 Well, good afternoon, everybody, and welcome to this session co-created by the Financial Times and the World Economic Forum called Protectionism Back to the Future. My name's Jillian Tett. I'm the USO Managing Editor of the FT. And I have to admit that the name was actually my idea. Originally, we were going to call it something very sober and serious, like the future of global trade and the WTO. But I've been coming to Davos now for almost a decade. And what strikes me this year is that the mood has really changed. In previous years, Davos was very forward-looking, very optimistic. Many people would assume that globalization, free market capitalism, innovation would go ever upwards on a trend, and the future was looking bright. This year, we've been hearing a lot about the past, or rather about past frightening historical parallels. In particular, the 1930s, that great protectionist era has been tossed around a lot as a warning of what could happen if protectionism rears its head and, in some people's eyes, a sign of what is already happening. So we have an absolutely terrific panel to discuss these issues. We're both going to be discussing it amongst ourselves and with the people in the room and with the audience watching on Facebook Live and the FT's own channel as well and the West Streaming Platform. So a lot of people are watching these very, very, a lot of people are watching debate and this very important issue. Panel, I won't spend a lot of time introducing, but I think all of you know roughly who they are. We have two private sector participants, two brave CEOs. So sticking their heads above the parapet and getting ready to talk about things like Trump, Brexit and protectionism. David Cote, CEO of Honeywell at the end and chairman. Next to him, David Abney, CEO of UPS, company which of course has lived off global trade flows for a long time. Next to him, I'm delighted to say that we have a representative from the Chinese perspective, Min Zhu, someone who has been a key leading light in the IMF for many years and is now just gone back to Beijing to head the National Institute for Financial Research and his participation is particularly important given that President Xi's comments about globalization have been one of the highlights and the great debating points of this year's Davos. Next to him is Cecilia Malstrom, the European Trade Commissioner and next to me on my left, you're right, is Roberto Azevedo, who of course is a director general of the World Trade Organization. So public and private sector perspectives and we're gonna be talking about protectionism, Trump, Brexit, global trade flows and yes, the WTO as well. But I'd like to start not with the WTO, but with David or the two Davids. We have a collection of Davids at the end. So I'm gonna pick on Honeywell first. All CEOs are the same, you know. Exactly, exactly. David, you have been quite, I've spoken, David Cote, Honeywell. In previous years, about the direction of corporate tax reform, government policies and things. As a company who essentially is based in all around the world, with operations all around the world, are you scared about protectionism? Do you think we're going back to the future? It depends what happens. So I should start first with, I'm very much in favor of free trade and I say many times we've been learning since the Phoenicians that trade between countries improves the lives of all the countries participating. You've got enough experiences with it, the Hanseatic League in Europe. Free trade has generally been a good thing overall. Yet we have these arguments every decade, every century, just like we do about productivity. And it's like we just never really learn our lesson that this is a good thing and we ought to find a way to make it work. All that being said, do I really think we're gonna go back to protectionism? I don't really know yet and I can promise you that I'm paying a lot of attention to it because trade matters to us. To your point, half our sales are outside the U.S. So we pay a lot of attention to this. But you'd have to say if you look at agreements within the U.S. like NAFTA, it does need to be upgraded and both Canada and Mexico would say the same thing. If you look at trade with China in the U.S., I think most people would say that while China has been in agreement with the words sometimes of the agreement, not always necessarily in the spirit. And it's worth having a discussion about that. So if all of this discussion that we're hearing from the administration is a prelude to a negotiation that makes sense. So in other words, you're kind of anchoring everybody on here's how to think about it, here's what I'm going to do. And you just end up with an agreement that makes a lot more sense, that'd be a wonderful thing. If everything ends up being exactly as it's being said today, that would be a disaster. So it's kind of, I think it's a little too early to press the panic button. We ought to see what ends up happening here. Have you met Donald Trump? Have you had a conversation with him about trade? No, I've met him in the past, yes. Ever spoken about trade? I'm going to ask both of you about this. We talk about a lot of things, yeah. Did he? Would you care to share them with the audience and all the Facebook Live Watchers? Well, okay, well, the other David, how concerned are you about protectionism and or Donald Trump? You know, when you talk about protectionism, I don't think now is the time to overreact. I mean, are things trending the way that we would like? The answer is no. Would we have liked TPP to have been approved and would we like for the new administration to be supported the way that it was written? Of course we would. But to overreact to specific incidents, I think would just cause further concern. I believe the power of globalization and you just look at e-commerce. If there's nothing else that's going to drive globalization, global e-commerce is going to. So are we going to go through some fits and starts? The answer is yes. Maybe a little more than what we thought. Have we been going through fits and starts? Yes, we have. I mean, things haven't been smooth the last five years or so as we've been trying to negotiate these deals. So I'm a little more concerned than I would like to be, but I am not overly concerned. And I think at the end of the day, globalization is just too