 Welcome everyone to this session on the future of the international trading system and how to make it better. We have some fantastic panelists to talk about what we can do to improve really when we talk about the world trading system we obviously talk about we're talking about the shape of globalization the rules under which our global economy are governed and how we can make them work better for people. Clearly the last year has dealt enormous challenges to the resilience of that system and in the previous few years we've also seen political challenges, question marks about the future for the World Trade Organization but also for our entire rules-based multilateral system. So I'm delighted that we have an excellent panel to discuss all of these issues who are sitting in a sense in different corners of this global trading system. Noel Quinn who is Chief Executive obviously of HSBC, Damian O'Connor, Minister of Trade and Export Growth and Minister of Foreign Affairs of Trade of the National of New Zealand. We have Valdis Dombrovskis, the Executive Vice President for an Economy that Works for People at the European Commission and Beatrice Vedemauro who is President of the Center for Economic Policy Research. So we have finance, we have trade, policy makers and economists all contributing to this. Executive Vice President Dombrovskis I guess the important question for you often the EU is at the center of some of these debates. How does EU trade policy after everything that's happened in the last year deliver outcomes for people and make the system stronger we hope for future crises? Good morning. Well indeed it's very important that the trade policy is delivering for the people and actually in Europe we see that trade is a strong engine for growth and strong engine for improving also people's lives and incomes. Currently one in seven jobs in Europe is supported by exports and during the next decade 85% of global growth will take place outside the EU. So it means that for Europe to continue to grow to sustain the level of prosperity it's important that we are connected to this global growth and for this we need open trade and investment. Of course what is important that this is a rules-based trade that's why from the EU side we very much emphasize our commitment to multilateralism and to the work towards the reform of the World Trade Organization and we see positive openings now with a new US administration as regards their commitment to multilateralism and them being back at the negotiating table in the World Trade Organization. We need to continue to develop our bilateral relations with different countries different regions and what also President of the European Commission from the line recently underlined in her that was a special address is that we are committed to make trade policy greener, fairer and more resilient and actually next month we'll be publishing a review of European trade policy to outline how we intend to achieve it. And just to follow up briefly with you I wondered what do you think what is the European Union from your perspective learned from the Trump administration's approach to the international trading system because obviously that is still having an impact through the world. Well indeed and probably it to a certain extent prompted Europe to develop this approach of open strategic autonomy so basically meaning that on one hand we remain committed to multilateralism and free and fair trade but on another hand we are also strengthening our autonomous toolkit our trade defense and enforcement toolkit so basically we need to be ready to more assertively defend our interests our rights in case some of the third countries are not playing by the global rules. Okay well I'm sure we've got plenty to unpack even in that but we must move through and Minister O'Connor New Zealand is well known as a strong supporter of the WTO and I open trade generally but many people ask the question is the WTO even relevant anymore what do we need to change to make it more relevant? Look thank you very much and I have to say well Commissioner Don Roski said you know the EU very focused on the improvements to people's lives through trade we are absolutely dependent upon it and so we've always supported the WTO and the rules-based system is the only way of giving confidence to exporters and ensuring that you know they can move forward make the investments the capital commitments to grow exports in a country like New Zealand but it does depend upon the rules and we need to see the WTO of course move forward it's stuck at the moment we need to see it modernize and New Zealand it's a core part of New Zealand's trade recovery strategy to have an effective WTO organization we've been frustrated that they haven't been able to move forward on things like fishery subsidies general agreement but again stuck and if it can't move forward on those then people start to lose confidence in its ability we have to appoint of course a new director general and a sense of leadership and direction is really really important we need to have the appellant body in pass shifted and hopefully the new administration in the US will will enable us to make some progress there we believe that the WTO must demonstrate that it can deliver further openness and it's really important that people have confidence that it is there for us all not just for I guess for the selected countries that can make best use of I guess negotiating or lobbying we you know want to see the rules modernized and things like digital trade which wasn't part of core negotiations when the WTO was set up clearly those things have to be bought in and our international objectives around climate change we want to see climate environment and trade rules bought into place so that we can have the sharing of technology as much as possible a WTO is still the best way forward for us to grow multilateral and plural lateral trade agreements well I mean Beatrice just to move on to you I mean as an economist you look at the how the world has changed in the last few years and we heard the minister O'Connor mentioned