Creon Butler
My name is Creon Butler and I’m the Director of the Global Economy and Finance Programme at Chatham House. It is my great pleasure today to host a discussion with Dr Jesús Seade Kuri, who is a candidate for the position of Director-General of the WTO, and this is the second in a series of such discussions that Chatham House is hosting with the WTO candidates. And I’m very pleased that this forms part of Chatham House’s centenary celebrations. In its first 100 years the Institute has been a strong and committed supporter of the rules-based international system and we hope these discussions on the future leadership of the WTO can contribute in a small way to strengthening a critical part of that system.
Dr Seade has had an enormously distinguished career in international economic policy. He has led a number of critical trade negotiations, but also, has experience in the IFIs and in academia. He was Mexico’s Ambassador to the GATT in the early 1990s and then served as Deputy Director-General, both in the GATT and in its successor organisation, the WTO, at a critical stage, in both the conclusion of the Uruguay round and then in the starting phase of its implementation. He is currently Under-Secretary for North America in the Mexican Ministry of Foreign Affairs and has been the Lead Negotiator for Mexico on the US-Mexico-Canada Trade Agreement. He has also served as a Senior Advisor in the IMF, working on debt relief, in particular, and alongside his work in the official sector, he’s been a senior academic working in Hong Kong-Shenzhen and Warwick University in the UK.
Before we begin our discussion, I’d just like to make a few quick housekeeping points. This webinar is on the record and is being record. If you wish to tweet, please use the hashtag #CHEvents and after an initial discussion of 20 minutes or so, we will move to a Q&A segment, where my aim will be to ask people to put their questions, if we have the time available. Alternatively, I will look at the questions, as they come in and ask them myself. And if you would like to ask a question, please submit it through the Q&A function on the Zoom platform, not the chat function or by raising your hand. Now, I’d be very grateful if everybody could keep their questions and comments as brief as possible, because we have a relatively short time of 45-minutes and we have a hard stop at 17:00 hours UK time.
Dr Seade, thank you so much for sparing the time for being with us today. Perhaps I could start the discussion by asking you about your overarching philosophy on global trade. And it’s very clear from the statement that you made to the WTO Council and in your press conference that you know the world trade system from the inside out and you’re very focused on bringing everyone together to find solutions to the current challenges. But behind all of that there is a, you know, key philosophy about what is this whole effort for, what is our goal? Is it free trade, fair trade, greater global growth? And given that view of what the goal is, how does it influence your vision for the future of the WTO?
Ambassador Jesús Seade Kuri
Okay, thank you very much, Creon. I’m really honoured and delighted to be with you. I’ve had extensive interactions with Chatham House in the past, in several ways. I will not go through that, but it’s an honour to be invited to talk to you on your centenary, and your anniversary. And let me also say that I have a deep attachment, and that’s not just words, it relates to the question, I have a deep attachment to the UK, that’s where I studied. I was extremely, kind of, given the levers to my life as an academic in the UK. I taught, for a number of years, very successfully, I was doing very well, and all that, really – I created a family in the UK. So, all that really imprinted in me very much of your outlook on life. The UK, and if I may say, the European, although those two are not necessarily kosher to say together, for me they are, and the European way of looking at the world, which is very much an open society and in particular, an open economy, but also, a rules-based economy. A rules-based society, where, for example, there is a clear role for the government. It’s not just the Adam Smith extreme of a free for all, but a rules-based system and I’m very much a believer.
So, coming to your question, my philosophy about the system that I would like to help create, I’ll give you two complimentary answers, two halves. The first one is mostly backward looking, the second is mostly forward looking. The former is that we need to reinstate a strong rules-based dynamic and inclusive system. All three parts of that statement are in serious peril, each one, okay? The rules-based we know, the dynamic we have stopped negotiation, and the inclusive, well, let me just very briefly say all the attention historically has been mostly on, using the language of Wimbledon, I will call centre court procedures. The negotiations within European Union and the Americas, now the UK, in China, in India, the main negotiations – of course, those have to be done and dealt with and moved forward, but we cannot leave out special areas of particular interest that are not captured, are not addressed by these centre court processes.
