 Welcome to all of you on this seventh session which is devoted to trade and politics and we have a splendid panel of people who have been in the official DOM and also now involved in the business. So we have the two sides of the equation, I think. When you think about trade and politics, there is, I think, three points to stress. The first one, many people tend to believe and yesterday we had this impression that trade and politics is a source of increasing conflict, increasing interaction and I would like to know from the panel whether they share this view or whether they have some nuances. I think we have to be careful about this impression because it can be really related to from where, which place you are. For example, if I am a European, I can see that the years of the 1890s were pretty quiet but the Koreans get to a salvo and a set of anti-damping duties which are really unfriendly and could really be very hard on them. The protocol of accession of China to the WTO was not very friendly protocol of accession. So times were already on in Asia and we are not accustomed to that. So we have to have kind of assessment whether today is really different from yesterday, maybe for us, EU, US, but not necessarily for the rest of the world. The second point is the relationship between trade and international politics. She has mentioned China at almost every session, so of course this is the big change. The conflict during the 60s, 70s were quite different in terms of structure because the US and the Soviet Union were very static conflict. China created a very dynamic source of conflict because it's emerging. So the key question here is what are the main fracture lines, what are the main points which China is really now changing the issues? For example, bilateral investment treaties, the BIT between China and Canada is a very new one when it's not the same. You have some non-reciprocal aspect of the BIT, what does mean exactly in the long run in terms of changing the regulation. But also one thing which is not necessarily understood and I would like to know the ideas of the speakers is the unfortunate coincidence between the emergence of China and the change of the WTO simply because the WTO is deepening. Deepening means that we don't really discuss about type, we discuss about services, about norms. This is regulations and then when you negotiate on regulations you have to trust the partner. It's very difficult to trust 150, 60 partners. So there is this kind of coincidence of the emergence of China and deep change of the WTO which could have happened anyway and then the rise of the free trade agreement as a way to solve these difficulties. Last but not least, trade and domestic politics. I am amazed by what happened in Ukraine and Russia. We take two sanctions against Russia which of course hurt Russia, create turmoil in Russia and in you and which hurt ourselves. Nobody really mentioned in Europe the option of increasing the integration of the European gas market because that would have eroded gas from monopoly in some member states. That would have been a little bit unfriendly for China but well-financing in Europe and probably very good in the long run for gas from and in fact gas from through Russia has larger complaint in the WTO. And one last point on the domestic politics, an observer look always at the majority and what happened in all the democracies that the majorities now are very thin, left of right government, you have a very thin majority. They are difficult to solve trade issues when you have such a thin majorities because the tiny lobbies can really upset your political balance in the capital cities. So plenty of topics and for all these topics we have really as I said splendid panel and I will just describe the panel very quickly in the order I will ask the panelists to express their views. First one I will ask John Manley. He was minister of finance, minister of affairs, he has really looked at all the aspect and he was deputy prime minister that we could imagine for this kind of conference and is now the CEO of the CEOs of the Canadian CEO. So he's on the business side of course and that's very important because this is the business equation which is important. The second one I will ask to talk is Mr. Alejandro Rojara. He started his career at the ministry of finance affairs in Chile. In fact he has a long connection with Korea because he was negotiating the first free trade agreement for Korea and the Koreans were just starting to learn the FTA, how to do FTA and they got a very good teacher so they know how to do it. He was deputy director general of the WTO and today is part of the business community because he's a senior consular at King and Spadling law firm. The third speaker would be Professor Tau Park. Of course in Seoul nobody needs to really present Professor Tau Park. He's a professor of economics at the Seoul National University, a graduate school of international studies but he has also after that a good contact with the business community because he was the chairman of the anti-damping committee. I don't know exactly the title but the Korea Trade Commission. So he has to be involved in the really in the details of the dis-undidamping affair business and of course as everybody knows he has been a minister for he was a minister of trade of the Republic of Korea and he was the person the minister who launched the South South Korea China free trade negotiations which was just concluded a few months ago. And last but not least, Mr Pascal Lemmy, he was a member of the cabinet of Jacques Delors at a time where in fact Europe was making a lot of regulatory reforms in the services within the European Union. So he has this view on the internal affair. Of course after that he was trade commissioner at the EU and deputy director general of the WTO and he's now the honorary president of North Europe with a think tank based in Paris. So really a splendid panel with all the skills needed and then Mr. Lemmy if you can start your remarks. Thank you very much Patrick and let me say to begin with I'm very pleased to be here I'm going to make a couple of disclaimers to start. First as far as I can tell I'm the only non-trade specialist on this panel which means I come with not only a pure heart but pure clean hands. Secondly it is at this moment 158 a.m. at my home and I may feel the waves of fatigue wash over me at any time which calls to mind when I was foreign minister and traveling all the time one night I dreamt that I was on my feet giving a speech in the House of Commons and I woke up and I was. So we'll see what happens. This is a panel about trade and politics and Patrick asked us to talk a little bit about whether we think politics is a bigger factor in international trading systems and relationships than it once was. And I'm going to argue that this may be in fact a time of great challenge great risk create opportunity and much of that will be driven by political considerations. But what's changed is not that politics has become more entangled with trade but that many other factors are straining the model that we've been really become used to and been evolving since World War Two. So I'm going to try to make five points and do it all in less than the time a lot at first politics has always been a factor in trade. It's always been a factor in trade. Remember that it's not really that long ago a century ago that trans border passage of goods was really for many governments the only source of revenue that they actually so how governments get their revenue is as at its core a