powerful. It's just going to be too productive to our society for it to die and go away. Well, I hope you're right. And I'm sure that Roberto also helps you right. From your perch as Director-General of the WTO, many people have looked at this interminable process of WTO negotiations. I can tell you that if we try and put WTO negotiations stories on the front page of the FT, we have to work very hard to make sure they look exciting because it goes on and on with all the jargon. It feels like we've been trying for a very long time to get these trade deals, and yet not very much has happened. Give us some good news. Give us some reason not to panic about Trump. To begin with, I hope that negotiations will never end. Right. And they will continue and on and on and on and that we will keep delivering results. OK, I think many journalists' hearts sink at this point, but yes. So I do hope that negotiations will continue in the WTO and will continue forever. What I do hope is that periodically, we are delivering good news outcomes, important outcomes. One very important outcome, which we agreed in Bali in 2013, was the trade facilitation agreement. It's an agreement that would increase exports around the world by around $1.3 trillion and $750 billion in developing countries alone. So it's a very significant agreement at lower costs of trade. It's fantastic. We are now with 106 ratifications. We need 110. So you have four. Tomorrow, I expect to get one from Nigeria. So we go to 107, three to go. Next week, we're expecting to get from Jordania, two to go. And who are the two holdouts that we are holding up breath for? We get surprises. We're sitting there and there's an ambassador who comes in. I have the ratification for my conference. Thank you very much. Have a coffee. So is there any chance that the very day after Trump gets sworn in or starts in the office, we can actually get a ratification from the WTO? The very next day, I'm not sure, but very soon. Very soon. He'll be fresh in the office. I mean, what about people who say that you've been doing this, frankly, quite heroic work, marshalling, shepherding all of these different ministers and trade agreements and stuff? And yet, there's a growing voice or growing ground sort of voice that's saying, well, actually, the future doesn't really lie in these multilateral deals. It's going to be bilateral, if not regional. No, I don't think so. I think it's a misguided view. The bilaterals are going to be there. Absolutely. We always had bilaterals. The get was founded on the basis of bilaterals that existed in 1947. And they will continue. And they inspire the work in the WTO. The more bilaterals and regionals we have, the better it is for the multilateral system, because liberalization is happening. And then we multilateralize those things, and we harmonize them in the multilateral system. So the more bilaterals, the better. I am absolutely for them. And the more they can work on that, I think the more we should support them. I'm a big supporter of that effort. Right. So some of the parts is greater than the whole. You can actually add them together and get more trade, not less. At a point when you have already liberalized trade with 20, 30, 50 partners, why not with the rest of the world and do it in a harmonized way? So to the extent that you have members negotiating free trade agreements amongst themselves, it facilitates tremendously the work in Geneva. Right. Well, I'm going to turn to Commissioner Moll's for just a second. Before I do that, I want to ask a very specific question, which although I live in New York, you can hear my accent I held from the UK. And I heard Prime Minister May talking earlier. And the question that many British observers are asking is Prime Minister May has talked about entering the WTO. How easy would it be for the UK to jump back into the WTO as and when Brexit occurs? Because we've had very conflicting signals in that point. First, the UK is in the WTO now. It will not walk out and then come back in. It will stay in the WTO. It continues in the WTO. Of course, there is a very important step in Brexit, which is the terms of the divorce between the UK and the EU. And that is going to determine what happens afterwards. What the UK will then after the divorce is completed? Because they only have to negotiate with other WTO members their own contract with the members once the contract with the EU is severed. Because only at that point in time do they not have commitments. Because today they have the commitments of the EU. So the moment that that doesn't exist any longer, then they have to negotiate with WTO members. And we can talk about that if you want, but that would take a few minutes. OK, all right. That would take a few hours or whatever. But my simple question is, will it be seamless and easy? It could, it would depend a lot on what they offer, what they try to do. They can, for example, try to emulate what they already have with the EU. Do like a kind of a cotton paste. I'm doing, what I already do today, I will do tomorrow. There are some areas where you cannot do that. Territory quotas, subsidies, and I will not get technical here, but they're tricky issues. The more they try to change what they do and do something different, of course, the more difficult it is. They have to negotiate with 164 members. The less changes are introduced, the easier it is to conclude agreement with the other members. Well, I think from that, I conclude it will not be seamless and easy. But... It depends, it depends. Commissioner Malstrom, were you expecting Brexit? No, I have to say, but I've been wrong so many times last year. Like many others, I have to say. No, we were hoping and also expecting that in the end, our British friends would vote to stay. Now, they did not. That is their decision. I'm sorry that they leave us, but we have to respect that and then we need to find a solution. And in your eyes, the most likely solution at the moment is what exactly, that the UK leaves and then starts renegotiating its trade deal with you in the queue somewhere down below all the other countries that are coming up? Well, first of all, they have to formally evoke the Article 50, which is the sort of letter of divorce. That will come according to the government mid-end of March. That is the formal start of those negotiations and we've heard