Speaker A
And uh Vipin uh had asked me specifically to focus on the future of WTO. So we start with WTO, and I think um as opening, I would uh my only uh opening statement would be we've seen the world changing. We have seen
Panel discussion on the future of the WTO amid shifting global trade dynamics and rising nationalism.
Key Takeaways
- The WTO remains relevant but must evolve to address digital trade and changing global power dynamics.
- US unilateralism and domestic politics pose significant challenges to multilateral trade cooperation.
- India and Japan represent differing but cautious approaches to WTO engagement amid geopolitical shifts.
- WTO's dispute resolution is limited when fundamental trade rules themselves are contested.
- The future of WTO depends on balancing national interests with the need for international cooperation.
Summary
- The panel discusses the evolving role and future of the WTO in a changing global trade environment.
- US policy shifts under Trump and prior administrations have challenged multilateralism and WTO's authority.
- Japan expresses concerns over US policy changes and their impact on global trade and human resource mobility.
- India's perspective highlights its firm stance on protecting agriculture and labor-intensive sectors in WTO negotiations.
- The WTO faces challenges adapting to new trade realities such as e-commerce and digital trade.
- Domestic politics increasingly influence international trade policies, complicating WTO's enforcement mechanisms.
- The panel debates whether the WTO will survive or transform given current geopolitical tensions.
- The dispute settlement mechanism's limitations are discussed in the context of fundamental rule challenges.
- The shift from traditional trade borders to digital payment gateways calls for WTO reforms.
- Deglobalization trends and national interests are reshaping the global trade landscape and WTO's future.
Chapters
- 00:00Introduction and Opening Remarks on WTO's Future
- 04:33US Policy and WTO Dispute Settlement Crisis
- 08:37Domestic Politics vs International Trade Agreements
- 12:08India's Position and Challenges in WTO Negotiations
- 19:57Economic Perspectives on Trade and Agriculture
- 24:00Global Trade Dynamics and Business Cycles
- 30:37Trade Models and Government Decision Making
- 34:35Tariff Reductions and Trade Gains
- 47:50Trade Notifications and Regulatory Pressures
- 60:08Demographic Challenges and Cultural Factors in Trade
Full Transcript — Download SRT & Markdown
Speaker A
especially with the election of President Trump in the US, we have seen the world moving away from being a place of multi-polarity or multilateralism to a place where the might is right is becoming the norm. So what is uh very
Speaker A
bluntly and I would ask professor um Fujiara to start with it. How do you see the future of an organization like the WTO when you have a major power like the US which does not seem interested one in
Speaker A
WTO per se as an institution? Also, the US does not seem interested at this point in international cooperation.
Speaker A
Well, um probably I'm not in a good position for answering that question, but uh as far as Japan is concerned, uh so we have a double-sided uh kind of opinion in our country, uh because US has changed its policy quite
Speaker A
a lot after Donald Trump of course, and uh we are as far as um human resources in the United States, uh we have some kind of very scary situation. We are really worrying about uh the flow outflow of the human
Speaker A
resources in the United States because I'm collaborating with the researcher in Boston University and uh they have a very hard situation in terms of the reduction of the NSF funding and also the people especially the young researchers have to get out of the United
Speaker A
States. So looking at these things, so as you told me that the effect is a lot and there is a mobility in terms of the human resources as well as the world trade networks is completely changing.
Speaker A
So as that's what Japan is observing. Uh so we are really worried about the situation and at the same time we want to go along the line of the United States but uh you know we have a
Speaker A
um you know two-sided attitude toward that line of uh so professor Muri if I could ask you to jump in and we heard uh a very nuanced Japanese take on this. What is your take uh sitting here in India when
Speaker A
we look at WTO where India has been a major player and we see the geopolitics which is also unfolding almost on a daily basis on social media especially.
Speaker A
How do you see an institution like the WTO? Do you think this is something which will survive? What is what what seems to be a a very tough trying period for it?
Speaker A
It's a very very tough question, you know, which you asked whether it'll survive. Uh but you know let me talk bit about the US and its position with respect to multilateralism and its interest in multilateralism.