their new challenges that the WTO faces I mean is that the fundamental part of this is the rules have not kept up with the system or is it mainly about just shoring up support for those rules it's both Stephanie the one hand side the world has changed in much more radical ways over the last 30 years really then we often understand so there is a shift in the center of economic gravity that has had a very large trade component then there are new challenges and there is the fact that the operating system of the trade system is quite old so if it was a computer it would be like 50 years old and we definitely would want to have upgraded the operating system and just in terms of the tectonic changes it's clear that we've had an explosion of trade over 20 years so trade as a share of GDP went up from 40 to 60 percent in only two decades and at the same time the G7 share of trade and of the world economy actually declined significantly because there is the entry there is the emergence of the emerging markets and this was very this was the globalization part this was associated with the decline in poverty but it's also associated to a certain extent with the increase in inequality within the industrialized countries and we know very well the last 10 years trade has essentially been stagnant we are we are at still at the same level of trade to GDP as we were 10 years ago so it's not only the last four years where we've had the full attack on the trade system but already before where we could see that after the global financial crisis trade never fully recovered and now we have all these new challenges that are again many of them not so new but definitely accelerating through corona digital trade this is of course exploding right now but already the service trade part was increasing and this is not covered by WTO so far there are the challenges of climate change and carbon adjustment border taxes there is the systems competition concerns over industrial subsidies etc and all of those issues in a way have a big implication for trade they are not only they're not trade only which makes it difficult but need to be somehow incorporated into the into our the way that we operate the the multilateral system and therefore a a rethink at the rebuilding of the operating system is going to be part has to be part going forward and as has been said before there is an opening and a chance now I guess when I when I hear you and I hear those challenges and I want to move on to Noel Quinn in a minute but Beatrice just to come back a little bit when we think about those challenges and in the modern world when we look at those kind of challenges we are learning that we often have to be nimble and opportunistic in our creation of coalitions to do things and to move forward in maybe some areas and not in others and often we we have more flexibility to do that now it doesn't sound like WTO is necessarily the vehicle for doing for taking on some of the things you've just listed as an outsider what's the response to that can the WTO really be part of that to the extent that these are common and global concerns you need you need common approaches the alternative is that you have regional ones that you have clubs of countries moving ahead and that may be a thinking of climate change the way that you have to go first but obviously you know no country alone can change the climate in either direction there it is very obvious but it's true for other concerns as well and and regional approaches or bilateral approaches may sound tempting but they will they will not be able to fulfill one of the core principles of what multilateral institutions and the WTO stand for which is non-discrimination and I think this is one of the one of the core principles that has really held up over the decades since it was founded and that everybody in principle can agree to that common rules should be based on non-discrimination. Okay we'll probably we'll keep coming back to WTO I suspect but Noel Quinn let me bring you in we have heard a lot particularly in the last year about investing in a sustainable recovery building back better but particularly the new emphasis on climate coming not just from government commitments but also from pressure on companies to to act from your perspective what does that look like what does that feel like in practice? Thank you Stephanie I first of all the COVID crisis has absolutely been a wake-up call to the world and to the business community I think we have fragile the global economy is to a natural event and COVID has brought that home to us all in terms of a sustainable recovery I think I'd address it on two fronts firstly the economic slash commercial angle and then secondly the climate angle what I'm seeing is supply chains are definitely changing diversification of supply chain is a reality of what we've just been through on COVID and with diversification of supply chains I think it brings new challenges to the trade architecture for a long time countries were going down a bilateral route because they felt it easier to get a bilateral trade agreements agreed rather than going through multilateral multilateral or regional agreements but the more that you diversify your supply chain I think the more dependent you are on the multilateral or regional trader I think it's important we revert back to allow supply chains to be truly diversified it's important to be able to tap into multilateral trade agreements I did some research many years ago about the usage of bilateral trade agreements between countries particularly by the smaller and mid-sized businesses involved in supply chain and the take-up rate of bilateral agreements by those smaller mid-sized businesses was very low the take-up rate of multilateral trade agreements was much much higher so I think as supply chains diversify in light of the the the issues that people are faced in in COVID I think we're going to need more multilateral regional trade agreements rather than bilateral the other economic reality of COVID is there is companies going to be emerging from the crisis with a higher debt burden and