some speeches by the Prime Minister lately. But of course, we cannot start before that. Then the European Council, the heads of states and government will discuss that and based on that, they will give a mandate to the Commission to negotiate. We are setting up a negotiating team under former French Minister and Commissioner Michel Barnier and we will start negotiating. Then if they do leave, as the Prime Minister have said, the internal market and probably also part of the customs union, there will have to be, when all the exit procedures are there, there will be a trade agreement between us and the United Kingdom, which will be negotiated after they have left. Given your experience of negotiating trade agreements and of course, you've just done one with Canada, congratulations. Thank you. How long do you think it would take to negotiate something with the UK? Because if you look at Canada, that took a long time. With Canada, it took a long time, yes. Oh, is it 10 years in the end? Oh, seven, I would say. Seven years, OK. And it's not really done yet because it has to be voted in the European Parliament. OK, so it's seven years in pending. I have to put the bottle of champagne, yes. Others have been quicker. It's hard to say, but it takes a couple of years, sure. A couple of years. Depending on, I mean, depending on what we want to be in it and how the mandate looks like, but it will not be done over a weekend, no. So we're looking at potential limbo chaos for quite a while. Well, Michel Bannier and his team have been very clear on this, that they think they will be, from the moment exit, somewhere in 2019 in the spring, there will be some sort of transition period into that period we will negotiate. So how long with that, I have no idea. Right. And just one other question before I turn to, I'd like to ask the Davids again what they make of this, but the Davids, yes, who are sitting next to each other wearing almost exactly the same outfit as well. They coordinate every month. Exactly, they coordinate with the FT Colors as well, so thank you. But before I ask that, I'd like to ask a serious question, which is that if you talk to UK officials these days, Theresa May herself mentioned this this morning, they will say things like, well, never mind, we'll go and negotiate trade deals with other EU countries quickly. We've already had Donald Trump appearing to indicate that he'd like to do a quick deal with the UK. The reality though is going around talking to people in Davos is that the UK is going to be competing with the EU to strike trade deals, isn't it? Because other countries and trade blocs may say, actually, we would rather hurry up and get our trade deal with the EU in place before we worry about the UK. Does that worry you? Well, the EU, for the moment, we are 28 countries and we are until the moment they leave. Even without the Brits, we would be 27. We will still be the biggest market, the biggest exporter, the biggest importer, the biggest source of investment, the biggest giver of investment, so we are an interesting party. So we are negotiating around 16, 17 trade agreements right now, preparing for another five or six big ones. So we will be busy and maybe UK as well then. It is natural that the UK then, once they have left the European Union, that they also seek to negotiate. But as Arido said, well, we set trade agreements today. They take time because they are so complex. It's not only about getting rid of some tariffs. It's all about sustainable development. It's about services. It's about standards. It's about the tax sometimes, the customs corporation, IPR. I mean, they're very complex. That takes time, but they all set rules. It's a way of shaping globalization and that's a good thing. Right. And just to come back to that, if you're negotiating 17 trade deals at the moment, then the UK would be the 18th in the queue. Is that right? Yes. They're involved too. I mean, it's not like the first we do Canada, the first we take Manhattan, then we take Berlin. We do them all at the same time sometimes. And some go quicker, some go slower, some take a break because of political circumstances or others, so it's not like we take them one after another. And then the UK will have to withdraw from all the trade agreements we've done so far in the name of the EU, which is around 38, I think. Right. Well, that sounds like that could take a lot more than two years. David, how do you feel about hearing that the UK could be 18th in the queue? Do you have big operations? I feel like more information times. Do you have big operations in the UK and have you been serving the European market out of the UK? We absolutely have big operations in the UK. And it would depend on the customer. Some customers would serve the rest of Europe with further UK, but many of them not. It's not really the most central location. I can tell you that from our aspect, we really haven't seen a change in business. Now, we have seen companies and customers that are talking to us, they're concerned. And what they're concerned about is uncertainty. There's one thing businesses don't like. They don't like not knowing what the rules are going to be. So the longer it goes on, the more uncertainty there will be, the more concerned there will be. And if the negotiations start to get a little testy or don't seem to be going as smooth, that's just going to increase anxiety. But it's not something that we can put our fingers on today and say that we see anything any different, because they're in the, as the commissioner said, and they're going to continue to be for a certain period of time. I mean, we've had signs already in this Davos that the big banks are unsurprisingly preparing for the worst and are likely to shift jobs away from London. I mean, David Coat, what does this mean for Honeywell? Are you looking at shifting operations from London to the European Union? I mean, or rather would you not put any more investment into the UK? I'm going to echo a lot of what David said, and I would completely agree on the uncertainty. I would also agree that we haven't seen much of a change yet. While there was a lot of discussion about uncertainty and a lot of concern about it in the beginning, things don't really seem to have changed all that much. But we've got about 7,000 people in the UK and about another 28,000 or so in Europe. And we