Speaker A
US has been consistently my way or highway approach. Okay. From the very beginning since 1946 when the ITO was proposed and the the US uh Congress did not ratify it. So we had to come out with general agreement on tariffs and
Speaker A
trade. So from that day onwards US has been uh seeking its path and its interest alone. So uh what we see uh US today is uh uh a fallout of its constant uh unsuccessful attempts since DH around 2004 then 2008 when the revised text was
Speaker A
proposed and also the uh crisis of uh dispute settlement which happened in 16, 17, 18. uh There onwards it has been consistently seen as uh uh my way or highway or you know they will not change their domestic regulations but you know
Speaker A
if you look at the uh losses wherever disputes they lost they've never corrected their domestic regulations so they they said you know our law is the most golden law and that cannot be changed so this pattern has been there
Speaker A
in the US systems and governance so uh what uh Trump has done is just just a reflection of what has been happening and uh followed by earlier presidents also uh like Obama uh so the the idea that you know this is just a Trump's
Speaker A
creation is is a new one and this is a changed world uh I think uh we are uh we are see we are we are sitting on a foolish uh promise I I think the uh see the world WT will continue to exist
Speaker A
because 70% of global trade is still happening through MFN trade. So uh uh and US reciprocal tariff of 10% which was announced in April 2025 and later on another 54 countries were identified and specifically applied reciprocal tariffs uh the 10% which was applied for all
Speaker A
countries and the reciprocal tariffs were only for 54 countries and then we have penalties on India 25% more for import of petrol from Russia. So all these things you know just tell you that you know uh Trump is not a team player
Speaker A
and US is not a team player and US always wanted uh uh their things to be settled and agreed upon by other other partners trading partners. So uh uh with in that context India was a force to uh reckon with and
Speaker A
uh India India we took as a as a conscious measure we took our negotiating and we also stuck to our interest basically agriculture was a no no for India and many other sectors labor intensive as uh uh Birmmani
Speaker A
presented uh just before me value chain labor is a very important part you know labor generates aggregate demand when you employ 100% of people that mean that many people spend money and you know that's a big force you know money
Speaker A
multiplier in terms of so I I think you know u uh we may see a world a turbulent world for three or four years but once it settles everything will come back to normal and it will set a new normal
Speaker A
and I think the WT also needs to undergo change see you know fundamentally WT is designed to take care of good trade but increasingly Now uh e-commerce and the digital trade has been increasing. So the border has changed from the ports to
Speaker A
bank payment gateway. So this sort of factorization has not been carried out in the WTO agreements. So once the border changes from land ports or seaports land ports and seaports and airports to uh bank bank payment gateways there is a fundamental shift in
Speaker A
uh in happening at the bottom. Thank you professor Whippenin. Uh if I was to tie in what we are going to discuss tomorrow also that is deglobalization and we we the future of WTO world trade somewhere as the rules change we also
Speaker A
realize this is all happening because for most countries today their domestic policies the domestic politics has become more important than the international rules and the international laws. something with under which WTO is supposed to operate. Would you say that this is something we are
Speaker A
observing in a temporary phase or is this something which is likely to go on and how does that affect trade finally?
Speaker A
So in some senses you've asked a kind of a deep and fundamental question, right, because ultimately government policy national government policies are driven by domestic politics, right, and yet at the international level you have to sign agreements um and try to enforce them although that
Speaker A
enforcing agency you know is not voted or elected by you know the citizens of any country. So there are there is no global citizenry which is voting for electing the representatives who are under WTO. So ultimately these kind of
Speaker A
clashes between national politics and international agreement is is bound to happen you know every some years or every some decades. Uh it's not very clear to me that the WTO would survive.
Speaker A
It's not very clear to me what form it would survive in and whether you know in terms of uh right because any dispute resolution mechanism WTO not you know is not the only exception even our legal system it
Speaker A
begins with a certain collective agreement in essence that the rules are okay and we want to punish people who mildly deviate from the rules but when the rules themselves are fundamentally challenged resolving that is well beyond the realm of the dispute settlement
Speaker A
mechanism. Right? So for instance, you know, if if a group of people don't believe in private property, you do not take that issue to the court of law and the court of law decides whether there should be private property or not,
Speaker A
right? A court of law operates on either we all agree there should be private property or we agree there shouldn't be private property and within that realm it settles you know you know you know marginal deviations f
Speaker A
So now I think you know certainly with Trump there is a lot of theatrics right but if we keep the theatrics apart if you look at just effective policy I think fundamentally the rules of the game have been kind of questioned and
Speaker A
challenged and there you know some of the things he says and this is the issue with the theatrics right because the theatrics get so much of the attention but if you look at India right India is not a terribly easy country to bring
Speaker A
goods into so it's not as if the Americans are all that Right. Uh this issue about protecting the agricultural sector like where does this issue arise from and what are we protecting? It's a very it's not a particularly productive sector and how
Speaker A
did it get here where you know we have not had the technological changes that we should have had you know why is productivity so low and how long will we continue to try to keep the sector as it is. Right? Those are all kind of
Speaker A
questions that we should think about. Um so really I think this is an opportunity also to look inward right uh as to how we got into this situation. Some of the things he says are not all that wrong. India is not a
Speaker A
country where it's terribly easy to get goods into. There are serious protections to a sector that's extremely inefficient and the price for that is not I mean it's you know everyone pays for the price for it globally but you
Speaker A
know citizens who live within the geographical boundaries of India probably pay a higher price for an unproductive agricultural sector than most other people in the world.
Speaker A
So I I thought that was interesting. I haven't come across too many people kind of being kind to Trump of late. So, so that's interesting and also there's a difference of opinion from professor Mley who is confident and optimistic
Speaker A
that WTO will survive and uh yeah but you know Yeah. Yeah. Please. No. No. Please go ahead. Go ahead.
Speaker A
Yeah. See I see there are couple of uh on couple of aspects I differ from uh our good friend uh sitting on the left. Okay.
Speaker A
you know see on agriculture it's a very complex issue now dealing with agriculture I've been negotiating this agriculture uh for the last uh 23 years and we have seen a pattern uh of uh in agriculture uh domestic support is being paid by
Speaker A
countries 33 countries hold special rights to pay domestic support okay so they can actually give a a particular cont what has been uh set as a demon minimist for uh 5% for developed countries and 10% for developing countries. These countries hold kota
Speaker A
okay of say 19 billion 20 billion 30 billion. So they have a fixed amount of some 33 countries and those countries uh were given this exemption one-time exemption because they have been paying these subsidies since the uh the WTA
Speaker A
agreement came into existence. So since it it was being paid before so that were continued to be paid. Now that being so it creates a lot of disincentive for farmers from the developing countries to enter the market. Now what is the promise given
Speaker A
when we join the WTO the you will get agricultural market access please give us the non-aggriculture market access developing countries to be give to give non-aggriculture products market access for develop developed countries and developed countries will open up their
Speaker A
agricultural markets for India now if you look at the WTO agreement agreement on agriculture just before the agreement on agriculture was signed There was an agreement called Blair House occurred between EU and US. Now in that that verbat that text you can see
Speaker A
as a reflection in agreement and agriculture. So the socioeconomic realities of developed countries have been imposed upon the developing world.