yet the recovery in itself will create cash flow pressures for many of those businesses and those cash flow pressures will be evidence in the supply chain as recovery picks up their demand for cash and their pressure on their working capital will increase and I think we the financial services sector but also I think governments around the world need to acknowledge that the recovery will also be painful not just the crisis of the supply chain providers and I think there are certain industries that are fundamentally going to have to reshape themselves and will need investment if I turn to climate there's a great report just being published by BCG titled net zero challenge the supply chain opportunity and that draws it after you know we all focus on the big manufacturers of the world and what are they going to do to meet climate objectives but that report draws attention to the fact that actually 80% of their emissions actually comes from their supply chain so we have to work collectively across the whole supply chain to address the climate agenda and that supply chain is global today so we have to work cross border and cross boundary on driving down the emissions not just from the manufacturers but from the supply chain of the manufacturers I'd encourage everyone to look at that report and that will require investment but it will also require disclosure and reporting because there isn't one part of the supply chain that can fulfill the obligation of the Paris Accord is the totality and all of the supply chain needs to buy in transparency and disclosure requirements associated with climate but I'll pause at that and just to come back briefly because I know you're going to be involved in a group of businesses talking to the UK government about the post-Brexit regulatory environment more broadly and I'm just interested you know there has been a lot of talk about deregulation in response to Brexit here in the UK but broadening it out it feels like quite an old-fashioned response and approach it seems like a plan for a previous era to talk about deregulation as the way to build back better when many people are actually wanting a more purposive and more muscular approach for government and to achieve some of these objectives so I just wonder do you think deregulation should be part of building back better? I must confess the dialogue I'm having um I had some dialogue with the Chancellor along with some other financial institutions just the other day it wasn't the purpose wasn't a relation the purpose was about economic recovery and creating economic energy post-covid post-Brexit and looking at barriers to economic recovery and and if regulation to a degree is a barrier then have a dialogue about it but it wasn't the purpose wasn't about deregulation the purpose of that dialogue wasn't about deregulation it was about driving the economy forward post-covid and economic recovery was the purpose and whatever was needed to pursue recovery was on the agenda for discussion so I'll turn it around the other way to be honest definitely. Okay and so Executive Vice President Dobroskis if we think of you've already mentioned or we've mentioned that the Biden administration and how that may change the feel of many of these discussions China is a key question mark about how the US is now going to be approaching its relationship with China and crucially where the Europe fits into that I'm struck the EU obviously has just fought the investment deal with China you know how does that fit into Brussels broader approach to Beijing? Well as regards EU relations with China as concerns economy there is certain asymmetry which we need to address it is true that EU's market is much more open to Chinese companies to Chinese investment than China's market is to the EU and that was the main aim with which we negotiated comprehensive agreement on investment to address this asymmetry and if you look at this agreement this asymmetry is there there are substantial new openings from China as regards level playing field as regards market access also there are substantial commitments as regards sustainable development and from the EU side we are mainly locking in so to say existing level of openness because it's substantially higher to begin with so that's the first thing that there is certain economic asymmetry which we need to address and to the extent the comprehensive agreement of investment will help us to do so. Second point EU had some kind of catching up to do if you look at the US US has already their phase one deal with China recently regional comprehensive economic partnership was agreed in Asia with China and many other countries so it's important of course for EU also to how this deal so to say to be on equal footing with other players but we have to be realistic not that comprehensive agreement on investment will resolve all our issues with China there are many and we are very much looking forward also to work closely with US to address those challenges both working in different bilaterals or trilateral formats but also multilaterally because when we discuss the reform of the World Trade Organization many of the challenges which we need to address stem from the social economic model of China so we need to work together with US to address those challenges and to ensure that WTO reform is actually taking place thank you and one area where clearly the Biden administration is at least as focused as the Trump administration is China's intellectual property theft and the trade distorting subsidies I just wonder briefly do you see that as an opportunity to now work more closely with the Biden administration to address that those issues and how would that work is that outside the WTO what where do you see the possibilities well indeed those are concerns we are also having to some extent but only to some extent they are addressed also in our comprehensive agreement on investment because there will be disciplines on state on enterprises in China transparency requirements on subsidies there will be measures to address forced technology transfers we also previously concluded