tend to balance things locally. So we try to be producing more local to where the sales are. So I don't see a big change for us. But a lot of this, again, gets down to what actually happens. And to the extent that things go smoothly, and all our counterparts on the panel do a good job of managing all this, then we have a lot less reacting that we have to do. And hopefully some consideration will be given to those kinds of things, because that kind of disruption won't be good for their economies, won't be good for the people that we employ. And hopefully we'll all go smoothly. Right. Well, Min, I'd like to turn to you now, because in some ways, in this Davos, you represent a country that has been a bright spot for globalization. Which is good, is it? It is good. It's somewhat unexpected. Did you expect that President Xi's speech would be the note of optimism at this year's Davos on the trade front? Well, China benefits from globalization, although President Xi said the Chinese people are working extremely hard to earn the benefits. And China will continue to support globalization. I think that's for good reason. Do you think that the Chinese government sees a moment now where they can try and jump into the vacuum that in some ways is being left by Donald Trump and America in terms of promoting globalization and sees a baton for pushing it forward? Well, China is one of the countries in the whole world. I think globalization is a very good job for everyone in the world to support, right? It's not only China. China will be happy to play its share. And so that's the reason I think President Xi had a very strong commitment. Say, China will continue to support globalization, and China willing to work with all the countries in the world together to support globalization. I think that's a very important point. And now that, say, for example, TPP has essentially fallen apart, and China is taking the lead in creating its own regional bloc, do you see that as a sign that actually China is willing to push forward with regional deals? And really, if you like, act without the US? It depends on how do you define it, because the Asia-Pacific region of free trade bloc is so broad, right? It's both from Asia to the Pacificus. So it's a big region. But I think the good thing is it's very open. It's including everyone, 21 countries. Nothing is included. So I think that's very good. Because if you do trade, you have to do trade with everyone, right? It's hard to say, we want to trade with you, but not you. We want to have particular policy with you, but not you. So I think the Chinese approach is much more open, much more broad, and to support the global system. Right. I mean, David Coat, I mean, you've dealt a lot with China in the past. Do you see China as a bastion of globalization, or do you think, in fact, the current excitement is a bit overdone? Well, I'm a big fan of the country. China is our biggest country for sales outside the US. And we've got about 13,000 or 14,000 people there now, only 75 of them are expats. I mean, it's very, very local. So I'm a big fan of the country. That being said, the changes need to keep coming. Like, I'm fond of saying that whether you're a person, an organization, or a country, you have to keep evolving. And I think China is at that point where there's an evolution that still needs to occur. And I've kind of talked about it sometimes, like they're a steroidal teenager at this point and don't really quite understand the power of the muscles that they have. And the impact that they can have. And there's a lot of ways that this could go awry. I mean, there really are, whether it's country, city, middle class wanting more political power than it feels it has, a territorial dispute. I mean, there's a lot of ways that this could go wrong. But I don't think it will. Historically, they've figured it out. And I'm hopeful that SOEs, for example, are something that they're going to sort out over time. Because I really do think that's one of the changes that needs to come. But we continue to bet very heavily on the country. I just hope that evolution continues. I mean, are you worried about a US-China trade war? Because, certainly, if you take Donald Trump's rhetoric, or rather his tweets, particularly the ones emanated 3M at face value, we are heading towards a potential trade war. Yeah, but what people say, I've often said about politicians, their jobs are much more difficult than ours because growing up in New Hampshire, running companies, what I thought, what I said, what I did, all had to be the same thing. If you're a politician, that's three separate decisions. It's three separate decisions. So it's a much more complicated game. And that's how I think guys like me get sucked in sometimes and think we understand and find out, no, we don't. So what somebody's saying isn't necessarily what they're going to do or what will happen in the end. Sam, reluctant to jump too quickly and talk about the disaster when we don't really know what it's going to be yet. Just for the record, that was David Cody that said that. No. I'd love to hear what David Abney says about the US-China trade war. The rest, are you concerned about that? Well, one, I'm an eternal optimist and I don't believe there's going to be a trade war. Now, I can't predict, right? So it just seems like there would be so much to lose and there's so much to gain if we continue to find ways to not only trade with China as we are today, but to improve the conditions and to improve access between the two countries. So I don't think that we're going to be there. I don't spend a lot of time worrying about what may happen because we just think that would be much more remote. And we believe cooler heads will prevail and that there will be room for an agreement and we're very interested in seeing that happen. Min, you have worked in Washington. You're now in Beijing. Have you ever met Donald Trump? Never. I hope I have a chance to meet him so I can maybe explain to him his situation. In what way? Tell us what his situation is. I mean, there are a few things. I can tell, for example, in a few years ago, US imposed, particularly 45% tariffs on particularly Chinese tar export to US. So China's tar export to US dropped from $14 million one year to $5 million, dropped almost two cents, but price increase. So they saved US job $1,200, but US