Upon invitation I recently attended a seminar discussion at a corporate firm in Brussels. In that firm some people of the global foresight department organized a very good seminar in which they wanted to have feedback from me and my colleagues think-tankers about various global trends in today's world economy and what implications that may have for the future.
Various items passed the table and when it came to international trade, eyes were heading in my direction. In particular, one question about the WTO came up. Of course, that's an often-asked question nowadays, specifically with regards to the possibility that the Transatlantic Trade and Investment (TTIP) may run into difficulties. The question was, therefore, what would happen to the WTO if TTIP fails? Would countries re-direct resources towards the multilateral trading system again, or not?
Well, that's a hard one to predict I said as that question depends on many economic and political factors. However, I did have a couple of things to say, mainly three observations I have come across in the last three years since I have been in Brussels and have visited many seminars, high-level discussions and other events.
One is that recently I attended a seminar discussion in Florence where quite a few notable economists and policy makers / advisers were present. When discussing the WTO, somehow a generational division seemed to appear in the sense that the older people in the room found it a lot more unacceptable that the multilateral trading system would become in danger compared to the younger generation. This may have long-run implications I said about any real efforts to revive the WTO by future policy makers.
Second is that in Brussels at least, I often heard the same comment from Commission officials occupied with trade strategy that the ultimate goal of TTIP is to bring back countries, and in particular emerging economies, to the WTO. TTIP could then be seen as an important instrument to revise the WTO. True, without the big economies such as the EU and the US not much gets started in Geneva. Hence, a successful revival of the WTO in the short-term at least could stand or fall with the outcome of TTIP.
Third, a successful come-back of the WTO will also depend on the future of trade. Although goods trade may peter out, new trade issues may inevitably come up in the future such as digital trade. At ECIPE we have been doing a lot of research on that and to us it seems that precisely developing and emerging economies are more restricted in this area of the global economy than developed countries. This could therefore lead to new tensions at the WTO during negotiations as we have seen in the passed rounds.
The WTO has several functions of which the most important ones are monitoring member countries' trade regime, dispute settlement resolution and providing a negotiation platform to solve trade issues. Particularly the latter function has been running into difficulties. Hopefully these three observations won't put too much weight in finding a new way for the WTO to negotiate trade.