agreement on geographic indications with China addressing also some intellectual property aspects but there is much more work to do and this we can do both bilaterally but also through adjusting the rulebook of the World Trade Organization and this is something which he had been emphasizing very much also in previous years but now indeed we see that we can expect more commitment also from US side as regards WTO and as regards multilateralism and Minister O'Connor I mean it's outside China we are perhaps expecting to see even more change in the attitude to trade from the US administration you need to make a sales job to the administration about rejoining the TPP what's what's your best pitch and how can you do you need to address the view for many in the US that it's not a good deal for American workers and it should be renegotiated if we can start I guess with the principle that if you don't have progress towards multilateral trade agreements and rules then the alternative is protectionism and I guess we saw as a result of COVID a tendency to go back towards protectionism we saw immediately almost 80 countries bring in 100 new restrictions on the movement of trade we took the opposite approach we sat down with Singapore they were the facilitators and said to a few like-minded countries look what do we need now and obviously the issue of medical equipment was one of the things that we agreed to not bring in any restrictions for so that enabled all of those countries to have access as each of us were able to access the same medical equipment now we think that that's the way forward we have always been part of multilateral trade agreements on the basis that while the WTO is 164 countries that's an ambitious target for any other agreement but if you start with those who have like-minded objectives it has been with CPTPP with RCEP we remember in a signature to that and with the agreement on climate change trade and sustainability we didn't seek to get an agreement across the globe but we did say to like-minded countries can we start what are the things that we agree on and if we leave the door open for other countries when they reached that space of I guess of agreement then they are open to join the agreements and so that's the way that we will move forward in terms of the US CPTPP look we're supportive of any countries that want to sit down understand the rules and what the agreement says and if they can you know come come so far as to to meet most of those rules then that's great so open plurilateral trade agreements is what we will always advocate for the WTO of course is rules across all of 164 it will be hard to get any other agreements indeed just to get you know some reform and and some commitment to retain the WTO is where we want to go but in the meantime particularly in areas like climate change environmental sustainability labour issues will work to incorporate then into trade agreements multilateral ones with like-minded countries wherever possible and that comment about the WTO and indeed your concept of the open plurilateralism I guess that is in a sense that a contrary position to what Executive Vice President Dombrovsky was was was saying if you have something really crucial for example this issue of intellectual property theft or the China's particular contribution to the subsidies problem and that the WTO is not necessarily going to be your best route would you say that well that's true but I guess if we focus on the particular issues where we have a concern and block progress on what otherwise would be agreement then then you know we get stuck and I guess that we've always and there are always parts of our agreements that have left to be side-lettered to be incorporated into side-letters of agreements or left for future future negotiations I guess we don't and have never perceived agreements to cover each and every concern and ambition that we have can I just say very briefly we as a trading nation we've still had to embark upon what we call a trade for all agenda we've had to go around our communities convincing them of the value of trade so we can understand in other countries you know that may be a harder task but ultimately if we rely on local production on protectionism and hope that we can move forward in the world then that will be impossible so we have to we have to sell the concept of the value of trade to our communities as well as to our business sector and no Quinn I mean this question of the relationship with China you know hangs over many of these conversations Chinese President Xi this week did warn against the emergence of a new cold war I just wonder as a as the head of a of a company with with so much of stake in the in the global system but specifically also in the in the ties with with Asia how much do you fear how seriously do you take the idea of a new cold war and you know what how would you want to see relations with China proceed coming out as we move into a new administration what's happening first I'm a banker I'm not a politician so the perspective of a bank of the finances trade you know you know that our history is for 155 years is been involved essentially in supply chain financing that's what we started out as an institution connecting the world to each other so that they can trade so I'm a strong advocate of trade I'm a strong advocate of world trade I'm also a realist in that trade has changed many times over our 155 year history and I think over it has definitely initiated a further change in diversification I think people have been concerned about an over concentration on any one source of manufacturing whether that may be within China or it may be elsewhere and therefore I think supply chains are diversifying and bringing elements of their supply chain closer to home but I do not believe that each realistic to bring the totality of that supply chain back home I think we will always be even going forward a world where global trade is part of our architecture the nature of it may change it may become less concentrated but it will still be a global trade system and therefore I am an advocate