political decision. And then secondly think about the implications of the Great Depression the 1930s and the passage in 1930 itself of the infamous smooth Holly Act in the United States which was characteristic of the protectionist sentiment that swept the developed world in those in that era and governments felt threatened by the economic circumstances they felt they found themselves in many governments were overthrown radical governments came to power conditions were created to lead to global conflict but at its core was the intuitive belief that the political considerations of the day required greater protectionism. The post war global trading system exemplified by the GATT was also a result of an alignment of political interests so that you had you had at the time you had at least in what we then called the first world of a very dominant US economy and therefore United States that was prepared to champion liberalized trade when US corporations were ubiquitous and where America's industrial might really made it the dominant supplier of everything almost everything that the world required so political interests aligned. Second point just I'm also conscious I'm the only North American on the panel so I'll say some things on behalf of the United States which others may disclaim later but if you think about the North American trading block if in fact that's what it is it was and it is all about politics started with the Canada US Free Trade Agreement that came into effect in 1989 followed by NAFTA in 1994 believe me it was all about politics and what happened certainly on the Canadian side because governments Canadian governments had lost office over previous proposals to enter into free trade agreements with the United States. Brian Mulroney in office at the time literally gambled his government on a free trade agreement with the United States he built a good partnership with President Reagan they managed to get it done I might add with trade promotion authority and it came into effect it was it was President Bush 41 that put NAFTA on the agenda and you'll recall recall that Ross Perot ran in that election in 1992 and some would say literally managed to cause the election of Bill Clinton over President Bush so in a sense it it may have cost him dearly remember the allegation that NAFTA was going to create this giant sucking sound of jobs out of the United States into Mexico but it was President Clinton over the objections of a majority of his senators that got the NAFTA through Congress and that and NAFTA interestingly was adopted almost simultaneously with the completion of the Uruguay round and the Maastricht Treaty so that many things were happening at that time simultaneously and I would have said as a member of the Canadian government at that time that I believe that we had embarked on a process that would keep trade moving forward Peter Sutherland famously commented that trade trade negotiations were like riding a bicycle that if you didn't keep moving forward you would you could fall off third point regional and bilateral trade negotiations are a rational response to the failure of the Doha round now to say that Doha was ambitious would be a bit of an understatement and and probably my colleagues on this panel Pascal in particular knows how frustrating it was to try to build a consensus around the path that Doha sought to set out involving developing economies as well as as developed ones so the rational response has been to develop regional agreements criticized as a spaghetti bowl but really it's the only plural lateral game left in town so regional agreements are consuming or in some cases bilateral agreements the Canada Korea agreement comes into effect three weeks from now Canada Europe is is in the ratification process the negotiations having been completed but these agreements are consuming increasingly most of the political and business energy that's devoted to trade because there's a sense that these discussions might actually lead to outcomes fourth point this really isn't going to get any better because the world is increasingly complex and our political economies are all engaged in dealing with a myriad of very deep and difficult issues some of which we've talked about over the last two days here at this conference the World Economic Forum just recently came out with its its global trends for 2015 and that the trends they pick out you can pick your top 10 they might be different mine might be different but they're hard to argue with deepening income inequality persistent jobless growth brought on by technological progress and automation lack of leadership including the international community's failure to address issues like global warming rising geostrategic competition among key actors the weakening of representative democracy rising pollution in the developing world increasing frequency of severe weather events intensifying nationalism increasing water stress and health as a critical concern in the economy so how's that for a cheery list of issues that world leaders are having to deal with anyone that wants to volunteer for an alcohol induced coma may go to the bar after dinner this evening but these are the issues that are that are top of mind in in each of our of our countries the common thread is that politics drives the responses to all of these what you might call mega problems and it's in this context that trade negotiations are carried on and so this makes the traditional trade-offs of a trade negotiation much more complex if not entirely impossible and my last point is that the process notwithstanding all of the above the process of globalization is irreversible and that's part of some of the factors that cause me to say that are some of the reasons why it's increasingly a difficult world in which to carry on traditional negotiations first of all supply chains are established and not only supply chains in terms of how things are goods and services are produced but the aging demographics of some economies are are going to need to be offset by the more youthful demographics in others so quite apart from an arbitration of arbitrage of labor rates there's there's going to need to be an arbitrage of availability of labor forces second factor is that in aggregate the world is awash in energy supply even if distribution may be an issue in some places there's a lot of supply technology is ubiquitous and available and capital in search of investment opportunities is not restricted by national borders to any great extent and nor is it in short supply so the promise of continuing to raise living standards as we've seen over the last 20 or 25 years is very much alive based on a continuing growth in in trade pattern so what I say in answer to your question is that politics is indeed alive and well in trade but in fact it's more or less gotten us to where we are today there are no really easy answers to dealing with some of the political conundrum that confront us and which create the context for these negotiations but we need to do to keep moving forward regionalism really regionalism is here to stay and so our hope is that regional agreements where they're being negotiated bring out the greatest possible ambition in their members and in this way they can spur others to keep up and to become building blocks rather than stumbling blocks to greater global integration politicians need to a need to call on trade negotiators to design these regional agreements whether they're TPP or TTIP or others in such a way as to make them interoperable with the global trading system and finally