Luncheon Series: Trade and WTO reform
September 25, 2018
Edward Alden, Senior Fellow, Council on Foreign Relations
David Brown, Economic Policy Advisor, Senator Chris Coons
Kimberly Elliott, Visiting Fellow, Council on Global Development
Kent Hughes, Public Policy Fellow, The Woodrow Wilson Center
Aaron Schmidt, Chief of Staff, Congresswoman Suzan DelBene
Dr. Paula Stern, Chair & CEO, The Stern Group
Dr. Orit Frenkel, Executive Director, American Leadership Initiative
Claude Fontheim, Advisory Board, American Leadership Initiative
David Nelson, Senior Fellow, American Leadership Initiative
Jason Berger, Analyst, American Leadership Initiative
ALI convened this group to discuss Trade and WTO reform, using Paula Stern’s piece “Reforming and Strengthening the WTO: America’s Path back to Global Leadership,” as a conversation starter. The conversation moved from a discussion on WTO reform, to a discussion of China’s role in the global trading system, to a discussion of how politicians can talk about trade.
This summary does not identify the individuals who made the points below because this discussion was held under a limited Chatham House rule. Key topics and perspectives were as follows:
The WTO and China
We are at an inflection point in the future of the global trading system due to China; China presents a series of strategic economic and trade challenges that the U.S. has not encountered since the creation of the international economic and trade institutions after World War II.
China’s presence in the WTO creates a challenge to reforming the rules to address China-specific issues, such as forced tech transfers, and state-owned enterprises. Some WTO experts say that the tools exist, and the U.S. needs to be more aggressive at bringing WTO cases and enforcing agreements. U.S. companies are deeply involved in the Chinese market, which adds another layer of complexity to addressing these issues.
Because the WTO has been stuck on many trade issues, partially, but not solely because of China, the WTO has shifted towards plurilateral agreements, like the International Technology Agreement, and agreements between coalitions of countries that are willing to eliminate a higher level of trade barriers, like TPP.
TTIP and TPP were an end run around the stalemate in the WTO. With Japan and the EU reaching a free trade agreement, an EU-TPP agreement, covering three-quarters of world trade is close at hand. The U.S. cannot stay out of such an agreement.
The WTO still serves a useful role as a global forum and in terms of enforcement. This is why reforming the enforcement mechanism and appointing appellate judges is so critical.
Much of the concern regarding China revolves around how to deal with the changing balance of power globally. Even with a United States that is more engaged globally, the U.S won’t be able to play the pre-eminent role it once played. We haven’t developed a new model yet
Key takeaway: There is a need to both reform and use the WTO more aggressively, while simultaneously looking for ways to have a coalition of countries willing to liberalize at a higher level (TPP and TTIP countries).
Key takeaway: The US hasn’t had a publicly articulated trade strategy since Bill Clinton. Such a strategy should include WTO reform, working with allies to liberalize where possible, address China issues, and develop trade initiatives with the developing world to address issues such as poverty in Africa.
Trade and Globalization Messaging
Members of Congress are interested in how to talk about trade issues. New polling suggests that democrats, particularly millennials and minorities ones are very pro-trade.
President Trump’s protectionist policies may create a backlash, pushing Democrats, and possibly independents and some Republicans, toward favoring free trade. Dems should adopt the message that the America’s international retreat and protectionism under Trump is hurting U.S. jobs and security.
Small businesses are an important political constituency, and are being disproportionately hurt by current protectionist policies.
Messaging takeaways include:
It’s important that Democrats explain how America has become the country that it is and offer an optimistic view of the future. The U.S. can compete and win in an open, global world.
Democratic candidates should be able to tell voters how trade will benefit them where they work—not just where they shop.
We need to look for ways to pair trade with more innovative labor training and assistance. We need to collaborate with companies on job training and addressing job losses from trade.
We shouldn’t be shy about recognizing how America’s values differentiate us and use those themes in our policies and messaging.