Trade Talk at the Global Economic Symposium

On October 14th, the Bertelsmann Stiftung hosted a session on “Multilateral Regionalism and Emerging Markets – Opportunities and Risks in Global Trade” at the Global Economic Symposium in Kiel. Session speakers included Andreas Esche (Director, Shaping Sustainable Economies Program in the Bertelsmann Stiftung); Joseph Francois (Managing Director, World Trade Institute); Bernard Hoekman (Professor, Robert Schuman Centre for Advanced Studies); Pascal Lamy (honorary president, think tank Notre Europe and former Director-General, World Trade Organization) and Petra Pinzler (Berlin Correspondent, DIE ZEIT).

During this session discussed topics included i) the recently signed Trans-Pacific Partnership agreement (TPP), ii) the Transatlantic Trade and Investment Partnership agreement (TTIP), iii) the role of the World Trade Organisation (WTO) and iv) consequences of free trade agreements for both employment and consumption.

According to Joseph Francois TPP was born as a “not China” agreement. Former WTO Director-General, Pascal Lamy, highlighted that TPP was composed of 80% precaution and 20% protection. Andreas Esche mentioned the results from the latest GED’s study The Trans-Pacific Partnership Deal (TPP): What are the economic consequences for in- and outsiders?, which showed that with first order effects (without spillovers and regulations’ harmonisation) a slightly positive effect in countries within TPP is expected. If spillovers are applied, TPP would yield overall positive effects. He stressed that the myth of “if there is a winner there has to be a loser” in foreign trade needed to be addressed.

Regarding TTIP, speakers stressed the need to harmonise regulations in order to foster trade. Bernard Hoekman pointed out the need to harmonise regulations, especially in the services sector, between EU and the US, in order to reduce repeated tasks and to allow regulators to specialise. It was agreed in general that the harmonisation of regulations between these two economic blocks would have important consequences in the global value chains. On the other hand, Petra Pinzler defended that the recent anti-TTIP demonstration in Berlin had attracted many since consumers feared that TTIP would lower products and services’ standards.

A more controversial issue was the ISDS (Investor State Dispute Settlement). Petra Pinzler outlined that the number of ISDS is booming, as companies realise they could potentially profit from these cases. On the other hand, Joseph Francois highlighted that the European Commission has already put forward a dispute settlement process to address ISDS.

Pascal Lamy outlined how precaution in foreign trade raises issues for the World Trade Organisation, since its task was to monitor the necessary transparency for trade. He stressed that “calling a precaution convergence process a trade negotiation is a big mistake”.

And if you are interested in reading more on TTIP’s potential effects on third countries, don’t miss our new TTIP study on potential winners and losers in developing countries.

Please don’t miss our upcoming video with an interview with Pascal Lamy in our Session at the Global Economic Symposium!