consumer paid $12 billion. So per job saved, US consumer paid $1 million. This is a good deal. And China export lost. So there's no winger in the trade war. I think that's very important things everybody have to see, have to understand. This is a real case. But back to you, David, I have to apologize. I have a very poor voice because I have codes. I lost my voice. So I have to tolerate my very poor voice. In Chinese, we call it the duck voice, ga, ga, ga, ga, ga. Yeah, firm for. I'm concerned, I have to say. Yes, I mean, one day we say, the politician can change that person every minute, right? He should not be too serious. And two days we say, we still have to wait to see because we still don't know. The people is not in White House yet. If he moving, he may have a different policy actions. But we don't have very much time to wait, only a few days. From what I heard, I think it's pretty concerning, right? He said he would name China being the exchange risk manipulator or something. What does it mean? He would go through WTO in those IMF. He can impose 45% tax across all the Chinese and exporters in the United States. It would cut basically China's GDP growth with one source. It would cut US GDP growth within half. It would cut, sorry, US, sorry, that again. It would cut Chinese GDP growth with one third. By one third. It would cut US GDP growth with by half. It would hurt both. It's serious. So, I mean, this is not a travel issue. It's a pretty serious issue, right? Now, this David says, well, it's a trade. What can you go say? But we got to trade at 3 o'clock in the morning. When you do trader, you bring the public into the picture immediately. Then you have a nose room to negotiate, right? I mean, that makes things extremely difficult. Yes. Yeah. Because if you bring all the publics, as a 300 over million US receive the traders. At 1.3 people in China watch the Chinese authority how to react to the traders. But still, we don't know. It's a trader, it's a trader. What's the policy? What's the real thing? They will say, it's not real. Because politics can change. I don't know. I'm Chinese. I don't know. American politician, I have to say that. So if there's no negotiation room, it's serious. So I would say, I'm concerned. Because so far, what I heard at this particular moment, only 36 hours away from the people who are moving to the White House, he will say in the day one, he will do ADC. And particularly the way he manages that fair, is a concern to me. Can we expect the Chinese government to issue any public estimates or guesstimates about the cost of a trade war in an effort to try and influence public opinion? I mean, are we going to see Beijing start tweeting back? No, unfortunately, as the day we say Chinese people still don't know the muscle the uses. Chinese people never use the muscle. We are very humble, calm. And so they don't know how to use the treaters. And I think that's the most important thing. And the second issue, there are tons of tons of study about the cost of a trade war. Go to WTOs. Go to Peterson's. Peterson Institute has tons of study of the whole thing. So you don't need the Chinese authority to tell the world, this is the cost if you do that, right? There's a lot of studies, it's very easy. Just at the tip of your hand, finger. David, and I want to bring in Commissioner Maltraman. Yeah, responding a little bit to what Min was saying. One of the issues that I think still exists between China and the US is even though we read a lot about each other and we all go back and forth to each other and we kind of intellectually understand that the two systems are different, at the end of the day, we don't really understand the system. And I always say in the US, I can't tell you how often we hear referenced to, well, China is a totalitarian system. You say, no, actually, there's a lot of politics that go on behind the scenes, a lot of arguing, and the person stays in charge for 10 years. They just have a very well-focused effort on saying it's one China, one voice. Everybody says the same thing. We come into the China and we think, well, it's pretty obvious where the US is a very open system. Anybody can say anything they want. And I've said this at our breakfast the other day. I'm surprised how many times I had to answer the question about, gee, you know, if the US really views China as a strategic partner, how can Nancy Pelosi say what she's saying? And say, well, Nancy Pelosi can say whatever she wants and so does everybody else. We've got a bunch of independence out there. Anybody can say anything they want and they do. And if you try that idea of, well, it's a strategic partner, so everybody's gonna be supportive, that's not gonna happen. Yet we still seem to have those misunderstandings between the two systems, even though we should both know better. Yeah. Well, particularly if the American president can say whatever he wants, I think that the impact have to take into consideration seriously, right? Well, that I think we all hope moderates a bit. Well, I don't think it's much fine of that yet, but I should say, by the way, I'm gonna turn to the audience for questions in just a moment. Those of you who are watching on Facebook, live streaming, Facebook Live, can send in questions. I should be getting them on the iPad. If someone in the facilitators can actually give me the iPad, that would be great. If not, we'll have to do it in the room. But before we do, Roberto, when you hear this talk about, and also the commissioner masterroom, when you hear this talk about trade wars, what is your reaction? I think we should try not to talk ourselves into a trade war. Come on. And I think we're seeing a lot of that. Trade wars should be taken seriously. The major difference between what happened after 2008 and what happened in the 30s, is that now we have multilateral rules in the 30s we didn't. So when the unilateral election was taken, there was a domino effect. And that domino effect wiped out two thirds of global trade in three years. Now you don't wanna see that now. That will be a catastrophe of untold proportions. So I think we should strengthen the multilateral system. There are tools to handle a lot of the things, a lot of the complaints that we hear. There are tools in the WTO that you can use. So maybe that's the way forward. And I'm not talking about country A, B, C or