Speaker A
Okay. Now that's one point or two three points whatever I how how many points I mentioned. Now see there is another element in terms of tariff. tariff is adorum nonadburllorum. Now countries like European Union fixes on non nonadorum terms and bound it to the WTO.
Speaker A
So when they submitted the schedule they uh put in a text something like a tariff like 5 plus 10% plus 10% on 10% alcohol.
Speaker A
So if you that's a very complex way of clarification. If you say 5, it is€5 per kg of import. Okay. So you you you have something like minimum import price into European Union and then you have on top
Speaker A
of it 10%. And then on top of it if you have product has 10% of alcohol content you have additional duty of 10%. The alcohol content goes up the higher the duty. So see adluram average calculations of this have never been
Speaker A
done. It it was supposed to happen in the dharound. That's why I said dharand dharand is actually one of the critical elements where you know the developed and developing countries were on the two extreme ends. Okay. Now the moment you
Speaker A
say develop dha round you also know that you know the adluram equivalent had to be calculated and three tire approach with respect to agricultural tariff liberalization had to happen. So you know many of this not being done it's
Speaker A
very unfair to say that you know we have been protecting our agriculture sector unreasonably. You open up and you sincerely open up we are ready to open up. Okay. So if you have not done sincere opening up you're giving partial
Speaker A
you you want to retain 33 countries do want to retain that special rights of giving x amount of subsidies y amount of subsidies to the farmers and there is no uh uh regulation that you know you you need to spread the subsidies around you
Speaker A
can put dump all your subsidies in one year on one product and destroy the market. It happened in cotton cotton the uh cotton producing countries Benine uh Burkinaasu Chad and one other country they were they had 90% of their GDP from
Speaker A
cotton prod production 90% of the GDP now you know the US what it did was you know it put all of their money subsidizing cotton so the the world cotton prices fell okay so that's that's where you these
Speaker A
these policies when the developed countries are practicing and propagating in a manner suiting them. It's very unfair to say that you know we are protecting our farmers which is very unproductive. Of course farmers are uh needs to be
Speaker A
protected to some extent like you know uh giving them the green box subsidies which the uh which is permitted under the WQ. There are three kinds of green, amber and blue. Now um green box subsidies and article 6.2 to
Speaker A
developmental box which is known as developmental box. You can provide subsidies to infrastructure. That is why our efforts have been moving towards providing u cold house storageages for storing agricultural products creating mundies facilitating uh agricultural farms and you know laying roads good
Speaker A
roads electrification. So all these activities are we are gradually moving towards that. So again I would say it is unfair to say that you know we are uh excessively supporting our farmers. We are not we are not we are moving towards
Speaker A
that but when you have a situation where developed countries do not want to sit and renegotiate agreement on agriculture and the other aspect is also there external reference price. External reference price is a very important element and barrier in agreement on
Speaker A
agriculture because external reference price is 1986 8789. So 88 1986 87 888 these three years reference price is taken for deciding subsidies to be given way back.
Speaker A
Okay. So the prices needs to be uh either carried forward or some sort of inflation adjust adjusted prices have to be so it's it's a very complex negotiations and we have agreed uh after see after the DHA debacle in Bali we had
Speaker A
agreed to two other agreements. So we were incrementally moving towards agreement and you know movement forward.
Speaker A
But again uh we saw some sort of this 2018 u the US did not uh support the dispute settlement process by nominating a judge uh lawyer and uh supporting the appellet system which is the second tire of uh the panel decision. After panel
Speaker A
then you go to the appellet body that's the final body where things get settled.
Speaker A
So see the uh uh as you say you know it is not as simple as that no so let me put my case there and okay yeah thank you so um let let me just add one point to
Speaker A
the farmers thing I I'm not an economist but I come from Punjab which usually gets blamed for farmers and agriculture but I think in India it's also political the problem not just very economic so that would be my two penny hair And
Speaker A
professor Fujiara, I I was curious if you could give us a Japanese perspective. How does Japan look at the changing world today where we see a movement away from what we traditionally used to call in IR as international
Speaker A
cooperation, global governance? Do you think institutions today at an international level are being devalued because more and more countries today do not want to have this global cooperation. They would rather focus more more on their own nation states.
Speaker A
That is we have countries which are now more inwardlooking rather than outward or global or international looking. How does Japan look at this change?
Speaker A
Well, I'm I'm not economist so I don't know much about that. But uh in Japan ordinary people they have a very great doubt about the role of WTA WTO uh because uh especially after the uh sudden change of the policy in terms of
Speaker A
the tariffs. Uh we are exporting a lot of automo automobile uh products to the United States. that we had to change our policy and we had to promise a huge amount of investment from Japan in the United States and the same was true for
Speaker A
Korea and other Asian countries like Philippines Vietnam Malaysia. So we have a very big doubt about the role of the WTO. So that's uh what you know ordinary people around me are talking about and at the same time so you are talking
Speaker A
about uh the so our own nationals interests so that's uh in probably because of the presence of the SNS and the you know um some uh positive feedback of some minority opinion opinions about uh so we don't care about other countries so that's
Speaker A
kind of opinions are spreading slowly and steadily uh even in Japan and probably in other countries in Asian countries like Korea so that's some kind of feeling it's not very good situation as I think so that's all what I can say this moment
Speaker A
professor whippin he he's given us the view from Japan what Would you your opinion be from India? Is India also wanting the WTO to kind of revive, reform, get back or do you think India is also now moving into a phase or we
Speaker A
have moved into a phase where we want to be more inward-looking and we are less interested in this international cooperation multilateral institutions.