For example, when we completed the negotiations creating the World Trade Organization, after everybody have – had been to all the celebrations, after Marrakesh, signature and everything else, the least developed countries, that’s a category of 49 countries, according to United Nations, which are the poorest countries in the world, began to say, “Hey, we cannot undertake all those commitments.” And the response was, “What are you talking about? This has been done and completed and agreed.” But, of course, they had not been part of it to sufficient extent and to cut it short, I, as Deputy Director-General, responsible for development, as well as for international relations, lobbied, discussed with the big trade powers and we agreed, they agreed, they accepted to reopen the negotiations, which was very painful and very risky. We reopened the negotiations with a successful stint of about four months that I chaired, to develop special provisions for them.
So, that can’t happen again. Inclusive has to mean that you look at the interests and the needs of the least developed countries, the interests and the needs of the small, vulnerable economies, which are a very special kettle of fish, the small – the needs of landlocked countries, and so on and so forth. So, that is a primary thing that I really would like to help countries recreate this roots-based dynamic and inclusive system. But at the same time, this doesn’t tell us enough about where we’re going, about the future, it only lays the groundwork and it’s very important, it’s vital.
But in terms of where we’re going, I find that the world has continued to change. We cannot make do with what we have had in the past, even if we do it very well now. In particular, I think of issues like how can you develop and have satisfactory rules on trade, without having enough on investment, which is increasingly part and parcel of the trade declaration? And then, all the tension in the world falls on anti-dumping and subsidies, but what about developing stronger provisions that we begin to have on competition, competition policy, as you have very strongly in any given country?
In a country you have a Minister doing trade and somebody doing investments, somebody doing competition and, also, you have somebody doing finance. In this world, we do have finance done, taken care of by the International Monetary Fund, by the World Bank, by the regional banks, but the connection with trade doesn’t exist. In your country it – the connection is done in something called the Cabinet. You have the ministries, but you have the Cabinet and you have the boss on top, in case of need. Internationally we don’t have that, so the only way to do it is to develop what I call a new multilateralism that begins to be more comprehensive. Not only in the sense of being inclusive, but thematically begins to develop a vision on investment, on competition and on the immensely important connection between trade and finance. So, that’s where I would leave it as the answer to this one.
Creon Butler
Well, thank you very much. You immediately raise some absolutely fascinating questions. I mean, if I could just follow from your last point. Of course, in some ways, the G20 is meant to be the place…
Ambassador Jesús Seade Kuri
Hmmm hmm, yeah.
Creon Butler
…where you bring all the different elements together. And indeed, you know, from 2010 onwards there was a, kind of, framework for strong, sustainable and balance quotas, which was meant to have all the different elements. You have all the international organisations, political leadership and so on. So, there is, so there’s a need to do that, but at the same time, you know – and also, actually, in the past, as you’ll know extremely well, the WTO did com – there were those in Europe and – who wanted the WTO to go into investment, competition and so on. And it was more than the system could bear, basically, at the time, I think would be a way of looking at it. So, I think your aspiration is absolute – you know, makes a great deal of sense, but there is a practical problem that the institution is, it’s struggling as it is now, even with the issues that are clearly within its remit. So, the question is, you know, how do one – how does one sequence this effort? And, you know, for example, where – one could use the example of the approach to the crisis at the moment in the dispute settlement area or the lack of negotiations, how does one sequence tackling those problems, versus this need for a broader approach?
Ambassador Jesús Seade Kuri
Of course, I was giving you my vision, my long-term vision and I said the second part was…
Creon Butler
Yeah, so that…
Ambassador Jesús Seade Kuri
…the long vision.
Creon Butler
That’s absolutely fair, yeah.
Ambassador Jesús Seade Kuri
One would hope to begin to go in a certain direction, but the priority on an immediate basis is the first part of what I said, repairing the vessel and giving it the due dynamics and the inclusiveness, that’s absolutely central. What we need to do is to start with the first steps and the first steps, as I said in my presentation to the authorities of trading at the OA – at the WTO, is to, first of all, to deal with negotiations. We have had preciously little negotiations of enough significance, since the creation of WTO, 26 years. We’ve had some important, but very narrow, on trade facilitation, on banning export subsidies in agriculture, but they’re very narrow, important. But by and large, the negotiation machine has, essentially, stopped, we need to restart it. That’s not something you do like you – like when you switch the lights on. That’s not something you can do that way. It’s more like regaining momentum by a person on the track. You have to take a first step, then two in the same time as the first, and then five, and then you’re running and you’re moving in a satisfactory way.