D. This is something that has to be a collective responsibility. If we enter into a trade war, it's the fault of everybody. I think we need to really sit down, talk the problems, have dialogues, sit with each other and see whether we can overcome some of these problems. And there are tools to do that. I think we should be very careful when we talk about trade wars. Commissioner Ostrom, I've just already got a question here actually, fascinating, which is actually rather relevant to this, which says, as Europeans, we need to protect our industries as everything has been wiped out by outsourcing to China. That suggests that actually protectionism, causal protectionism, might actually be rising. Indeed they are, and that's the title of this seminar or this talk. Yes, protectionism is raising and that is worrying. And let me say that I fully agree with Roberta Azevedo on trade war. It has no winners. The whole world is losing on this and we do not need more protectionism. We don't need more walls. We don't need more higher border taxes. We need more trade. We need better trade. We need multilateral system that is strengthened. We need to shape the rules globally, when possible and if possible, and if not via bilateral and regional trade agreements that comply with multilateral rules when they exist. And then we invent news to create a level playing field because trade is such a formidable source of growth, a formidable source to fight poverty and exclusion. We just need to make sure that we are better in delivering, that they really deliver what they want, that we have it more inclusive, more transparent, more value-based and also compensatory measures for those who feel that and who are left out of globalization, not necessarily trade because trade don't, I mean there are jobs lost but there are also many jobs gained. It is the general automatization, robotization, industrialization that changes the labor market and there we need to be better in protecting and having social systems and skill training and so on. But protectionism and raising. This is a very important point I would add to one thing. I mean think about in the past 20 years in the whole world, billions, billions of poor people will be able to lift out of poverty. The majority reason for those people to be able to out of poverty is trade, right? The trade brings them skill, the knowledge and brings them income and job. I think if you're looking for the whole world, this is really phenomenal things. Except I have to say the questions I'm getting on Facebook live right now are pretty skeptical about free trade and if anything calling for more protectionism but let's ask the audience here if they have any questions. I can see hands going up already. Let's start over there and it would be courteous but not compulsory to identify yourself. Keep your question extremely short or I'll cut you off because there are a lot of hands waving. Shona Hall already with Nike. But my question is the US Congress is composing a border adjustment tax which would tax or deny the deductibility of imported goods and allow exported goods to move tax-free. Do you consider that protectionism? This is a question from those of you who couldn't hear or watching on Facebook live, the CEO of Nike. So you certainly know something about trading across borders. Sorry. Oh, sorry. From Nike, sorry. Yes. Okay. Okay. A representative from Nike who's not yet CEO. Sorry. Apologies. Do you regard, David, do you regard this as protectionism and border tax? What is your view about this? Because this has been one of the hot debating topics in Washington. Well, you know, first I think even though it's gotten a lot of attention and a lot of concern, this is a proposal and it has been real hard to get a lot of information on this. So we are very interested in finding out just exactly what would be involved. It is being presented not as protectionism but being presented as corporate tax reform which we certainly are big supporters of. And we think the U.S. needs a very competitive rate. We think we need to be able to bring profits back to the U.S. without being penalized on a territorial system. And that's very important to us. The rest of it, we have to look at the details and find more information. So I would want to wait and see exactly how it's going to be applied when we ask questions we haven't been able to determine. But in conversations that we've heard it's been pitched as a version of corporate tax reform. Well, we've already had groups like Levi Strauss say that, you know, they reckon the cost of genes will go up quite sharply for consumers if it was introduced. From my perspective, Honeywell is a net exporter from the U.S. So you would think that I would like the idea but it makes me nervous and taxes have become just such an inextricable part of every economy and every society now that I think you've got to beware the law of unintended consequences. And if you make that radical a change, I don't think we can really know all the things that are going to spawn from that. So it really makes me nervous to do something like that. And I'm all in favor of corporate tax reform, of overall tax reform in the U.S. But I think it can be done in a way using the existing system, modifying it a significant amount but not taking that risk of unintended consequences, which I think could be significant. Min, sir, are you- Yeah, I think we'll have the final call. We have a judge here. WTO can give you the answer, right? Because you have the other rule of the policy. Before that, I would say regardless of whether you call it a terrible or not, you never call it a tax or whatever, right? But by definition, it's terrible type of things, right? I mean, it's not a corporate tax type of things. So in that sense, it's a concern. I also would be more than happy to hear from voice from Europe. I think the European probably would be more concerns than Asians. Well, I'd like to hear from Commissioner Milstrom. I'd also like to hear from the WTO whether they would regard this as legal or illegal. And you will not hear that. I think we- It's a legislation that hasn't even been drafted. How do you expect the WTO? It will have to go through a panel. The panel will have to look at that and the pellet body. You know the WTO system. What is it? It's going to say this is legal or illegal or just like that. We're