regional agreements need to continue to inspire global trade rules or at the very least extend special rules to developing nations if if we create walls within regional agreements rather than bridges we risk leaving large parts of the world such as Africa Middle East behind and and that in a very real way could result in the trade system undermining global security so I think that when you if you create a system which some groups are outside and they feel particularly deprived that is the core to issues that first of all regional disparities of income levels of unemployment that in turn feed regional insecurities and and conflict thank you very much thank you very much Tom what I I took from your points is that first there is a kind of slowdown that mean we are trying to do more and more but at the same time we are doing slower and slower it takes a long time now to negotiate an agreement even now a bilateral agreement and it takes a long time to vote an agreement even even longer time I am an European you are Canadian we know what happened to the EU Canada FDA it has never been so long between going from a text to really something adopted by the parliament so there is really a very serious problem here of a machine which is really slowing down although he's still trying to to make to make some progress and again the other point I retain from your speech is that you say we should not keep people outside you were mentioning essentially the developing country but with TTIP and TPP we are maybe trying to keep somebody else outside which is of course China and that we have been of course we should be very careful about this kind of situation Alejandro that's your turn on your main points working okay thanks both thank you very much Patrick a pleasure and honor to be here today there's no doubt that there is an increased interaction between trade and politics trade is very much politics but there is increasing friction on the domestic side I would say that as the trade agenda becomes more intrusive touching upon areas which are not part of the traditional agenda of trade and touch his sensitive areas of public opinion and and and the body politics and and and thus there is an increasing concern about what is the trade policy of a particular country and what are the trade relations for example issues about supply of services and immigration issues about the food safety questions about public morals multinational companies that to governments and international jurisdiction that also becomes sorts of concern in many jurisdictions and so on so forth and this is increasing and I think this is only starting and and particularly as I'm going to quote my former boss here to my left when he says that as we move on from economic systems designed to protect the producer and we evolve into systems that are more designed to protect the consumer the whole area of regulatory matters and collective preferences becomes crucial and thus it becomes more quote political unquote and and and from an international dimension I'll say there are several aspects to this one is we have seen this in the last year since the particularly since the crisis more protectionism all around countries funded more expedient to use trade restrictive measures the measure to discriminate against the foreign supplier of goods or services including in some countries and you alluded for example to anti-numpy measures in some countries these measures are applied on automatic pilot meaning the governments have no political control over the application of such measures and thus they have no consideration about the external relations dimension of that or the welfare of the economy as a whole so that's one aspect then one I cannot but underline the degree of concern as the stock of protection and measures increases a few years back it was about three percent of world trade now it must be around five percent and and and counting another dimension international dimension is something but I would maybe not use the right word but I would call it abuse of power for lack of a better title and here for example when countries use the WTO's dispute settlement system sometimes they do not comply with the rulings or only do it halfway and there's some long-standing disputes which are still pending some have to do with the United States which about anti-numpy duties murder so-called murder amendment others have to do with intellectual property have a club more recently paying compensation without removing the offending measure again the United States of Upland cotton and also United States with the Indonesian clothes cigarettes etc one boy you but the detail but the fact is that the system is used but somehow at the end of the day it's the offending measure is is not reduced and there's a problem is not solved even though at times there is some sort of compensation to the other party that is not good I would say at the end of the day by the same token you mentioned China for example and I think China's accession I think is a good example of what I would call a certain abuse of power I think China was mistreated upon a succession by imposing on it more obligations and conditions than other members of the WTO had this sort of discrimination I think does not fare well politically with China or with any other country by the way so it must have a political consequence at the end of the day and and thirdly I would say also that this increasing inability to solve for lack of a better word in balances in the trading system here we have a system that must evolve into 21st century issues etc but it still has a backlog of traditional issues which still lag behind in terms of rules the quality of the rules and of liberalization I'm talking here of agriculture domestic support I'm talking of fisheries subsidies and and other areas which by the way as much as the regional trade agreements mega regionals bilateral's can go deeper than the WTO they do not address these issues hmm thus these issues are left pending there without multilateral or without much multilateral action and it creates sort of an irritation and the interest of some countries a big number of countries particularly the less the poorer countries in the world left unattended while the rest of the world may try to solve some of its agenda and get more to get better international cooperation on a bilateral basis thus I think creating several layers of a system which I think is not politically healthy so we to all this we it's quite clear that we need more and better rules and more better rules of international level international cooperation and but here we run into the political question where is the energy to do all this going to come from where is the leadership going to come from and an earlier panel over at lunch we heard the word retrenchment for example by the United States and I think that here too is an applicable concept to say that we're traditionally one look to the United States for leadership this is not existent today in the field of trade or largely not existent it is not coming from Europe either etc so we have a vacuum of of leadership a vision with which to contemplate what the international economic relations in the field of trade are going to be in 10 15 years that to me today is lacking and I think that that is politically unhealthy to say the least thank you thank you thank you very much I think you added really two extremely important points the first one is the old issues which are still there in Europe it's a little it's really disaspirating we had tried very hard to lobby against the