View from abroad: Free trade and the new world order (Originally published 01/08/2015 at Dawn.com)

The signal for exporting nations is clear: if you count — or want to count — in the new world order, make sure you join a regional free trade agreement.That’s the message that many global trading nations will be taking home if — as expected — the US-led Trans-Pacific Partnership (TPP) free trade deal is finalised this weekend in Hawaii.Certainly, most nations still pay lip service to the multilateral trading system symbolised by the World Trade Organisation (WTO). And yes, there is also a focus on bilateral free trade agreements as well as plurilateral deals.But once, again, loudly and clearly: the trend towards mega-regionals is unstoppable and that’s where savvy nations are headed.As described by one newspaper, FTAs are “the new Great Game at the dawn of the 21st century”.The TPP is about trade and commercial interests, certainly. It’s about creating growth and jobs. But it is about more than that: it’s also about overarching strategy and geopolitics and just which nation will emerge as the primary power in the Asia-Pacific region.So let’s be clear: the TPP is US-led and China — along with India and Indonesia — is excluded. Still, the TPP would create a 12-nation grouping including five countries in the Americas (Canada, the US, Chile, Mexico and Peru); five in Asia (Brunei, Japan, Malaysia, Singapore and Vietnam); and New Zealand. South Korea, the Philippines and Taiwan have voiced interest in joining.Once signed, the TPP will form a free trade area with a population of 800 million, which accounts for 30 per cent of global trade turnover and nearly 40 per cent of global output.That is impressive. And clearly those outside the TPP are worried. And are not sitting still.First, China. Convinced that TPP is meant to “contain” China’s regional and global outreach, Beijing is working on several fronts to counter the US led initiative.Beijing is actively promoting the Regional Comprehensive Economic Partnership (RCEP) which would include members of the Association of Southeast Asian Nations (ASEAN) as well as India.China is also taking up the Free Trade Area of the Asia-Pacific (FTAAP) which would bring together members of the Asia Pacific Economic Cooperation (APEC) forum.Most significantly, China’s President Xi Jinping has come up with the ambitious ‘One Belt, One Road’ initiative to connect an array of Asian and European nations through transport, infrastructure and ICT links — and ultimately through unfettered trade.India’s actions may not be that visible but Delhi is creating stronger trade links with Southeast Asian nations while also seeking to negotiate a free trade agreement with the European Union. The EU-India negotiations are in an impasse at the moment — but both sides are trying to inject much-needed momentum into the talks.Which brings us to the EU. European trade officials did not, at first, take the TPP very seriously. As the deal looks set to be signed, attitudes appear to be changing.The EU is negotiating FTAs with a number of Asian nations — Japan, Vietnam and Malaysia — which are also members of TPP. A free trade deal with New Zealand and Australia has not been ruled out. And Singapore has already signed a free trade pact with the EU.And, significantly, for the EU, China is demanding exploratory talks on the pros and cons of an EU-China FTA. Brussels has so far filibustered by insisting that it first wants to conclude ongoing negotiations on an EU-China Bilateral Investment Treaty (BIT) before considering a free trade deal. But sooner rather than later, the EU will have to acquiesce.The EU has of course responded by trying to hammer out its own Transatlantic Trade and Investment Partnership (TTIP) with Washington. But those negotiations have run afoul of civil society groups which fear that TTIP will lower EU health, food and other standards.In Asia, however, if it is to compete with the US and China, the EU needs to start FTA negotiations with the 10-member Association of Southeast Asian Nations (ASEAN). Europe could be even more ambitious and seek a trade deal which covers ASEAN as well as New Zealand and Australia.More ambitious still would be a trade agreement which would cover all 51 countries which have signed up for ASEM, the Asia Europe partnership.Clearly, therefore, trade agreements these days are about commercial and economic interests but also geopolitical outcomes.US President Barack Obama has no doubts that “if we don’t write the rules for free trade around the world, guess what, China will … and they’ll write those rules in a way that gives Chinese workers and Chinese businesses the upper hand.”Make no mistake: the TPP and other FTAs of its kind are not easy to negotiate. The scope of such deals is enormous — covering questions ranging from copyright law to labour and immigration issues, as well as more standard trade talk of import tariffs and exceptions for sensitive commodities.It is crucial that TPP — and the transatlantic TTIP if it is ever completed — keep the doors open, with no discriminatory terms set for newcomers.Finally, while it is understandable that countries, frustrated by the long-stalled Doha round of global trade talks, have turned their attention to various initiatives to set up regional FTAs, they should try to maintain the WTO’s central role in global trade liberalisation.The TPP process itself is an admission that the consensus-driven WTO is too cumbersome a venue for so-called “high-standard” trade deals. But it would be counterproductive and harmful to give up on the WTO and its ability to create a “level playing field” for all trading nations, big or small, rich or poor.