much more careful than that. Although every time that people talk about measures that are so polemic and controversial, it's a reason for concern. But I'm not going to say at this point in time whether it is legal or illegal. Forget that, don't even ask. But the principle is not exactly, doesn't really match WTA principles, does it? Well, you have to look at the measure itself. And then there are rules. There are rules in the WTO that allow for exemption of taxes when you export. But certain types of taxes, not all types of taxes. So you have to look at the type of tax and whether or not it violates the WTO rules. Everything in the WTO is more complex than it seems. You know, Ricardo did a much better job given that kind of answer than David and I did. Well, wait and see. We need to, of course, to see the details of this. There's been a lot of talk. So it's difficult to go into that particular proposal, that because it doesn't really exist yet. But it is a source of concern, I think, as a principle. And it risks to have a domino effect across the world. And that is not good. Yes, well, of course, we don't know what will happen. And it will lead to distorted trade and it will lead to much higher consumer prices as well. We should not forget about the citizens, the consumers. Absolutely. Let's take the next question. We've got a question back there and then we'll come forward. I'm Robert Lawrence from Harvard University. There's a lot of discussion about how things are very uncertain. So how Davids don't want to commit themselves. But we've already seen that Donald Trump is calling American multinationals who have their operations abroad essentially unpatriotic. That's his policy now. So how do you two feel operating multinational corporations when the next president feels free to say that there's something fundamentally wrong, indeed immoral, with what you're doing? Are you preparing for a tweet attack? I haven't been called immoral yet. So I guess I have to wait my turn in the barrel, I guess, at some point. But so far it hasn't happened to us. It's happened in discrete areas. The thing that's kind of surprised me and the day after the election, you could actually feel an improvement in the animal spirits of CEOs of small companies and large companies. It was really surprising. And anybody who tries to deny it is just really not paying attention to what people are saying out there. So we're not seeing it in the data yet. So I can't say that all of a sudden orders are starting to boom. But there's some psychological effect that is occurring in the US right now. And if there's just a few things done to spark that, like the corporate tax reform or tax reform overall that we were talking about, I mean, this could be a nice generator of economic growth. But we'll see. It's not even president yet. We've got to wait and see what happens. But there's no doubt the psychology's improved. Yeah, Min. Yeah, this is a very interesting point. I agree with you. The animal spirits are certainly rose up in the states. You see the equity market. You see the expectation on inflation is dramatically, you see the 10 years yield raise increase, 85% of the response market certainly moved out. That's good things because the present elected policy is a pro-growth, pro-business. So it's have a positive feedback to the market. I think that's good. But everything have a bad unfortunate thing. When you want to have a sustainable growth, you need a real fuel into the engine. You need to do the copper tax reform. You need to do infrastructure investments. You need to do the various things. All those things are very technical driven, legislating driven, technical. And it take times. Now, between the expectation and the real fuels run into the engine to push the growth, I think that's pretty big uncertainty. But for the trade battle, you can launch any time. So go back to these issues because those issues, because expectation be way high. And because all those things, the real sustainable growth in the US will take some time because all those have to go through legislations, all those budget but whatever. And trade issues probably will be the first issues on the table. So then globally, I think it was a real concern. Right. David, Avni. Yeah, I think there's one topic that we haven't talked about. And it could make us feel a little uncomfortable because we have to take as pro traders some of the responsibility here. And we have not done as good a job as we need to communicate the message of free trade and globalization. When that picture gets shown of the factory that's closing, it doesn't matter why the factory closed. Maybe it was due to NAFTA. Maybe it was due to technology or whatever. But it's a visual in the US population. And we haven't communicated the benefits. It's much harder to talk about all these small and mid-sized companies that with e-commerce that can take advantage of globalization and create all the jobs that we know will be created. It's easy for me to say that for every 22 packages that crosses the border in the US supports an additional job. But what's more important is these small and mid-sized businesses. And if they can compete, what it can do to the economy. It's real easy to think it's a trade as a zero sum game. There's got to be a winner. There has to be a loser. We believe it's a growth strategy. We've got to communicate it better. But we also have to help the people that have gotten dislocated, the people that have lost their jobs for whatever reason. We have to equip them for 21st century jobs and help them to be prepared to compete in the future. But before I turn to the next question, I'd just like to ask one thing. Since we are talking about image and perception and public relations, what is clear to me now is a number of CEOs, American CEOs, are essentially creating full-back emergency plans for what to do if they do get subject to either tweet attacks from the president-elect or from public criticism. And with that, we're seeing companies coming out and saying, yes, we are suddenly deciding to invest here in the heartlands of America or shift operations or whatever shows there's a lot of discussion going on. Do you have a contingency plan for what you will do if you suddenly face accusations that you are letting down America by being too global or moving too much stuff overseas? I don't. As I