Speaker A
So when I look at Indian government policy, I see it pulling in both directions. And for those of whom who are kind of more aware with the granular dynamics in Delhi, including that of the ruling party, they would see structural
Speaker A
reasons for why Indian government policy pulls in both directions because there are groups within the ruling party.
Speaker A
I wouldn't say a ruling coalition. There isn't much of a there's one party which is supported by Yeah. So but there are elements within the party and uh which pull in both direction. You know you would know you're from Delhi. So we both
Speaker A
from Delhi right? We in Carolina we're so far away we wouldn't know but you know so but me I just you know I wanted to take up something you know from what Yoshi just said right? How do we explain any kind of crisis? So in
Speaker A
economics the big crisis we try to explain are these things called business cycles recessions and these kind of things and there are in a sense two ways to do it right um there is you trying to explain the particular crisis that's
Speaker A
happening right now and there the stories you tell will be a lot around the the personas and the personalities involved in this case of course you know Trump plays that role very well right then there is of course you trying to
Speaker A
explain a certain pattern of crisis which tends to reoccur. In some senses, there is good reason to expect such patterns to reoccur every now and then.
Speaker A
This is a in this at this juncture of history, inevitably such crisis will occur not only for the WTO, I think, but also other international organizations.
Speaker A
I think part of it goes back to what Yoshi was saying that the domestic populations in several countries, technological change has me meant that they see a lot more of the world outside. But I think technological change has also meant that the ability
Speaker A
of national governments to influence public opinions domestically has at least my perception has increased. You see in the in you know where there is WhatsApp and messaging and where people rely on not rely almost have a sense of
Speaker A
addiction to reels the ability to control the narrative nationally irrespective of the country irrespective of the political party I think under the new technological circumstances much more uh than it was in the past that's my impression that that force has
Speaker A
happened so you will see in some senses a resurgence of certain nationalistic tendency because most governments will have an increased ability to control domestic cop opinion formation. That's one. Second, it's also true that most international organ and this is of
Speaker A
course very well known and very well written about most international organizations set up today don't reflect the fact that uh you know China is such a large share of the world economy and also a world even larger share of world
Speaker A
trade and not just that you know 20 years ago you know Yoshi this was said about Japan in the early stage of development that they make trinkets.
Speaker A
Yeah. And then Japan was suddenly not making trinkets anymore. And actually now if you ask you know lots of young people they they will not even remember that people thought at some point that Japan that was the image of Japan then
Speaker A
that was the image of China and then the image changes much after reality changes. China no longer makes trinkets.
Speaker A
They make you know they make some trinkets but they also are capable of making very advanced technology and those realities are just not reflected in international organization. It's also not reflected in the positions that the Chinese government takes. I mean, of
Speaker A
course, they have some cons, you know, they show some teeth when it comes to Taiwan. They show some teeth when it comes to, you know, the sea uh seas around them. But if you look at internationally, they don't show much
Speaker A
teeth. So, if you compare their technological capabilities and their GDP levels, they're quite muted.
Speaker A
You see and this is a part of a my impression is they have a much longer view of things right they want to be the largest economy they don't want to destabilize the city the situation till they come to the very top but the
Speaker A
reality the the you know I think professor virani at the end of his talk when he was asked a question he said we should not ignore the fundamental realities we should respect them so most of these institutions now you know are
Speaker A
so you know uh they've moved so far away from the fundamental technological economic product production capacity reality on the one side and that is capable of generating the conditions for a crisis in and of itself and this has
Speaker A
been of course well said very well studied but I think there's still an underestimation of this because you know sometimes a measure of the capacity of government you know is in popular press one would think the government that
Speaker A
shows more teeth is the more capable one but the Chinese don't seem to show just because they don't show more you know enough they have much more capacity than the teeth they show right so the so so the
Speaker A
deviation from reality is far greater than we perceive and second I think the closure of the human mind is something that is brought about by this new technology you know how many people are going to sit down and read French
Speaker A
literature or Japanese novels or whatever else you know and political parties now make great use across countries of being able to control narratives at home uh so you know I think these two forces at work are capable of disturbing lots of
Speaker A
international organizations. WTO being perhaps one of the first victims. So when when you talked about the Chinese not showing enough teeth, the one thing that came in my mind it's not that I want the Chinese government to show more teeth. I I'm
Speaker A
saying compared to what the the the capacity it's a saying that they have in China, it's they say speak softly but carry a thick stick. So I think that's that's the way they operate. So uh professor Murli if I come back to you and uh
Speaker A
professor Vipins talked about China and the rise of China. We also seen that much of the world's institutions have also suffered because of this US China rivalry and the competition that they have. Do you think WTO is also one
Speaker A
institution that has suffered because of this? Let me answer that you know before uh yeah see uh when uh the US China uh tussle or dispute or uh whatever you call uh is an outcome of uh forgotten Anglo-Saxon model of financing which was
Speaker A
followed uh uh in late late 80s where you know the uh the bank conventional financing got shifted to market based financing. So the markets took control of financing thereby you know enabling firms in US to go and invest in China
Speaker A
and the CEOs making huge profits out of it. So that model also took uh the control over patents uh which was actually held by public sector before US public sector and was uh sold out to the private firms in the
Speaker A
United States and then that went to the Chinese uh economy because the model they followed in China was joint venture. Okay. So under joint venture you are supposed to share all all of your assets with the other party and
Speaker A
then you know both parties share each other's assets and you know then the firm thrives.