farm subsidies and today nothing happened basically or very little happened the things are a little bit in a better shape but not really the amount is really always the same fishery this is the same same situation so it happens and of course these small lobbies are still extremely powerful and when you then when we design a bilateral trade agreement that's even worse because then the trade negotiators exchange quotas and that means that really through trees the whole thing forever in a trade agreement the second point I really like to come back is the lack of leadership and this is yesterday during the dinner I was discussing with somebody on the table I give you just a figure the second term of President Reagan he got 90% of the electoral votes so if a tiny vested interest come to the White House and say I want some subsidies or you oppose some tariff reduction President Reagan could say who are you I have a substantial majority President Bush number two Bush some he got 50% votes so a tiny vested interest could really upset its free trade instant and that's not only the US that's everywhere including in the UK and you can see that now in the UK so the question is really have we constitutions domestic constitution national constitutions up to the task because basically we have to review a little bit our constitution in order to know what happened and yesterday my counterpart who was a British fellow told me we should have something like the mandatory voting because the Scottish referendum shows that really when everybody votes things are much better in much better shape because then you have the pros and the cons but before this this vote everybody was thinking that Scotland could leave the UK so there is this kind of small differences which are of course very small problems in the Constitution which are very important for the future of the trade system. Next speaker please. Thank you Patrick. Patrick prepared some discussion points at the beginning but this is a really huge topic trade and politics but in fact in the class I teach trade and politics because you know trade policies are very much related to a political process we call the political economy of trade policy so trade give an impact to the economy in conflicting ways so political discussion is always made for trade policy area but this time I want to pick up three issues one regarding China the other one regarding multilateral trading system and lastly I want to give you some Korean experiences. Let me start with the rise of China in the field of international politics and trade. If you look back some years let's say 2001 I already mentioned China exceeded the WTO in 2001 if you look at that situation domestically in China China considered the accession to the WTO very very important for its economic development and also economic restructuring so Chinese government wanted to reduce their inefficiencies the domestic economy through promoting competition and this was China's so-called fundamental policy stance at the time of so-called reform through opening up that's the reflecting the policy guidelines of premier Deng Xiaoping. However as time goes by and especially regarding the trade liberalization China seemed to think that it did excessively substantial market opening when it exceeded to the WTO Alejandro already mentioned and therefore now it takes more passive positions in the remaining recent trading initiations like Doha round so Chinese leaders now pay more attention to the issues of distribution and employment due to the emergency of income inequalities and also the unbalanced regional development among different regions in China so now China takes very cautious approach to trade liberalization that's how I understand right now I think the central government is concerned about domestic political resistance from industries, labor and even from local government officials so in other words so-called top-down approach in China is no longer valid I guess so having said that I'd like to jump to the suggestion what we should do about China this is a little bit based on my own experience in dealing with China I think it's more important to have continuous communications with Chinese leaders and persuade them to participate in the multilateral efforts to achieve more open world trading environment rather than isolating or containing and marginalizing China that's one just a simple suggestion I want to make through this opportunity let me just turn to the multilateralism the multilateral trading system worked better in the past since its scope of liberalization was rather low and also it has been dealing with many border measures but when a multilateral trading system started dealing with services investment in IPRs and some social issues like environment it encountered huge limitations for the more we have now emerging large economies they are starting to make their own voices and also expected economic return or economic gain through a multilateral trade negotiations different among countries so with this kind of development that the consensus-based decision-making process or mechanism of the WTO faces serious limitations to resolve this many people say that we need a political leadership especially at the top level but if you think about the G20 summits we now have nine the G20 summits we have observed already even the G20 the premium world economic forum cannot resolve the problems of Doha negotiations some members simply think that G20 is a is a gathering of 20 out of 160 WTO members so I think we have to discuss honestly how to save the Doha round and the multilateral trading system with all options open I'm saying all options open this is one thing I really want to emphasize let me just quickly turn to the Korean experience Korea has experiences of more than 20 years of market opening through various occasions including Uruguay round the bilateral FTAs and also bilateral conflict with the United States through Super 301 whatever so regarding domestic political resistance to the market opening in Korea it seems it's my own personal opinion the market liberalization through the multilateral trade negotiations faced relatively less resistance compared to those through bilateral FTAs like the chorus Korea US FTA in the case of Korea US FTA in addition to the fact that it has very high levels of market opening in Korea there are some other component we call anti-american sentiment groups are there so that's why we have more political resistance against the chorus FTA but anyway there are also concerns much domestic concerns about the Korea China FTA however which was recently completed but the domestic political resistance are not very high so far I think the reason is the the letter one Korea China FTA has relatively low levels of market openings compared to our FTAs with the United States and EU so in some as far as domestic political resistance are concerned in Korea the main factor seem to be the level of market opening that's the very important factor to determine the domestic political resistance while Korea also at the same time has experiences of 20 years or providing compensations to the industries which are negatively affected from market openings in order to mitigate domestic resistance it would be extremely important for the government and experts now to provide facts facts based information to the general public and NGOs as possible what I'm saying is here domestic political resistance we cannot avoid but in the future what do we do about this I think we have to provide more accurate information we are not talking about