The challenge of choosing a new WTO director general (Originally published 05/02/13)

The Doha round of trade talks has long dominated the agenda of the World Trade Organization (WTO). An urgent priority for the organisation’s 157 members, however, is to appoint a new director general to replace Pascal Lamy, the much-respected former EU trade commissioner who has led the Geneva-based trade body since 2005, and who is stepping down in August this year.Over the coming months, WTO members must also make sure that a ministerial conference in Bali at the end of the year can reach agreement on a small package of “early harvest” deliverables from the long-running Doha round. The focus is on clinching a deal on trade facilitation – a move that Lamy says could stimulate the US$ 22 trillion world economy by more than US$1 trillion – as well as on special measures for least developed countries.First, however, the WTO must select a new director general to lead the organisation for the coming four years, a task made more difficult by the continuing deadlock on Doha. The new man/woman who takes the helm of the WTO faces the challenge of revitalising the long-term trade liberalisation agenda while also ensuring short-term results in time for the Bali meeting.A changed global landscapeMuch has changed on the global economic stage since the Doha talks were launched in the capital of Qatar in November 2001. The world economic recovery remains fragile, protectionism continues to be a threat even as global economic inter-dependence grows, the Group of 20 nations is a more powerful force in global affairs (China joined the WTO in 2001) and so-called “new” topics such as investments and competition policy are now firmly on the trade agenda.The proliferation of regional and bilateral trade deals, meanwhile, continues to distract from the multilateral trade agenda – despite hopes that these agreements will be transparent and inclusive and become “building blocks” to boost global free trade.Nine hats in the ringGiven the challenges facing the WTO, it is heartening to see that candidates from nine countries have thrown their hats in the ring to succeed Lamy. Under WTO rules, members have until the end of May to decide on the right person for the job.It’s a great line-up. A majority of the candidates are from developing countries and, for the first time, three women are in the race. So far only men have held the WTO’s top post, and only one previous director general, Thailand’s Supachai Panitchpakdi has been from a developing country.The final set of nominees includes three candidates from Latin America: Roberto Carvalho de Azevêdo, Brazil’s current ambassador to the WTO; Anabel González of Costa Rica, who is her country’s current trade minister, and Herminio Blanco, Mexico’s former minister of trade and industry.From Asia, Mari Elka Pangestu, who is Indonesia’s Minister of Tourism and Creative Industry and was trade minister from 2004-2011, and current South Korean Trade Minister Taeho Bark have been put forward by their countries.Kenya has nominated Amina Mohamed, the country’s former WTO ambassador, while Ghana has presented Alan John Kwadwo Kyerematen, former minister of trade and industry.New Zealand’s Minister of Trade, Tim Groser and Ahmad Thougan Hindawi, former trade and industry minister of Jordan, are also vying for the position.The nine candidates have already addressed a closed-door meeting of the General Council - the organisation’s highest decision-making body outside of its ministerial conferences.The selection and appointment of the new trade chief will follow consultations to be held in April and May and the final selection will be made by consensus, no later than May 31. The nominee will take over at the WTO on September 1. Qualities neededChoosing the right man or woman for the job will not be easy. Of course, qualifications, experience and competence should be the deciding factors in choosing the new head of the WTO. But in the real world of horse-trading and strategic alliances, other factors – such as geography, gender and whether the candidate has held a ministerial post - will play an equally pivotal role.WTO selection procedures state that “where members are faced in the final selection with equally meritorious candidates, they shall take into consideration as one of the factors the desirability of reflecting the diversity of the WTO’s membership in successive appointments to the post of Director-General.”The top slots at the International Monetary Fund (IMF) and World Bank have traditionally been held by a European and an American, respectively, as the result of a “gentlemen’s agreement” between decision-making members of the two Bretton Woods organisations. This is the case at the moment, with France’s Christine Lagarde at the IMF and Jim Yong Kim from the US at the World Bank.Further complicating the WTO selection process is the fact that the search is also on for a new head for the United Nations Conference on Trade and Development (UNCTAD). Speculation is that an African will be selected for the post.The next WTO head must be able to drive forward an organisation which has lost much of its lustre in the last few years. He or she must be a champion of free trade, able to keep protectionism at bay and also play bridge-builder between the concerns of emerging economies and the priorities and interests of developed countries.On a personal level, the new WTO chief must be an honest broker but also a pragmatist who can adapt the organisation to new challenges.

The focus must be on personal skills and qualifications, passion and commitment. The new man or woman at the WTO must make the case for free trade, not for its own sake but because global trade is the motor of world growth and development and of jobs.