Speaker A
So a different model if it was uh used wholly owned subsidiaries this situation would not have reached uh such a u place. So uh what I feel uh is that fundamentally when government takes decisions about an agreement about a
Speaker A
deal it is between government to government but investment usually happens when enterprise to enterprise interact. Okay. So fundamentally today if you're asking Chinese have stolen all the technology but US firms went and voluntarily gave them the technology. So
Speaker A
it's not the Chinese taking away the technology and taking a lead, but United States firms went and sold them the technology as part of the Anglo-Saxon model of financing and the outcome of joint venture combinedly put together.
Speaker A
So uh uh I forgot what what was your question. U has the US China rivalry hurt the WTO?
Speaker A
Yeah, it it has hurt because you know US unilaterally uh started imposing tariff which is against the WTO uh articles.
Speaker A
Okay. So the in the MFN article it says you know article 2 it says you cannot violate the bound rate. So US has clearly violated boundary when it imposed 10% in the first instance and then 54 countries it's violated very
Speaker A
clearly when they raised it to 25 30 35 and respectively uh 15 25 30 35 respectively and also an additional duty of you know 25% you know you can't actually impose such kind of duties you know you cannot cite a
Speaker A
national security reason in article 21 to impose uh a pen uh punitive tariff on another country and it It is not the president who is empowered to do that.
Speaker A
It is the congress who is empowered to do such an act. Uh even in situations of emergency. Uh and these are well defined in the WTO. Thank you.
Speaker A
U we we we can have a few questions from the audience if anyone wants to ask a question from any of the panelists here and and join the discussion and join the discussion generally and also we would love to hear your comments
Speaker A
on the issue we are discussing. Yes please. So I wanted to throw something that I heard in conference back in October um where doc was speaking. Toper is the now chief economist of WTO and one of the things that he was saying
Speaker A
which I thought was very interesting was that historically uh the GAT and then the WTO reduced tariffs massively massively from you know what 40 50% on average to something closer to 10 and that really expanded by globally and so what the WTO He said
Speaker A
what the WTO had been doing up until quite recently was um sharing and expanding D was and uh he actually envisioned his own job as I said in coming to uh as managing a world that now is very quickly becoming a zero sum game.
Speaker A
The pipe doesn't pipe doesn't increase anymore. Part of the justification is that manufacturing at least most of the decrease in tariffs or the decreases in tariffs for manufacturing can expect minimal because it's already quite low and so it's much more about a zero sum
Speaker A
game therefore a conflictridden institution that is that is that doesn't own much currency by way to strike deals you know whatever you don't get I get whatever I get you don't And so I was just wondering whether that
Speaker A
strikes um you as intuitive as plausible or what's the way out is that is that mission for hope for hopelessness?
Speaker A
Anyone who would like to take that? Yeah. So you know basically what you're saying is you know developing countries as such gained from the uh liberalization um and developing countries as such gain in terms of liberalized trade which happened during
Speaker A
the period of yeah yeah you did gain but one particular country gained excessively so that's where the problem is and is not correct wrong you know by when he's saying that you know US is not to be blamed because this this country
Speaker A
dominated about 35% of manufacturing uh sector production in certain sectors uh BMI correct me if I'm wrong uh uh and certain other sectors the the average is about 35% of the global trade uh the other dimension is that you know
Speaker A
we also have situations where there are a lot of imbalances in the WTO which are not corrected like you know EUled uh climate changedriven unilateralism when You know you you when you blame uh when you blame uh for all the activities
Speaker A
carbon and of all the greenhouse gases carbon alone and CO2 alone and then take policies where you know you are asked to change your industrial production in a completely different way to address those challenges when you know that you
Speaker A
know CO2 is just a very small element in the whole atmosphere it's 04 and it went up from uh from the past five decades three decades from 03 to 04 and of that 0.1% human contribution is just 11%.
Speaker A
this very clearly. There are very other carbon uh producing activities which hap happen all around our world all around the environment. Oceans produce carbon earth emits its carbon forest produce deadwood in the forest will actually emit more carbon than oxygen. So these
Speaker A
policies when they are pushed us obviously will be on back foot. Okay. So that's that's that's partly what I have an answer towards your question you know and so yeah yes did it did expand by it concentrated that
Speaker A
benefit into one country and the reasons for that I have explained in the before also Anglo-Saxon model of financing and you know whatever happened so US was in a corner they could not do anything so they went ahead and did what they want
Speaker A
to do sorry I don't want to too much space here. But if you look at the Japanese miracle, German miracle, Chinese miracle, Vietnamese miracle, all of these countries as the speech we heard before suggested were trade driven.
Speaker A
So, you know, I'm not exactly sure what you mean by excessive gains in the US, excessive relative to what I don't think you can deny that the game was more balanced over the 20th century than than what it has become now. At least that's
Speaker A
That's a manifestation an interpretation of the data. Uh I didn't get your question. Uh did you did anyone get balanced?
