Wang Huiyao: Joint efforts to reform WTO

By Wang Huiyao |

President of the Center for China and Globalization(CCG) 

China and the EU have common aspirations in promoting the upgrading of the global trade system

The 2019 Ideas Lab of the Center for European Policy Studies was held in Brussels, Belgium, in February. More than 200 representatives from European and international governments, think tanks, enterprises and nongovernment organizations convened to discuss a broad range of key topics and issues under the theme "Europe's Choice". The Center for China and Globalization was invited to participate as a representative from the Chinese think tank community and I was honored to have the chance to deliver a speech at a sub-forum on the theme "Will the EU save the WTO?" At the conference, a number of seminars on China-related issues, such as "China's relationship with the WTO" and "Will China-US trade affect the future of globalization?" were held, showing the increasing importance that Europe and the world are attaching to Chinese affairs.

Over the past two decades, the World Trade Organization has played a significant role in the economic development of countries the world over, being a driving force behind the rapid development of globalization. But with the arrival of globalization 4.0, there is greater demand for the upgrading of the global trade system as the WTO in its current form will be unable to tackle the trade issues of the future, as reflected in the growing calls for WTO reform and modernization.

Although the WTO has encountered a series of difficulties, neither developed countries nor developing countries are yet ready to abandon it. This is due to the recognition and need globally for the basic rules and framework provided by the WTO, as well as its past contributions and current role in world trade. We can observe from history that the development of world trade and the normal operation of the global multilateral trade mechanisms require an effective WTO, further reinforcing the need to modernize and reform this institution.

China is a beneficiary and staunch defender of the WTO. It supports the necessary reforms of the WTO to push the multilateral trade institution to be modernized so that it can keep pace with the advancement of the world economy. The European Union has echoed this sentiment, repeatedly stating that it hopes WTO reforms will be carried out.

China and the EU established the China-EU WTO Reform Working Group to strengthen crucial multilateral trade system reform cooperation. At the Munich Security Conference, German Chancellor Angela Merkel said that in the era of globalization 4.0, the new world trade system will be the adjustment of the current system rather than a complete replacement. Therefore, China and the EU have common aspirations in promoting WTO modernization reform and it is in this context that China-EU cooperation will play an important role in the formation of this new trading system in the face of globalization 4.0.

Working toward this common aim, China and the EU can strengthen trade cooperation with practical steps to enhance multilateralism and push forward WTO modernization reform. According to China Customs statistics, the value of Sino-European imports and exports in 2018 was 4.5 trillion yuan ($670 billion), with a year-on-year increase of 7.9 percent, of which exports to the EU were valued at 2.7 trillion yuan, an increase of 7 percent, and imports from the EU total 1.8 trillion yuan, an increase of 9.2 percent.

The EU maintains its position as China's largest trading partner and largest source of imports. And under the current international economic situation in which trade protectionism has risen, Sino-European trade remains a ballast of support for the multilateral trade system; as well as being an embodiment of the important role the WTO system can play. So, China and the EU will continue to strengthen economic and trade relations, expand economic and trade cooperation, and through this lay a solid foundation to pursue their joint goal.

Second, China and the EU can strengthen cooperation in the WTO system reform process by promoting the progress of China-EU trade, further safeguarding the WTO system. This can be achieved by seeking solutions to move past the stalemate in adjusting the dispute settlement mechanism and appellate body, thereby working to avoid the collapse of the entire trading system.

China and the EU began their cooperation on WTO reform in 2018 when they set up a working group. The strengthening of cooperation between China and the EU, two very influential members of the institution, will help resolve existing problems and form a model for cooperation among all WTO members.

A major issue facing the WTO at present is the difficulty reaching agreements between developing and developed countries in terms of the pursuit of common interests. China-EU cooperation, which represents the interests of both, can give full play to their respective advantages and help to coordinate the positions of both developing and developed countries to achieve breakthroughs in negotiations.

China, in its unique economic position, can understand the demands and capacity of developing countries, conduct multilateral negotiations and work to seek a mutually beneficial result for both sides.

Correspondingly, the EU can coordinate the demands of developed countries with regards to WTO reform.

Troubleshooting this crucial global issue requires the patience and determination of China and Europe, and they should guide other WTO members to avoid extreme positions and zero-sum games.

Finally, WTO modernization reform needs to keep pace with the developments in trade, including emerging issues in the digital economy, service industry and e-commerce; areas both China and Europe have strong demand in. Therefore, China and the EU are best placed to work together to bring about breakthroughs in WTO rules in emerging areas and establishing guidelines covering digital trade.

In the era of globalization 4.0, the establishment of a new trading system needs to be built into WTO modernization reform, a necessary undertaking which demands collaborative efforts from all countries. China-EU cooperation on WTO reform can accelerate the formation of the future global trading system, promote the development of the global economy and support the progress of globalization going forward.