Celso Lafer, Mike Moore, Arvind Subramanian, Martin Wolf and Ernesto Zedillo discussed the future of trade policy and the role of emerging economies during the recent World Bank-IMF Annual Meetings.
The most intense debate focused on the Doha round of global trade talks and whether it should continue or have its issues taken up in a new round.
Several panelists said nothing is more important on the trade agenda than the integration of China into the global system.
What is the future of trade policy and the growing role of emerging economies in the trade arena? That was the question a selected panel of experts and commentators discussed at the Program of Seminars of the World Bank-IMF's Annual Meetings in late September.
Moderated by Zanny Minton Beddoes, economics editor for The Economist, the panel included a former minister of foreign affairs and ambassador to the United Nations and World Trade Organization, Brazil's Celso Lafer, a former prime minister and director-general of the WTO, New Zealand's Mike Moore, and a former president, Mexico's Ernesto Zedillo, as well as distinguished commentators -- the Peterson Institute's Arvind Subramanian and Martin Wolf of the Financial Times.
Minton Beddoes set the tone, describing the paradox facing the world today: "On the one hand, the multilateral ... Doha round, to put it politely, has failed to deliver. ... On the other hand, there's an enormous amount going on in global trade, both in global trade practice and global trade policy, and it's being largely driven by the South."
In the seminar "The Future of Trade Policy: A Growing Role for the South," panelists' predictions of the future focused on emerging powers, but especially on the rise of China. "It's clear that the ... challenge of incorporating what will be the biggest economy in the world – which is currently run, in certain very important respects, fundamentally differently from those of other countries, and whose impact, if it continues to grow like this – will be ... enormous," Wolf said
Subramanian took a jab at the idea of "BRICs" – an acronymic reference to the economies of Brazil, Russia, India and China popularized in 2001 by Goldman Sachs CEO Jim O'Neill – calling it "nonsense."
"They have no commonality of interest," Subramanian said. "There is China, and there are the others, and we have to recognize that reality."
Several panelists delineated a bright line between "20th century issues" like agriculture and "21st century issues" like intellectual property, but Zedillo, currently director of the Yale Center for the Study of Globalization, described agriculture as a future concern, with the rising middle classes of emerging nations likely to generate unprecedented demand for quality food.
"The rich countries ... accuse the developing countries of demanding special and deferential treatment" over agricultural issues, Zedillo said. "Well, you know what? [Rich nations] invented the special and deferential treatment. ... And we will not be able to feed the millions and millions of people that will be living in the next years if we don't get serious about agriculture."
Agriculture has been a major sticking point during the stalled "Doha Round" of global trade talks, which no discussion of the future of trade policy can possibly ignore, so naturally discussion of Doha took up most of the panel's time.
The panelists agreed that a multilateral approach to trade is absolutely essential, and that the post-World War II period has experienced a heretofore unseen run of wealth creation in the world.
"How is it that ... trade has been so successful?" asked Lafer rhetorically. "It has been a result of the multilateral trading system – of the rules of the multilateral trading system. And why is it so effective? Because it is based on rules, it is comprehensive, it is transparent ... and [it] has created predictability and security."
"As an institutional mechanism, the WTO is also working remarkably well," Wolf said. "It defuses bilateral tensions massively if you handle them in the global, multilateral context, both institutionally and intellectually."
However, the panelists also agreed that the global agenda needs to be updated, and most of their debate focused on whether the Doha round per se should continue or be taken up again in a new set of negotiations.
Moore, now Wellington's ambassador to the United States, delivered an impassioned plea to stick with the current talks: "It'd be a great folly to declare the Doha Round dead. ... Even launching this new round was a huge sacrifice by many developing countries."
Taking a different view, Wolf said it is "a pity ... but not a tragedy" that Doha would not be completed "in its present guise."
"I don't care whether you call it the Doha round or not, but we have to make it relevant to the world as it is now," Wolf said.
Subramanian expressed skepticism that the "single undertaking" approach to Doha and other negotiations – in which the entire agreement is considered for approval by all members, with no provisions considered separately – could settle the most contentious issues, calling it "a recipe for paralysis."
"We can declare a moratorium on Doha ... [but] I don't think there is any single topic that is in the Doha agenda that doesn't need to be undertaken seriously by the multilateral system," Zedillo said.
The worldwide apprehension over sovereign debt troubles in the Eurozone was also reflected by the panel, several of whom allowed a whiff of apocalypse into their comments as they made clear the connections between trade and peace.
"A hundred years ago, geopolitics destroyed globalization," Zedillo said. "Now, I think, economic incompetence can destroy geopolitics, and put at risk international peace and security."
"If we now see other great powers – China, India, and so on – trying to create ... penumbrae of bilateral concessions in their favor with weaker trading partners, we're in the world of trade empires," Wolf said. "And the world of trade empires is radically unstable."
"The major rising powers do understand that this system is important to them, and therefore the agenda that is going to work has to be an agenda they own," Wolf said.