Speaker A
What were you asking? Please clarify your question. I was just saying that we went from it seems as if the data might be interpreted as suggesting that we went from a game in which the G increases through trade
Speaker A
through the 20th century to a zero sum game over the past 5 to 10 years and one explanation is that the tariffs in manufacturing have reached zero.
Speaker A
Yeah. Yeah. So, so see the tariff reduction can be divided into two phases. Under GAT whatever was achieved under GAT when developed to developed countries negotiated as I agree that there was a substantial reduction in the tariff. The moment developing countries
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joined the WTO in a big way 125 countries in 1995. Thereafter if you observe the incremental reduction in tariffs achieved is very low. Okay. So, so uh to put uh uh put it all on tariff liberalization correspondingly you also
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have non-tariff measures increasing world over that means rules and regulations and standards increasingly playing an uh detrimental role in terms of market access. So when these are increasing and particularly in European Union you have measures like you know
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MRL measures which actually target 0.01% 01% of any agrochemical in agriculture products such sort of measures uh on the rise. This is becoming very very difficult for developing countries to trade. Uh and it is also for of course
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we are trading now. It's it is not a measure of any success but it is a it is a it's it's a reflection of that those countries are not implementing these regulations at the border properly. uh from since 2012 they have started
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increasing the implementation of the uh these measures at the border and we see that you know gradually there has been a hit back in terms of globalization uh and there is a and the world trade has actually tapered you know since 2020. So
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it's it's it's a globalization phase which is at the global level. So yeah, you are correct you know in terms of there is a hitback but not all things can be blamed on any one particular measure but it's a combination of
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various uh actors and players which yeah professor thank you so you know in in some senses uh Jean's so Jean's comment brought a fair number of things to my mind right one of them is you know of course we need to have some
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assumptions about you the relationship between the marginal declines in tariffs and the marginal improvements in in growth rate.
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You know whether the largest gains are in the early declines of tariffs or you know in the later declines of tariff.
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But if there is some sort of constant returns to the to the story then such an argument can be made. There is a more you know particularly because the person who made the comment is you know in such
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an important position in the WTO there is also this always the question of how do we view the work those work done by people who have come before us or more generally how do we view the people who
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have come before us. One story to tell is that they got so much done because it was a little bit easier and it's not you know and another story to tell is that they got all that done and what is you know what is it that why
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is it that I'm not able to get this done right and those two different views lead to two different kinds of human action in how to go forward maybe a part of the problem is the former view of things I'm not sure
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it was so easy to get those things even if the potential even if you assume that the gains not only constant returns.
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Assume that you know in the early falls of tariff the gains in GDP was greater.
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Assume also that it could have been more potentially equally shared. But this is all potential to make that happen then there given those world circumstances and then factoring in all the political circumstances that existed then the wars that were happening in different
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countries the dictators that existed the strange prime ministers whoever existed and to make it all happen. I'm not sure it was much easier than it is today. You know, I used to think that it's e it's e you know, easy to plug the lowhanging
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fruit till I saw a lemon tree and try to pick a lemon from which was low hanging.
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There's only one problem. There were more thorns in the lower side. So, so yes, I think that's also kind of the stories we tell, you know, I think, you know, saying it was easier.
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No, but he's told it was difficult now. I think we have time. We have some more questions, please. Yes, please.
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Questions. Agreements make sense when you know that they sir fulfilled enforced and fulfilled. Enforced and fulfilled. Yes, that's the cornerstone of a game of game theory for example.
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So it is clear that that at the moment no agreement can be considered as stable.
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That means that risks of the sort have to be put into right. So of that sort have to be put into the calculation of industrial policy and that probably means that globalization cannot be simply cannot there can be large
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clusters or natural but nothing nothing globalization can be implemented to the extent that corresponding So I would like to hear yeah experts.
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Yeah. So so not an expert but just an attempting uh see there is this uh economic models you know in different parts of the world.
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Uh some models have near formal uh structures that means you know the all firms are registered all firms submit the data to correctly and all firms are active participation uh participate in the negotiations. But in countries like India you know where you know we have
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this formal and informal sector and the informal sector's content is argued to be 40% and some people say it is 60%. So there are different figures. So we put it about 40 to 50%. So at the policym level uh now in such countries getting
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information is difficult of what the the the portion of the economy what it faces. It's like having gangrine in your leg and you don't get information of what is happening in your leg. But that does not mean that the that portion has
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to be eliminated or executed or taken out. So you try to uh solve that problem you know however difficult the uh gangarine may be. Now if that is a situation what you said agreement is between two governments but it has to be
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implemented between players economic agents. So that sort of a uh disconnect always would exist and that will play out in terms of agreements not getting fully achieved. Okay. And in developed countries you would have observed it plays out pretty well. You know if
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there's an agreement between two parties it gets executed pretty well. But in in situations like in the WTO when it became much more complex when GAT era to the WTO era the problem was in the WTO era lot many players got into with
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different economic status and WTO has this issue of self-d designation where you know a country could designate itself as a developing or developed country but the LDC's always were borrowed from the W world bank. So LDC list 54 of them came from the World Bank
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uh uh into the WTO and based on per capita income. So those uh had a provision to graduate but that that's a different story. Now if you look at these developing countries some of them are Singapore, Korea, uh Hong Kong. So
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are they developing? Yes, that's the first question. No. So they are much more developed than you know developing. So we we so there are these issues also because you know why did US get into that narrative. Uh the
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whole issue of SND was addressed in the United by the United States and then you know the Germany uh sorry China actually started using this henceforth we will be called developed. So that sort of a change happened with China. You wanted
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to say something. Professor Yoshara would you like to join in? Would you like to share something with us in response to the question? So probably I I I think I just want to kind of uh uh I think Andre's question was of course a
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little bit about enforcement between private players but also perhaps more so about enforcement of agreements between governments.
