The current global economy has ushered in a new phase of structural adjustment and institutional change. The existing rules of international trade and the coming into shape of new rules of international trade are related to the future development of the world economy and the global economic governance mechanism.
As an important part of the global economic governance system reform, the WTO is facing profound adjustment. A sub-forum of the Boao Forum for Asia Annual Conference 2019 was held around the WTO reform on March 27. Guest speakers shared their views on the topic from their unique perspectives.
Challenges Facing the WTO
Former president of the Philippines Gloria Macapagal Arroyo pointed out that the WTO was founded at the peak of globalization. Now, we have entered the third stage of globalization, but the Doha Round has not made real progress, and the commitments of the Doha Round have not been fulfilled. The United States had been actively promoting globalization, but now its attitude tends to be conservative. All these are challenges that the WTO faces and make the situation more complex. It is gratifying to note that China attaches great importance to the WTO and that China has become the primary promoter of the WTO.
Zhou Xiaochuan, former governor of People’s Bank of China, noted that in recent decades, trade imbalances have limited the role of the WTO, and the dispute settlement mechanism and the Appellate Body have encountered problems. “We need to see that the efficiency of the WTO decision-making body is not high enough, which is one of the reasons why it is facing problems. In 2008, when the global financial crisis broke out, G20 leaders strongly promoted the Doha Round and hoped to reach an agreement as soon as possible. Yet after so many years, the progress of the Doha Round is still unsatisfactory, which shows that the mechanism doesn't work effectively and needs to be reformed.” Zhou said.
Restoring Confidence in Multilateralism
In the United States, some Republicans think that international treaties are a threat to national sovereignty, former U.S. Secretary of Commerce Carlos Gutierrez noted. Any issue considered to affect national sovereignty will be questioned, he further pointed out. Gutierrez went on to say this administration's contempt for multilateralism is deep-rooted, and suspicion of international organizations has become the norm. In such an atmosphere, the most important thing is to change the political climate in Washington and rebuild confidence in multilateralism, he added
Zhou Xiaochuan said, “The prerequisite for WTO reform is the sincerity of member states. If most countries support multilateralism, WTO reform can be expected to reach agreement and make progress. If individual economies insist on unilateralism and make bilateral free trade agreements as the backbone of their future trade system, WTO reform will encounter many challenges and difficulties. Therefore, we must also prepare a second and a third set of plans. If the reform of WTO is unsuccessful, another plan is needed to support the free trade system and curb protectionism."
Resolving the Appellate Body Crisis as Soon as Possible
For the WTO, the Appellate Body crisis is a life-and-death test, founding judge of the Appellate Body of the World Trade Organization and former member of the Congress of the U.S. James Bacchus noted. He pointed out that American President Trump recently focused on cracking down on the WTO Appellate Body, as it refused to make a judgment in favor of the United States. The Trump Administration criticized the judges of the Appellate Body for exceeding their statutory powers.
The Appellate Body crisis has to be resolved now, Bacchus pointed out. By the end of this year, the Appellate Body will probably have only one judge left. When the number of judges is less than three, it will affect the normal operation of the mechanism and the right of appeal of member countries, which is ensured by WTO rules.
Bacchus suggested that in order to improve and strengthen the dispute settlement function of the WTO, consideration should be given to increasing the number of judges in the Appellate Body from seven to ten.
Addressing Varied Needs of Different Countries
The active promotion of WTO reform by developed economies reflects their strategic goal of restructuring rules and reallocating economic interests globally. To some extent, WTO reform has exerted pressure and challenges on emerging economies and developing countries.
Arroyo noted that different countries have different stages of historical development and different political systems Because of the differences in the stage of economic development and market economy perfection, WTO reform has brought some external pressure on the economic reform of developing countries.
Zhou Xiaochuan said: "The reform and regulation adjustment of the WTO will involve preferential treatment of developing countries. It should not be overlooked that WTO needs to help low-income countries to promote their development and benefit them from the global trading system. As a developing country, China not only speaks for its own interests, but also stands up for the whole of the developing world and has made its own contribution to promoting the development of the developing world. I think we will continue to do so in this respect.”
“In the process of WTO reform, special and differential treatment must be given to developing countries, which is the principle of the WTO. The U.S. proposal of the so-called ‘graduation criteria’ for developing countries will bring difficulties to negotiations on WTO reform,” Chairman of China Society for World Trade Organization Studies Quan Chong said.
Arroyo agreed. She pointed out special and differential treatment for developing countries should continue and should not be taken away, because we are at different stages of development. When reforming WTO rules, we should not forget such a principle.
China’s Response to External Concerns
The multilateral trade system with the WTO as its core is the cornerstone of contemporary international trade and the pillar of healthy and orderly development of global trade. Since joining the WTO, China has always firmly maintained the rule-based multilateral trading system and participated extensively in various WTO affairs. China is an active participant, a firm defender, and an important contributor to the multilateral trading system.
In response to criticism of China's so-called "trade distortions" and subsidies, Zhou Xiaochuan said: "China's economy has undergone a long transition from a planned economy to a market economy. In this process, China has substantially reduced market distortions and unreasonable subsidies. However, because this process of transformation will take many years, so there will be some residual distortion. The Chinese government is very willing to speed up the process of reform to eliminate such distortions, and the distortions will eventually disappear.”
According to Zhou, China should face up to such challenges and criticisms from the outside world. Some of these criticisms are beneficial to us. They can help us make decisions, further accelerate the process of reform and opening-up, and further promote China's participation in the global economy, including the formulation of relevant rules.