of multilateral approaches to trade I am an advocate of that what I'm also seeing is a change in commerce COVID has meant that e-commerce has become a much more important part of our economy going forward than it has been in the past and the trade system needs to and the WTO need to understand how we're going to adapt our multilateral trade agreements for the world of e-commerce cross border and I know that's a topic that's been worked on quite extensively but I think that need will become even greater and the other thing there is absolutely critical is even in the middle of a crisis the climate agenda has become even more urgent and therefore the pressure on the supply chain participants to prove their sustainability from a climate perspective is increasing even in a crisis and the need for investment the need for an audit trail of sustainability of proof that actually you're able to meet the expectations of the that is growing by the day and I think we have to realize that is going to be part of future supply chain management going forward more than it has been in the past so I'm a strong advocate of trade China will still be an absolutely important part of that trade cycle I believe I hope that natural dialogue will be the underpinning of how we move forward the only final comment I'd put on trade it's not just about where your manufacturer is about how you manage logistics and many markets that are successful are not only good at manufacturing they're good at logistics management as well if the world needs to acknowledge that as supply chains change they need to invest not only in manufacturing capacity but logistics capacity it was just following up on that and the question of supply chains I mean I noticed you know I'm a as head of Bloomberg economics I have reporters around the world but also economists and we had a beginning of the pandemic there was a lot of talk about supply chains regionalizing bringing home a very different shape for the global economy globalization coming out of this and then what we saw on the ground was actually a determination by companies to to remain with in with the supply chains that they had much more stickiness perhaps than people were discussing you know how much do you think the supply chains have been changed by the last year and I think I would also want you to respond to some of what no queen said on that subject you're absolutely right the first phase of the pandemic last year when trade by the way was falling off the cliff and countries were closing borders not only to people movement but also to goods when we had daily reports of some kind of restriction on the movement of medical treatment medicines etc that was also the time when there was most pessimism about the system the trade system and supply chains and the however when you look at what happened afterwards so maybe by September after after the trade world trade fell by almost as much as in the global financial crisis but within two months last year and had fully recovered by September and now we are you know running at full speed and that and services trade is still below that but put straight has really fully recovered and and the the fact that you know that the world has masked up has a lot to do with the fact that trading routes are open that the the fear of large-scale closures did not really materialize and also when when companies saw demand come back more quickly than they expected middle of last year they really used their existing supply chains and run up back up their capacity so the long term or the fears that value chains would completely change in the short time that I think has been pretty much averted but there is of course a need and that also goes back to the question of what can the multilateral trading system do what should the WTO do now they have to prove now or we have to prove now that in fact you know protectionism vaccine nationalism limits to export restrictions and legalization movement of critical medical supplies are not going to be the order of the day and a memorandum of understanding to this this effect could be a first step to later possibly a fully fledged funding accord in this area that would also be something that is of most immediate impact and some something that the WTO put engaging and then it needs to this has here and echoing what others have said too is they have we have to find ways to address the new challenges the climate change but even more so digital service trade the fact that during this and after this pandemic we can expect so much more cross-border telecommuting taking place and this may become a new development model for the poor countries that they export services that do not really cross the border themselves this has been accelerated by at least 10 years within the last year so the whole question of the digital economy for e-commerce to to telecommuting to all the questions that it relates to mainly data data location privacy these are all big big topics and they need to before need to be reopened or accelerated to discuss this and even on the last one where there is most pessimism where there is the question of really the clash of systems when it comes to the question you know is it China versus US if we are talking about industrial subsidies and how to treat state-owned enterprises then these there are technical questions there that are also relevant within advanced countries there are technical solutions to that too but if they need there needs to be transparency and most of all there needs to be a certain level of trust without rebuilding trust in the global system and among the key players it will be difficult to advance but again we have a chance now to use this this catastrophe which the covid pandemic has caused to to realize that trust and common concerns are crucial for global solutions well ambitress has raised a very important point which i think we have i didn't think we could avoid discussing this week because it may be actually the greatest the most imminent challenge to the global trading system is the question of vaccine nationalism and there's certainly a lot