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The governments cannot enforce. No, of course they do. No, no, they can. Of course they do. And so no, so I I know and in a moment you will agree with me.
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I tell me. Yeah, tell me. So at some point I attended this talk by an economist called Deepaklal who has done some you know like very interesting work. One of his books is this poverty of development economics etc etc but you know he passed
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away I think 3 four years ago. This talk by Deepakl which I think some 10 years ago when I attended this was he said is is there American imperialism?
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Is there American imperialism? Is there American imperialism? This was the title of his talk. He was kind of quite senior when he gave this talk and he said yes there is American imperialism and it's good and he said
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whenever he would give this talk people would get upset because you know one group of people would like to hear that there is no American imperialism and things are good therefore and another group of people would like to hear that
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yes there is American imperialism and therefore things are bad and his primary argument for why he said there is American imperial well he said there is American imperialism because when he looks at definitions of imperialism empirically any empirically measurable
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definition he sees is and he said it's good because there is a player to enforce global agreements and of course this true has changed now because there could still be an imperialist power but there you know from a technological point of view
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production possibility point of view is very difficult for a single it's no more 1980 or 1970 certainly not the time when Mao died which again brings to this question of you know from this notion of cheap talk in game theory
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So maybe the big sharad is not Trump. The big sherad probably all along or the theatrics is not so much Trump. Perhaps the big theatrics that we all believed in was the WTO. Did we really think that the tariffs came down because some men
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decide to wear suits and turn up at places and pass memos and wear these things and you know stay in hotels for a while etc etc and they always come to Delhi and stay in the same hotels right
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and then go to Geneva etc. And therefore, you know, we were able to create these the bigger pie that Jean is talking about. I'm creating the bigger pie is not trivial. And and mostly I've met some of these people myself and you
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know, I'm sure you have met many more of them. They don't seem to be the most uh upright of men or women and not the you know, they often are people who are very capable of working up a bureaucracy,
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right? which involves currying favors and listening to the you know they are not entrepreneurs who go out and create new product and challenge the world either in terms of products or social norms or whatever. I cannot imagine such
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people leading the world forward. They can do some work at the margin but I think it was a world where certain decisions were taken but not only taken there was an enforcing power and the enforcing power had to be
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listened to because of the geopolitical structure of things within that space. We created an organization which can argue certain things at the at the margin and the arguments made sense because things can be enforced and there was a sense in which the direction in
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which the arguments had to had to go. I mean if these bureaucrats don't take it in that direction then we give them a chance next day and say hey you know good try try again tomorrow right and then when you succeed you can take the
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photograph and you say you succeeded right so maybe the big theatrics we believed in was you know that that's where the real action was and I think this is the what you point to is is the I think the crux of the matter and I
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think this is why not only the WTO many international organizations in the coming decade to decade will continue to suffer because because of this absence of one single enforcing agency.
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Yeah. Uh I have to I had to clarify certain things what you said you know uh W2 is member driven body. Okay. Now if memberships agree members agree they will put certain things up there and most often the members don't agree. Let
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me take one example. TBT notifications that's actually technical barriers to trade notification is is is one of the barriers which actually impacts market access like SPS SPS is the sanitary and phyto sanitary measure like tariff these three instruments and
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non-tariff measures many other non-tariff measures there are 15 other non-tariff measures and one tariff so 15 non-tariff measures and one uh tariff effect impact your market access possibilities into a particular country.
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Now if you look at the SPS notification, this is actually driven by three sisters codeex, OI, IPC, they are well notified.
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Okay. But in the case of TBT notifications, countrywise notifications has was notified till about 2012 after which they have been removed because members put excessive pressure that to to the to country wise notification to listing of country wise and product wise. Okay. So
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these were taken out. Now who's who is to blame? W2. If you give WT as an institution the teeth to penalize the members which cannot be done because we are all sovereign members.
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Okay, that is where the problem is you know. Before you go and blame the WT alone, uh it is you need to look at the where WTO is placed that 650 members work employees working in the WTO secretary
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are heart they're just another set of bureaucrats doing their job you know and then running from pillar to post to uh take care of patchup you know many many issues of daily negotiations chitchats whatever happens mud slicking All country proposals come up on a on a
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on a daily basis. There are 15 countries which have put proposals and they have to take a document you know they they're they're very busy. So where will they have this interest to go and settle disputes between two countries? See, see
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again see the WTO dispute settlement pal system is completely shambbled in shambble you know that 2019 the Trump took away the support for the appellet body and it is nonfunctional why did he take away the support appalate body
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because US lost a couple of cases and they didn't want to change the this is exactly what I mean huh huh I think he agree yeah yeah that way I agree that way I agree because I see Why? Why? But when I
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when you ask me n agreements are not are to be enforced and implemented. Can I repeat the question?