PRs I mean of the government advertisement but we have to provide information based on objective and professional analysis this is very important and we give so far numerous compensations to losing industries particularly agriculture and livestock industries whenever we conducted trade agreements through either multilateral or FTA negotiations now it's time to analyze the effects of market openings as well as the various compensations so the government and research organizations should inform the general public and NGOs of these results so in doing so government can also make their compensation schemes much more efficient and furthermore now consumer groups are now complaining the prices of imported goods do not go down even after the implementation of the major FTAs with advanced nations like the United States and EU this may be happening because our distribution services in Korea are not very competitive or even in monopolistic kind of situation so government should investigate and also take proper reforms on the distribution services industries if needed I will just stop here that's what I call the syndrome of the glass of wine in Seoul it's always the same outrageous price in all the hotel that did not it did not move very much well I think two very important points what you observe is happening in Europe there is an increasing resistance to the bilaterals so the WTO is not now alone to be to be in the dark side and in fact sometimes I'm wondering whether the resistance on the bilateral agreement will not be even stronger than the resistance to the WTO let's see the US EU it's really very very clear and as you mentioned it's really important for the government to provide accurate information it looks basic but it's not done I have just one example on the investment dispute state dispute settlement in Europe everybody believes that it's an American devil but in fact we Europeans are the major user and the member states are the winner in this game so we are killing ourselves just by total ignorance of the fact and that's something which really request a serious effort from both the government and the business because the business have also to provide this kind of information last but not least Pascal this is your turn for the thank you very much as has already been said in the discussion trade politics have always been there from the moment the king of Crete signed the first commerce treaty with the fowl of Egypt we were entering into trade politics but my feeling is that the relationship between trade and politics whether domestic or international are fundamentally changing as we are transitioning from an old world of trade into a new world of trade and we are in my view somewhere in between these two worlds now the old world of trade was a world where production was national and the purpose of obstacle to trade was to protect domestic producers from foreign competition that's the world of the king of Crete and the fowl of Egypt and that's the world of the mandate of the door around now the new world of trade is totally different it's the world where production is transnational and where obstacle to trade stem not from measures to protect the producer but from measures to protect the consumer or more precisely and I'll come back to that from differences in measures to protect the consumer now what does not change between the old world and the new world is that trade opening works for growth and welfare under a number of conditions but that's not the purpose of today's discussion and what does not change either is that trade opening is about leveling the playing field but what changes enormously is the way you level the playing field and leveling the playing field if it's about protection is one thing leveling the playing field if it's about precaution is another thing now why is it different because the purpose is different and because the politics is different now the purpose is different between because in the old world the name of the game was recently simple you reduce tariffs or trade distorting subsidies and the intellectual horizon is quite simple it's zero zero tariff zero subsidy and you've finished trade opening in the old world and getting there it's complex because tariff structures are different between because capacity of countries to subsidize their producers are different but you get there crap walking with trade offs and all trade off my tariff on bicycles against your trade off on scrap metal and we both do a good deal if it's in the area of consumer protection safety security environment health standards car equipment standards maximum pesticide residues in flowers of prudential regulations in banking and insurance it's a totally different ball game the purpose of trade opening and leveling the playing field is not about getting rid of the measure in the old world you get rid of production and the job is done in the new world no question that it's not about getting rid of precaution if anything precaution will grow so the name of the game is getting rid of what constitutes an optical to trade which is discrepancies in the way precaution levels are set and sometimes even more importantly discrepancies in the way precaution levels are implemented because if i'm a producer of cut flowers tariff is not a problem anymore let's assume the body agreement will cut the cost of crossing borders because of administrative red tape and so on so i'm left with different pesticide residue standards all over the place which for me is a problem because i could produce and sell cut flowers much cheaper if i did not have to adjust to different levels of maximum pesticide standards and by the way also different levels of tolerance of machines which weigh maximum pesticide in my flowers so that's where it's very different and this is where the politics of leveling the playing field also changes a lot it changes domestic politics and it changes international politics it changes domestic politics because if i'm a tariff trade negotiator and i know a bit of that my politics is that i have producers against me and consumers with me i have a few loud voices of producers who scream that i'm going to increase competition and i have a vast majority of half silent consumers that are happy with lower prices if i'm in the business of precaution it's the other way around i have producers with me because they are appetized at the notion that they will realize a nice economy of scale with a single standard because of regulatory convergence harmonization mutual recognition whatever you do it and i will have consumers against me or more precisely what matters in politics which is consumer organizations the voice of consumers in politics is with consumer organizations and consumer organizations are let's say virtuous paranoids they always recruit their members in saying with me you will be protected against the risk which we are running if i'm not doing this protection of precaution job with you and that's of course a totally a totally different game same is in international politics the old world of trade with a world where you could have preferences i would have a tariff on roses zero for one day 20 for costa rica and 40 for israel because i want to be more pro-development so i have three levels because israel is a developed country costa rica in the middle around the poor country everybody's happy special and differential treatment we call it in wto now if it's about precaution preferences disappear special and differential treatment pro trade development policy around this way is dead in the new world i