So, what we need is to press on with the negotiations now on the way and I hope to contribute to pressing on. There’s been continuing grandstanding on the negotiations on the way on fisheries, we have to complete those, very quickly, within the time expected, which is end of the year. There are other negotiations being done, not multilaterally, but plurilaterally, so, a group of countries, but it’s not a dozen countries, it’s 50 and 90, so very massive negotiations that are very much supportive of, as long as they are open and have a kind of multilateral spirit to them. And we have those on the way on facilitation of investment, on rules – on regulation, domestically in relation to services, on electronic trade that the COVID has shown us how vital it is, it’s central to the future, and it doesn’t exist in the agreements in the WTO.
So, I want to contin – contribute to moving forward as well as we can with those, so that we can, in parallel, begin to discuss what negotiations we can launch next year. We have a big ministerial in June, in principle, in June 2021, the con – the Ministerial Conference of the WTO that should happen every two years and this one is coming after four years. So, that creates additional pent up pressure for achievement. So, at that ministerial we have to do well and that includes launching new negotiations that have to include agriculture, because agriculture was never seen as an on-off achievement 26 years ago. It was a process that was started that has a mandate built in to continue and it didn’t. So, the countries that have an expert interest have every right to say hey, where is this? So, let’s move on with agriculture, definitely.
I hope that we can begin to respond to the claim by everybody in high street and in every street in our countries for protecting better than the environment. By high street I mean the common people, not the trade specialist, to respond to the environment. Environmental trade is a very tricky area. I will be very careful on what I would try to invite countries to address. Issues that can quickly fall into protectionism are better saved for, I don’t know, later, if at all. But there’s a lot that can be done, I’m sure, that is a win-win, or win-win-win-win-win, 164 times for the membership. I believe that we need to engage in global warming and in production and trade, to look for opportunities for gain.
So, that is the negotiation machinery that I want to see moving, from the first step in fisheries, to the launching of import negotiations. In other things transparency, in other things, to come onboard next year. Then, in parallel, we have the Dispute Settlement System, the Appellate Body, that is fundamental, that was, when we create the WTO, the crowning jewel and it is now in complete disrepair. I am amazed that it is in disrepair, because I have read every single statement by the United States, which is a country most dramatically complaining about the state of things, and the claims they make a) are, in many cases, accepted by everybody else, including the European Union, which is the main counterpart of this. We accept that many of the things that the US – United States claims are true, excess of beha – I mean, behaviour by the Appellate Body outside the limits set by the agreements.
But at same time, I find that nothing any of them says amounts to changing a comma in the agreements. So, it should be doable to find a solution and what is missing is a connection between the Appellate Body that is autonomous, but its autonomous, but it’s not free to go wherever it wants. It’s autonomous in handling individual cases, but it has a Supervisor. The Supervisor is called Dispute Settlement Body, which is all the countries, all the Ambassadors. The problem is that we never designed that connection between the Supervisor and the supervisee, and I believe that’s not too difficult to design. I have my ideas, we can come back to that, but it’s basically a question of institutional engineering on that issue.
And then, thirdly, I would work very hard on reinvigorating the institution as an institution, to make the committees and the councils more responsive. It doesn’t make sense if a country says, “Hey, I have this budding problem with the European Union,” or with England, or with whoever, “saying that this particular product doesn’t comply with this and that. I need an assessment by the committee.” “Yes, Ambassador, no problem, the next meeting of the committee is in December.” “That’s not good enough, my producers cannot wait until December.” But I see no reason why we shouldn’t be able to handle certain decisions by circulation, which I used to do in a beautifully efficient way in the International Monetary Forum, or by videoconferencing, as we’re doing now. So, maybe we can say, “Okay, there’ll be a special meeting on your issue two weeks from now at noon.” So, I hope to bring more efficiency, perhaps to work with the members to shorten the length spent on dispute resolution, which is too long. In the US-Mexico-Canada agreement we just finished, one thing that filled me with pride was that, at Mexico’s proposal, my proposal, we cut by one whole year the duration of the typical panel, from two and a half years to one and a half years in that context, so we can do things of that kind. Those are my three tracks: negotiations, Appellate Body, and efficiency in different senses.