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Yeah. International organizations are dysfunctional. Huh? International dysfunctional. Dysfunctional or dysfunctional and because the world is different and new agreements are necessary but I'm not sure that we have patterns. mental patterns of how to arrange these ingredients because there's no experience of this
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sort. We don't and and just as just an example, we all know that most of theoretical economics and most of theoretical finance is done at the level of mean values.
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So even even there and so this what I see that what worries me really is the absence of men but pattern to follow some what's the picture that what's a reasonable picture that we we can get from now if we don't have this pattern
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this will end up in a much worse situation than with Yeah. And now I agree. I agree. I agree.
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I agree. Uh if if we don't have any more questions, we will wrap up this session.
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Okay. So, one last question and then we wrap up. So um just wanted to kind of you know mention that this this new national you know this kind of moment in the United States and also in other countries in
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response is it going to be really sustainable in near future there are few reasons to believe that it is not going to be sustained in the short one is that in almost all adverse economics aging is a big issue they cannot not you
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know continue with their current level of living productivity and unless they in Japan for example the average median age is 50 you know and if they want to continue their productivity and high income status they have to and secondly
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Germany 47 Italy 49 South Korea 47 all close to 50 all advanced companies in the US it's so relatively better 38 in is 28 right so then there's so much of uh opportunities that exist for migration and so that
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it's a win-win situation it's like it's not that the countries that send out people only benefit but receiving countries also going to benefit enormously in this kind of situation when the average age in those countries are so high and to to sustain the
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productivity growth and economic growth you need people and talent. So that is one reason I believe that this current nationalist type of tendencies show it.
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The other one is uh that you know if you look at trade patterns in recent times after this Trump various came you see that if you take us out from the world trade is growing growing right that is 85% of the world outside
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United States MF trade is about 70%. Yeah. So, so irrespective of know what types and all this is happening protection that's happening commercial interest still survive drives and so I feel that you know what we are talking about right now
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more optimistic economy about the future a small a small correction there increasingly trade is becoming in manufacturing ing trade is becoming serviceified.
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So additive additive manufacturing and so you know service sector may dominate. Okay. So so so I I I think you know trade agreement itself has to have a component of how to capture the online trade and digital trade. So additive
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manufacturing right and you know so so there's been course correction at the global level also European Union has corrected its uh it's it's it's it's simplified its ebam and then it is brought down many of the various the
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climate change related barriers so there's course correction you know as you said you know there's course correction happening as we speak also so that's a good sign I think we should stop at that so we are good we just very brief
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question that basically not a question. I was just like add to professor Gmani's comment on the problem of aging in developed countries and so there was your comment on services that will be services dominated but um I'm not going to um reveal the details of
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specific negotiations but studies show that uh when there are agreements between developed and developing countries with the in the services track developed countries would have very restrictive measures for more food that is movement of professionals even though there is
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problem of aging and they need the younger population for the service sector but uh the problem of MS qualifications in professional services so sir how how do you see this situation thank you let me not answer that because that will
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go into the negotiations but I I can say something yeah yeah yeah actually I would like So you know in fundamentally for a moment I did agree with what professor Virani had said but now that you have said what you have said I'm not sure I
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agree as much with professor money because I think economists tend to be economists right how kind of immigration policy evolves depends not only economic circumstances but also many other factors human beings have a tendency to be environment like to be around and environment for
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each person is the other people around there's typically a desire to be around people who you know have similar cultural practices or you know are like us and so on and so forth right and this is found country
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after country place after place okay in fact in that sense perhaps United States is one of the more open places yes Americans in general you know ignore the present circumstances for a moment right in general they tend to but
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if you go to Europe if you go to Japan if you come to India I mean ask yourself you know the editor of journal of political economy for a while was someone of German origin suppose there was a journal of that kind in India
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would Indians be open to having someone of German origin being the editor of that right or even imagine cross migration in India not you know Kerala has lots of people coming in it's not a big issue but there are many other
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states where there are there are fights because of person of this culture or that kind or this or looking like this so I think you know people tend to sacrifice a fair amount of the pie the economic pie to implement policies which
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stop other people from coming in who could have grown the pie. Even when I was in Russia, there was this discussion. I was in this Bank of Russia conference and there was this discussion about uh labor shortage.
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This was by the way the only time India was mentioned in the three days. China was mentioned many times in the context of technology uh technological innovation growth. United States was mentioned many times. China and United States were mentioned together many
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times. India was never mentioned. So they have a good sense of the manufacturing capacity of this economy and I think the sense is quite accurate.
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The only time it was mentioned was in terms of labor that but the person who mentioned this and I would not say who the person is. The person who mentioned this was mentioned publicly. So it's not a private organization was very was very
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quick to clarify that the person does not say that there should be immigration of a large number of people from India to Russia but rather production facilities could be established in India where the workers could stay in India
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and then produce produce and the goods could travel and there are good reasons most societies tend to do this. United States of the last century and particularly preWorld War I is a gross exception to much of human existence.
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You know, if you go back, if you think in terms of millennia, the United States of 17, 1800 to World War I or even till Trump comes into power is a gross exception to the way human beings have
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lived for much of our of our history. We are willing to sacrifice a fair bit of the economic power to be around people who are a little bit like us.
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But I don't know. I I almost agreed with Professor Vir. I was going to live leave this discussion in a good mood but Sara you have brought me back to you know lastly just so we we end this discussion
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it has been a great session and we I think all have come out of this session having learned a few new
Topics:WTOWorld TradeMultilateralismUS Trade PolicyIndia TradeJapan TradeGlobalizationDeglobalizationDigital TradeTrade Disputes
