progress is being made.
• China is a full participant in these endeavours.

Members see these initiatives as a way of preparing the trading system for the 21st century economy.

Trade rules must adapt to the 4th industrial revolution. If they do not, the likely outcome is unilateral action and fragmentation, which means unpredictability and higher costs for business, especially micro, small and medium enterprises (MSMEs). Instead there needs to be a path to a global economy in which everyone can participate and benefit.

There is momentum behind these joint initiatives. At the G20 summit in Osaka, 24 world leaders — including President Xi — voiced strong support for new international rules on e-commerce.

In Shanghai earlier this month, 92 WTO members signed onto a statement for investment facilitation, emphasizing the importance of creating a more transparent, efficient, and predictable environment for cross-border investment.

2. Restoring a fully functioning dispute settlement system

The most immediate issue on the list of necessary reforms is to assure that the rights and obligations of the WTO's members remain enforceable through an agreed and fully functioning dispute settlement system. Certainty for those engaged in trade, the underpinning of global economic growth requires that disputes can be resolved other than through retaliation and counter-retaliation. 

Maintaining an appellate level that is seen by all to be fully legitimate would eliminate that risk. Progress is being made to create a consensus on what steps would need to be taken to achieve this objective. Were this effort to be unsuccessful, the system will no longer be fully functional in less than three weeks from today.

3. Any system of governance requires effective management. 

Organizational reform cannot occur immediately.  It will require debate and reflection by the WTO's members.

Over the longer term, WTO reform will encompass a number of issues not currently being addressed. 

• Members will undoubtedly review how they can improve their involvement in the work of the WTO. There is no governance structure among the members at the WTO that is similar to those of other multilateral or regional inter-governmental economic organizations. As the WTO expands to universal membership, this question will only become more pronounced. 
• As the nature of trade changes, there will also be issues as to appropriate committee structures and processes.
• There will likely be a detailed review of other governance issues, for example:
  • how dispute settlement can be more responsive and efficient
  • how the WTO Secretariat can be more supportive of the objectives of the organization, in terms of providing analyses, monitoring developments that affect trade, assuring compliance with obligations, supporting the increase of the capacity of developing countries, and
  • how the WTO interacts with other international economic organizations, as well as business and civil society.

While there will always be some evolution over time within any international organization, there is always room for improvement.  Members are likely to opt for taking a more systematic approach.

Conclusion

The WTO's 12th Ministerial Conference in Kazakhstan in June 2020 is an obvious landmark for all these conversations. Some matters can be brought to a successful conclusion, others will require more time.

• We should be pragmatic and deliver where and when we can, but we must still be visionary.
• We need to keep working hard on all of these fronts if we want to see progress.
• We have an opportunity to make some essential changes to the trading system so that it can better serve the global community now, and in the years to come. But this will not happen by making statements that an improved multilateral trading system would be desirable. We will need a vision both for June 2020, as well as for 2025.
• Political engagement at the highest levels continue to be of vital importance. So too will continued coordination across the institutions represented here.
• The support and engagement of China will remain essential.

Thank you.