said, we're a net exporter. So I think in terms of whatever the definition that people are using now is what's considered good as a net exporter, I think it puts us in a decent spot. Well, David, move your head office to Shanghai. Actually, our Asia-Pacific headquarters is Shanghai. Uh-huh. Question over there. So I'm a farmer from India. And I think so it's when you're looking at protectionism, I think we need to get the voice of the unrepresented millions of farmers and how they get affected by protectionism. I think farmers in the developing world feel led down by the trade agreements that have taken place or that have been forced down developing nations, especially farmers, and subsidies in the US and Europe and all those places are driving down food prices to the extent that farmers are losing the livelihoods and jobs because trade is just a means to an end. And that end is prosperity and job creation. And farmers in the developing world are losing the jobs because of it. And the same farmers are moving to cities, and the same farmers are migrating now to Europe and the US. So I think the true cost of subsidies and trade needs to be calibrated. This needs to be a metrics to see that how we are being affected. And that's really true. Right. Right. That's a great point. And I think that probably stands almost by itself unless you want to comment. OK, well, let's take another question back there. And then any more? Gilberto Marine from Mexico, my question is for any of the two Davies, about the NAFTA. Because I agree that the NAFTA, after 22 years, maybe needs to be upgraded. And which do you think are the areas that interest more in United States, especially, for upgraded on the NAFTA agreement? Which areas do you think need to be renegotiated or upgraded in the NAFTA agreement? Well, David's thinking, oh, go ahead. But you've got to remember that NAFTA is dated. And I don't think anybody argues the fact that it needs to reflect a 21st century agreement. That is one of the things we were so excited about with TPP, is that in many ways, that was going to update the terms of trade between the three countries. And just to pick a few spots, one of which is e-commerce. There was an entire chapter devoted to e-commerce and TPP. And there's a lot of e-commerce activity that goes on between the three countries involved in NAFTA. Another was small and mid-sized businesses. Back when NAFTA was agreed upon, they didn't have the advantage of the internet. And a lot of small businesses were just concentrating on their particular country. Now, that was another change that was going to happen. And then there's environmental chapter. There's labor. There were quite a few improvements. And it was a good modernization of NAFTA. And we were excited about it from that aspect. Jillian, if I could, I'll agree with David. He's very good. If I could come back to TPP, because David mentioned it earlier also. And I do think it's a shame if we completely walk away from it. And we've talked about this before. But if you look from 1990 to, say, 2035, in 1990, the, say, developing regions, which people want to call them, were about 20% of the global economy. In 2015, it was about 40% of the global economy. And in another 20 years, it'll be about 50% of the global economy. And for us in the US to be ignoring that, I think, is a real mistake. And it's one of the reasons we also were extremely supportive at TPP. Right. One last very quick question. We're almost out of time, I'm afraid. Cliff Bigley, Swiss Parliament, just as a follow-up of that, most of the Southeast Asian nations need to be close to China, want to be close to the US. Will they be the collateral victims of that protectionism? I don't think so. I don't see any reason being that way. Free trade is free trade for the whole world, not particularly the regional related, right? So I think the trade is just a flow all the way, particularly in Asia areas, back to 4,000 years ago. And it will continue. There's a lot of engagement with these countries from the European Union side as well. Basically, all the TPP countries we either have or are in the process of negotiating or are preparing. So I think there is a lot of trade going on as well between Europe and Asia and also in the Pacific. That's a good thing. We also deploy that TPP is not becoming a reality, probably, because it would have set good rules. But there are others there who want to trade with these countries and who want to trade with us. Right. Last word, WTO, the bastion of free trade? In this particular situation, I think any innocent victim could be a victim, anyone. The moment that you introduce, for example, a sanitary, a phytosanitary barrier to retaliate against imports coming from another country, third parties will be affected. So depending on the types of measures, you may affect one, two, three, four, five, 10 different countries. It's impossible to predict. So that's why I keep saying we should not be too gang whole on talking about trade wars. The effect of a trade war, the consequences of a trade war would be truly unimaginable if we get there. Well, that seems like a very good moment to end a session entitled Back to the Future. I have kept this session in some ways quite light. I'm conscious it's Thursday evening at 6 o'clock. It's tough for people to stay awake after the fourth day of Davos. And I didn't want to get bogged down in endless WTO jargon. However, I guess the key point I'll make by my conclusion is actually at the core of this issue is a deadly, serious question. Because in the next 48 hours, we're going to have a new leader of the free world who has very different aspirations about how to set the global order. You can argue that he's captured a sense of anger that is sweeping through the Western world, anger at inequality, anger at the fact that many of the elites, including us here in the room, have been very slow to recognize the degree to which inequality has been rising and frustration been rising amid a different trade boom. And yet, if nothing else, what's going to happen in the next 48 hours should lay down a challenge to all of us who do believe in free trade to try and explain that the principle's better and the benefits and also to try and make it work more effectively in the world. So best of luck to all of you, and thank you for a great debate. Thank you. Thank you.