By Sae Kobayashi

Kicking off the conference was the panel entitled “Rethinking the Global Trading System,” moderated by CITD’s Co-Director, Professor Jennifer Hillman. With formidable challenges including climate change, the aftermath of a global pandemic, heightened geopolitical tensions, and deep-rooted inequalities in the foreground, the panel explored the trading system’s legacy and future. Panelists were especially encouraged to discuss whether the global trading system had lived up to expectations and how the world might move toward a trade regime that responds to the challenges of the 21st century. The panel approached these questions from varying perspectives, including by addressing who had benefited and who had not from the current trade regime, what was wrong with the system, and what trade policies should be pursued moving forward.

Ambassador Alan Wolff, a Distinguished Visiting Fellow at the Peterson Institute for International Economics and former Deputy Director-General of the World Trade Organization (WTO), set the stage by referring to the foundations of the trade regime (01:36:27). According to Ambassador Wolff, efficiency, peace, fairness, and transparency are key attributes of the WTO and free trade agreements that have provided certainty to the trade regime and have significantly contributed to development. While these attributes of the trading system should be retained, he acknowledged that others, including, notably, those involving the principle of non-discrimination, have been under stress and were in need of changes (01:42:44).

Kimberly Clausing, the Eric M. Zolt Chair in Tax Law and Policy at the UCLA School of Law and Ted Alden, the Bernard L. Schwartz Senior Fellow at the Council on Foreign Relations, were in agreement that the trading system had spurred economic growth, even despite the recent backlash against globalization. Professor Clausing, however, emphasized the importance of considering sources of economic disruption that transcended the trade field, such as technological innovation and domestic competition. She also cautioned against a problem-solution mismatch in trade policy (01:45:11). Mr. Alden argued that adjustment challenges were mostly domestic and political, as opposed to trade-related, highlighting the need for redistribution and safety nets. He also suggested the U.S. Trade Representative focus on trade matters, while concluding that the USMCA’s labor provisions provided effective means for addressing some of the trade-driven challenges (01:50:47).

Debra James, the Director of International Programs at the Center for Economic and Policy Research, offered her views on whose interests were and were not being served by the current trading system (01:59:25). She acknowledged the generally positive impact of trade on growth and development, but highlighted some of its negative effects, especially with regards to developing countries and inequality. Ms. James emphasized the trading system had been designed to favor major industry players. She also referred to U.S. actions aimed at blocking the expansion of the Special and Differential Treatment regime for developing countries and to problems arising from Joint Statement Initiatives (JSIs), and particularly the JSI on digital trade, which, according to Ms. James, primarily benefits big businesses (02:16:45).

During the discussions the panel touched on specific issues affecting the future of the trading system, among which stood out the geopolitical tensions between the U.S. and China and climate change. Regarding U.S.-China relations, Mr. Alden discussed the growing volume of trade between the two countries and proposed that decoupling should be limited to specific strategic items such as semiconductors (02:10:00). Professor Clausing emphasized the importance of plurilateral cooperation and partnerships among like-minded countries in addressing issues at the intersect of national security and trade (02:12:40). On this point, Ambassador Wolf also emphasized the need to increase the cost of using the WTO’s national security exception in order to prevent its abuse (02:13:41). Professor Clausing also touched on topic of climate change and mentioned the EU’s carbon border adjustment mechanism and recent trends on industrial subsidies as examples in which trade tools could be appropriately used to address climate change (02:22:11).

Professor Hillman closed the discussion by asking all panelists how they would reconceive 21st century trade policy with a view to serving interests that are not being served. In his reply, Ambassador Wolf emphasized the need for an interface mechanism to address the two divergent economic systems of the U.S. and China, as well as the need for enforcing obligations between countries at the WTO (02:27:40). Ms. James, in turn, advocated for the establishment of new institutions that put workers first, citing existing trade agreements and the WTO as examples of institutions that had failed to do so (02:31:39). Ms. Clausing echoed the need for a more worker-focused trading system, while calling on improved collaboration on issues outside of trade policy, including public health, climate change, and taxation (02:29:53). Mr. Alden underscored the significance of a bottom-up approach that incorporates local development initiatives and priorities (02:30:47).

This panel provided a thorough analysis of the trading system’s legacy and future. While the current trading system, with the WTO at its core, has generally provided benefits, it is evident that not all countries and interests have been served equally. The emergence of values beyond efficiency and fairness indicates a turning point in rethinking the trading system. The panel emphasized the importance of striking a balance between providing solutions to a wide range of social issues and focusing on trade matters in order to ensure that trade policy truly served society. Trade tools play a crucial role in addressing global challenges. However, trade policy is neither the root of all evil nor the solution to all global challenges. As these challenges continue to become increasingly interconnected and complex, it is paramount to identify the issues that trade policy should address. This requires assessing the root causes of problems and determining where trade policy can make the most significant impact and drive meaningful change.

Trade lawyers and experts must be at the center of efforts to achieve these objectives. Their expertise and knowledge can play a key role in navigating the complexities of trade policy and shaping its outcomes. Collaborating with experts, particularly within government, is crucial. Furthermore, trade lawyers and experts should strive to expand their expertise beyond trade matters. By doing so, they can develop a strong sense of what trade policy should do to effectively contribute to society.