will not have a different pesticide residue standard for one done roses or costa rica and roses or israeli and roses i have one because it's about health and my regulator is about protecting health so that changes a lot because again there's there's no there's no preference and it also changes the whole problem of the relationship between multilateral system and bilateral system which academics have always written tons of pages about it might be too many tons because it doesn't really work that way in reality but might come back from the discussion but what it changes is that the criticism which was done to bilateral which is that it's preferential it discriminates is not valid for precaution by definition precaution as i said with my example of roses does not discriminate anymore if there is a bilateral convergence regulatory convergence between let's say EU and US it's not discriminatory on the country today EU and US are implementing precaution regulations for exporters into the US or the EU market they are different if they become the same exporters on the US and EU market will be happy which is by the way what happened when the euros did their internal market when they switched from the common market to the internal market in in the 90s so it's a totally different world we have to with totally different politics to conclude with an example it's because they didn't get the difference that both the EU commission and USTR missandled this TTIP start of this quote-unquote negotiation which by the way should not be called a negotiation it's a regulatory convergence process and the way you name things matters in politics and naming this a negotiation gave the impression to public opinion on both sides that it was about negotiating precaution so europeans started fearing that they would have to eat chlorinated poultry and americans started to fear that they would have to eat this european cheese which are full of the bacteries and the narrative was wrong which is why this negotiation which is the first of the new negotiations in the new world is in bad shape and this is one of the reasons why and i think i totally agree with the politics point a moment ago it's even more than in the past a question of transparency you could handle to some extent negotiations on tariff quotas on socks or shirts in some secrecy if it's about precaution it's if it's about harmonization of regulation the purpose of which is to establish an administer precaution you have to be 10 times more transparent and i think in this area also trade negotiators still unfortunately live in the world of 20 years ago instead of the world of 20 years to come well thank you thank you very much i drove from your points that maybe something which was reconciling but at the beginning i was very interested by a point by john that globalization is irreversible and you say that after a list of all the problems that we have to face so i was scratching my head how to reconcile these two things and i think with pascal's command we have changed the system of negotiations the the word is bad in fact my question to all of you is should and we're not going to some new kind of unilateral liberalization because when you discuss about regulation you want to have the best regulation for your own sake it's not you don't want to have the best regulation for the pleasure of your partner you want to have the best regulation for from your point of view so i'm wondering whether in fact t-tip and t-p-p and all this this trade agreement mega trade agreement are not missing the main point is that we have to really be innovative in terms of negotiations and then it means that we could do something with china very quickly on some aspects of course something which i have in a very long time but we could be much more pragmatic and could involve much more the business then because the business has an idea about which regulations is the best because they know both sides the consumers because finally many firms know very well what the consumers want and they know also the regulation and the burden of the regulation to achieve what the markets want so it's not and this is a question for all of you and the discussion between you is not the way to go and to not to abandon the wto because the wto will still have tariffs to negotiate not to necessarily abandon the bilateral trade agreements because there are something that you could do on the bilateral aspect but at least to recognize that now we are in a world where trade negotiators are not only trade people but they are regulatory people and to involve we have tried to do that on the transatlantic discussion between the us and the you maybe we have done that between canada and the you but that is not that way to go for all of you let's not be naive because these regulatory measures may have at their core a purpose of protecting consumers but they can also be used to protect producers and what we face in many of these regulatory negotiations is this tyranny of small differences which actually don't make anybody safer in a practical way except they may make them feel safer occasionally and so you you know when you've got the virtuous paranoia that pascal is referred to that's that's fodder for all kinds of argumentation which might be quite spurious but before the others and to then since you are in the business when you talk to the regulatory bodies not to the government but independent regulatory bodies they may be on your side they may recognize that in fact they would like a better regulation that's happening the standard sanitary phytosanitary standard the french regulators would like to have better regulation than the current regulation so is not the regulators a good ally in this case or not at least it can be no I think I think that you you can find examples where yes they can be allies some regulators also take great pride in having what they consider to be the best system even if you could you could all of them as cal says whereas you can make you can often make a very strong case that regulation is not efficacious does not do anything but add cost or essentially functions as a barrier to access to to products that are are equally good equally safe equally useful wants to follow on this now well I totally agree with pascal's discussion on precautionary regulation or trade measures whatever but this is too complicated and we can talk about this but how can we resolve this in other words when you get regulators regulators to get involved in this kind of situation if you talk about among advanced countries like EU or United States maybe they can share some some you know commonalities but if you talk about the advanced country versus developing country including Korea I think regulators are more more protectionist than trade negotiators so I don't know how to I know this is a good area to handle but this is a very very difficult kind of reality we have to face you put Korea among the developing countries well you know I'm saying even Korea will have a similar problems you know okay for example all safety regulations on auto parts even through FTAs we want to open up all the parts and and and see whether this safety is is granted or not it's very very complicated anyway this is my first impression I don't know well to to to an extent what you've said and what pascal has been happening let me draw as an example the experience over let's say 20 years of negotiations on services and investment bilaterally or even under the WTO the evidence of actual liberalization taking place as a consequence of a trade negotiation is very