of question marks a lot of pressures now on the EU position executive vice president dombrowski's it is not a con not a positive contribution to the future of of trade and and trust in global systems if the EU starts to restrict exports of covid 19 vaccines is it well as regards vaccines indeed they are now important to ensure that vaccines are available and that vaccines are available across the world including to the developing countries and EU is fully committed to play its part to ensure that this is happening so all in all EU has ordered some 2.3 billion doses of vaccines not only with a view for EU's own needs but also to cover to help to help the neighborhood and to help the developing countries so what we are discussing now and as I said the decision in preparation later for today is a time limited system to ensure indeed a clarity on production and exports in the EU because unfortunately not all pharmaceutical companies has acted in a spirit of full transparency with the EU and we must of course ensure that companies are meeting their contractual obligations but we are not talking here export bans or export restrictions and it only concerns advanced purchase agreements and humanitarian needs covax facility which is there for developing countries neighborhood and and so on they are fully exempted so clearly EU is ready to do its contribution to ensure that the vaccines are available across the world and we hope that also other developed countries will do the same thank you so you would rule you would rule out and you would agree it would very it would it would be counterproductive and and very costly for the EU to start to set the example of restricting exports of vaccines exactly and that's why I outlined this time limited system as it's being designed right now and the fact that we need to ensure full clarity and full transparency and we need to ensure that pharmaceutical companies are fulfilling their obligations and Minister O'Connor just briefly on on this question I mean how is New Zealand handling the the rollout of the vaccine and and how concerned are you about what was described this week as a potential moral failure of a real a massive gap in the provision of vaccines between rich and poor countries look we are very concerned and for the developing countries and and where they see their inability to get access and we understand of course the need for ongoing investment as this rolls through we'll be looking very carefully at the situation in terms we we are not one of the early countries to take up the vaccine we will start to roll it out over the next couple of months so we're in a lucky position but the developing countries have every right to be concerned that they might be blocked and so the trips agreement and and the principles behind that are something that does have to be taken on board it it emphasizes once again the importance not just trade but the rules of trade and the openness required among us all if if we are to be fair across the globe and this is an acute issue that will have to be worked through but there will be many others as as we roll forward on climate change on other environmental objectives so New Zealand will be watching this very very carefully and advocating as always for fear and open trade particularly in this area of of vaccine and I had I think time only really for a very one final question and I thought if the other panelists will forgive me I wanted to come back to executive by president obroskis because we have many active policy issues facing the EU we've talked about lots of grand challenges major issues digital taxation and how to bring the digital world into the global trading system climate all of these new challenges and yet we have coming out of the trump administration an overhang of existing disputes including for example that the 17-year Boeing Airbus dispute I wonder how do you think it's important to get past to resolve some of these issues maybe also the the tariffs that trump has put on president trump had put on steel and aluminum do you think that those things have to be resolved before we can get round the table on these other issues or do you think it's it's possible to leave those as they are and still move ahead with the new administration well from EU side we consider of course that it's important to resolve those issues so the steel and aluminum tariffs which had been unilaterally imposed by US and EU had to react by imposing its own tariffs and also tariffs now imposed in line with a Airbus Boeing dispute so as regards specifically Airbus Boeing dispute our proposal remains on table we are ready to withdraw or to suspend these tariffs at any time of course this has to be mutual withdrawal or suspension and we are ready to negotiate the disciplines future disciplines in the area of civil aviation because also there there may be new competitors emerging so it's important that EU and US work together in this area so we discuss what the disciplines in the area of civilization should should be forward-looking and we put this Airbus Boeing dispute behind us and have you can I just ask have you had conversations have there been a has there been dialogue with the incoming Biden administration on that issue well clearly we are reaching out to the Biden administration on this we actually had discussions also with a previous administration unfortunately we were not able to arrive at the conclusion so we hope for a more cooperative approach of the new administration and indeed we think that this issues should be settled in relatively short time well thank you very much and thank you to all of the panelists I know with questions of global trade we can start off with very lofty discussions and major issues but it also often just comes down to brass tacks of individual disputes and problem-solving and as Beatrice Vida Miro said it's some the most important thing often is is trust as well as cooperation so thank you to all of you I'm Stephanie Flanders and I thank Executive Vice President Don Roskis, Noel Quinn, Beatrice Vida Miro and Damian O'Connor thank you for joining us