small most of the liberalization is unilateral and what these agreements do at least on the bilateral basis they capture that unilateral liberalization and don't allow any backtracking or rollback as a matter of fact that even has the other effect if you change an existing restriction that becomes your new binding the new level of your liberalization so you can even to say that you're negotiating then it's it's really in practice that does not take place so you just bind what you have done and you keep it there and if you move you move only in one direction more opening and the virtue of these agreements by natural or WTO is that they prevent any discrimination even then normally when you apply regulations in the field of services and investment it's almost impossible makes no sense to do apply them on a preferential basis as as pascal has said on on john's point i think you're you're perfectly right john there remains a gray zone between protection and precaution if i as a european try to export the locomotives to russia it won't work because the russians have their restricts specification that only russian producers know how to match this is a confusion between precaution and protection but this this issue is under jurisdiction of wto there is an sbs agreement there is a tbt sanitary and fighter senator agreement the technical barriers to trade agreement in wto that established the principles of balance between protection and precaution so if there is an issue there you have a system that can deal with it on on tau's point what matters in this new world where the issue is about regulatory convergence is who is the standard setter where is the world standard for car safety equipment established now there are a few areas in the international system today where there are multilateral standards i mean take codex alimentary use for food safety which is a joint operation between the world health organization and the food and agricultural organization in some areas of food safety you have a multilateral standard but which usually is rather low it's it's a sort of lowest common denominator and nobody is obliged to remain there you can go above in a more precautionary way now if you take the example of car safety equipment for instance if european and americans agree on car crash tests parameters which is one of the purposes of the transatlantic negotiation quote unquote negotiation again shouldn't call it a negotiation then this will de facto become the world standard and korea japan china will have to adjust to these standards because both europe and us are big car producers and both us and europe are big car importers if you take the example of food safety i have no doubt that china for instance will import euro us food safety standards because they need this for political reasons in order to reassure their consumers because they've had tons of political problems with food safety for the last 10 years now if it's about 7g mobile generation i'm not sure china will accept a euro us standard now this is on relatively simple issues which are sort of technical rational issues which have something to do with science but if you look at the other end of the spectrum a lot of these precautionary regulations have to do with culture not with reason but with passion like gmos for instance or data privacy us and you to take these examples have fundamentally different views of whether gmos are good or bad and this is a value scale or whether data privacy should be protected or not and this is very difficult and probably by the way beyond reach for the moment and finally on on alex on alex point what wt the principle of wto is that you cannot discriminate against foreign producers precaution works fine with this principle as long as you don't discriminate between your domestic producers and foreign producers on the ground of precaution which you should not do because it's about precaution it's not about protection so in many ways the sort of multilateral principles are much easier to implement like the most favored nation the most favored nation is not the problem in precaution because you treat everybody the same so in principle it's easier the problem again is that the machinery to get to regulatory convergence is different and not least because it's not going to be trade negotiators that will establish as the patrick was saying a pesticide residue standards i mean these guys know nothing about pesticide residue standards or about actopamining or about crash test forecast this this is with regulators so it changes the political economy of the negotiation also it's five o'clock but we started late so i would like to have one round of questions from the floor if possible because that's the minimum that we should get so is there some question that people from the floor are really eager to ask our panelists who wants i cannot see because of all these slides so you who raise your hand and ask whether they could be yeah okay i can see you okay that's better thank you very much i thank you so much for this very wonderful and informative panel i just have a simple question there's one reference to a regulatory question over the data privacy new trading sphere is now i wouldn't i wouldn't say dominated but influenced very much by the internet the cyberspace would you all of you could have a one word about the future of the trade politics in the area of cyber trade thank you very much and who wants to talk about this burning issue who wants to talk about that there is oh okay so let's take a second question so that you have time to think about thank you here thank you very much and my question is regards the issue of the cultural french exception i wanted to to know whether or not you consider this as a sustainable exception or as a short term exception in this ocean of globalization thank you very much there is actually one french independent i don't i have my answer but no more question so internet and french cultural exception who wants to start i jump on on on the second one by the way i'm happy that john is on this panel because it's not a french issue yeah it's a french and canadian issue canadians in their trade agreements with us which as we know are wide ranging and very deep have preserved cultural diversity and for a simple reason which is you know that and i'm not saying this because i'm french i'm saying this because that's my own experience the notion that the larger the market the better for the consumer does not always work and probably not in culture so there are good reasons to believe that trade opening is great for tires or shirts or socks it may it may not work the same way for cultural goods and services on on on data privacy that's an issue where we could have lived during centuries with different views about whether data privacy should be protected or not or how and it has to do with the perception of freedom the relationship to the rights of the state but that's that's over with data mining with the huge commercial value of electronic data files which are exchanged in all over the place there has to be some sort of common approach to this and if you don't have that then some will believe their data are poached and others will believe that this is preventing this is just blunt protectionism but this is terribly difficult because it's it's culture i mean it's even philosophy it's ideology and this question is you know and that's gets to the fundamental question which is how much of these convergence on value issues will you need in the future to keep opening trade and benefiting from the efficiencies of globalization we've done we've done the easy job which is getting rid of measures which are ideologically flat like tariffs because bicycles are the same everywhere and cut flowers are the same everywhere and scrap metal is the same everywhere we are now entering a phase where in order to keep benefiting from globalization i.e larger market larger economies of scale we have to look at issues which are much more sensitive so trade negotiations the politics of trade negotiations were complex in the past but they are going to be much more complex in the future but the price of resolving these difficulties is also much higher now than it was before i'm not an expert on this but in korea i already talked about the so-called the inefficient distribution system for major items and we're now allowing our consumers who can buy directly from all kinds of world supermarket or department store we i think we designate the amount the total amount this is 300 dollars 500 dollars i don't know exactly for that they can buy directly from abroad actually this is giving a lot of pressure to our you know department store and shops where where they sell very luxurious items so they are now traveling abroad they can compare the prices and then they come back home and buy it directly from from from foreign shops so i think that this is actually making some contribution to the benefits of consumers in addition to the you know fta's whatever we are having we are providing with them before patrick before i uh i jump into the cultural discussion with pascal with an evil look through at me um one of the interesting things in in uh in uh cyber that has evolved is the differences in practices around protection of data which is stored and uh this is particularly the case with the some of the implications of the patriot act in the united states which gives government quite generous access to data storage and i think pascal that may be what you were alluding to in part and and and what's happening is that this is actually distorting um how data uh how large data is managed so that increasingly uh companies that provide uh software and other services including data storage and data storage facilities are having to contract that in no fashion will data for which they are responsible find its way through their storage facilities into a jurisdiction where governments have access to it so it it you could say it's going to become a by increasingly a trade distorting uh reality but it is rooted in in some of those principles that we were talking about on culture yeah you know i didn't want to jump into it particularly because my view doesn't necessarily reflect that of the canadian government including the one in which i was a member because i think actually um that what has happened is that we we we devised systems that worked very well in a in a world in which um the spectrum was limited for delivery of of uh broadcast for example um distribution of films and so on in a world in which uh spectrum is unlimited in which uh in which you have broadcasting or narrow casting through the internet in which uh any movie anywhere could be available anytime uh without uh restriction through uh through uh internet services uh some of the measures for example in the canada u.s. trade agreement and that which were continued in nafta which gave some protections for canadian cultural industries are just ineffective they're still there um but uh i believe for um you know a small country beside a large market like canada is beside the united states if we want to have our own uh cultural industries we're going to have to directly subsidize them which is entirely permissible uh but which accounts for the lack of scale on a market that's one tenth the size so uh i think it's it's uh you know good luck in t-tip but i i think it's going to be something that will have to be looked at from an evolutionary point of view because the truth is um we have a very dynamic and engaged cultural industry in canada um and uh we have a broad appreciation of our stars um especially when they move across the border to the united states but canadian consumers buy us productions in much larger numbers so if you want it you're going to have to pay for through a subsidy process in my view uh thank you um on the question of the french cultural exception i think that culture is like agriculture and the word has the same root i think the they're very good reasons why agriculture and culture should be protected and promoted the question is the instrument used to do that for example in many places where beneficiaries of cultural uh special treatment they the beneficiaries love screen quotas and other quota rents and dislike systems of direct subsidization which to my mind would be the best way to do it because it's more direct it's more transparent and at the end of the day it's more competitive um for example in in my country in chili they they just established a norm whereby 20 percent of the music broadcasted must be Chilean uh and it and it really makes no sense because the definition of domestic music includes for example a Chilean conductor uh who has uh recorded uh a piece of a of a french musician that's a dvc with an orchestra in spain and the whole production taking place in italy so the only link to the nationality is the domestic is the nationality of the conductor but so besides the point it would be much better if all the promotion and all the protection be done through different instruments like agriculture for example uh it's perfectly permissible and it should be uh farmers be uh subsidized but not in a way which creates more distortions to trade or it becomes more trade restrictive so in that way in which many parts for example in France or other parts they deal with this cultural exception it becomes sometimes very close to protectionism of certain cultural industries at the expense of others whereas there are other instruments which are less trade restrictive by the same token on data privacy uh it's it's fine there are conflicts there are problems even of different let's say cultural approaches as Pascal has said the one and and perhaps we need more international cooperation but the one thing which i am pretty convinced of is that the answer does not lie in requiring that the data or the servers be localized in a particular jurisdiction because then in the name of data privacy what we're really practicing is protectionism well very quickly um as far as cultural industry is concerned Korean case could be a good example we open up our cultural market cultural industries now we have all the young people are all over the world promoting so-called k-pop and you know dramas or all kinds of things maybe it could be a good example for successful market opening for even cultural industries you cannot say better i'm with a colleague of mine from snu uh Jimin Dr Park uh he has written a paper on the Korean cinema policy and the Korean you are you are in the best country which is the counter example of France no almost no subsidies are a screen cutter which is totally ineffective like in canada many issues and a very thriving industry so what is what is going on and what we do with dr park is try to import the Korean experience into France because in France we have a flat level of attractiveness of the french movies and the subsidies have increased by 80 percent over the last 10 years so there is something which is going wrong so trade forced the country to look at its own domestic regulatory reforms let's thanks very much the uh the panel and give them a close up