Creon Butler
Thank you very much, I mean, it’s fascinating. There’s a, kind of – it’s like you’re envisaging a new normal for trade negotiations in the future, using technology, I guess, in a way. And it also struck me, when you were talking about the relationship between the Dispute Settlement Body and the Appellate Body itself, I mean, there are similarities when the UK first introduced operational autonomy for the Central Bank. There was a very real question about how you relate the role of Parliament in setting the mandate, on the one hand, to the independence of the institution itself. And it seems that there may be a number of areas, things that you could draw on in strengthening that element, if that, indeed, proves a solution.
But perhaps I could – perhaps I can come to one point that you’ve made in a number of the public appearances, which is about the experience you had in the 1990s, around the conclusion of the Uruguay round, when, in a way, there were also a great many challenges, but also, different strands and so on. And the key, it seemed to me, was to, kind of, create a political momentum and consensus to move forward. And from what you’ve said, this is a similar, kind of, challenging point, I guess, in a way, and I just wonder, is there anything you would draw from that experience of how the Uruguay round was concluded, in terms of specifically getting this political momentum and consensus to move forward today, either things that you would do or things that you wouldn’t do, having had that experience?
Ambassador Jesús Seade Kuri
Sure, well, I find it very noticeable that at that time there was a tremendous amount of interest by the private sector. There was not one week where – when I or any Ambassador of any kind of medium influen – partial influential country delegation would not be visited by businesspeople from Europe, from the UK, from America, from Asia. There was a very heavy involvement and, also, by the political bodies. Euro Parliamentarians came to my office many times. I talk to the people handling all these issues now, oh, in the last several years, during the Doha round period and there was not one soul to be seen beyond the actual negotiators. So, this favourable wind has disappeared. I don’t think you can do a lot to recreate it on an immediate basis, because we need pretty much immediate results now to address the problems, to begin to move forward. So, we need to go forward, in the absence of these favourable winds, using the flipside of the favourable winds, which is the scare, that it has to create in your soul and mine, the fact that we are close to the edge, we’re close to the brink. In the sense that there has already been a legal initiative in the United States to pull out of the WTO and it didn’t go anywhere, but you cannot exclude the possibility that things could get even worse, and things are already very bad.
So, I think on the basis of the very negative situation we have, with enough of an awareness of that situation, we can take the first steps forward out of the hole. But at the same time, we definitely have to start building those helpful constituencies to help us. Again, I mentioned the agreement that I just managed to complete with Ambassador Lighthizer in the United States and with Deputy Prime Minister Freeland in Canada. It was really extremely challenging for much of the time. It was being denounced by the whole of the opposition party. It was, basically, a political football. Everybody said this was not necessarily the most important priority. But we began to work in earnest with the private sector in the United States. The private sector in my country responded beautifully. We had a huge support, a very well-built structure, infrastructure, architecture, of a whole private sector team to address issues of intellectual property or agriculture, or rules. In each area, you had a whole team and the legal counsel for that team and so on, so forth. We worked with the American private sector and it didn’t take us all that much effort to have them incentivated into taking the same kind of approach with enormous vigour. So, for the closing of that treaty we have, in the United States, a private sector support network that included more than 300 business associations, not businesses, but business associations, working together.
I really think that we need to give more attention to – in the WTO, to links with the private sector, to the public eye, to arousing interest and arousing support from the public at large. I think that’s as important as any of the one – of the several areas in negotiation. The public interest, that’s to be awakened by the countries themselves.
Creon Butler
Thank you very much, and now what I’d like to do is invite everybody to put in their questions, through the Q&A function on the Zoom platform, and we will, kind of, continue the discussion, as the questions come in. I will try and choose between a great many, actually, already, a number have come in. Perhaps I can go, first of all, to John Mason, who has a question, I think it’s a question specifically framed, in terms of animal welfare, but I think there’s a broader issue about biodiversity and its relationship with trade. So, perhaps we could ask John if you’d like to put your question, please? Just take a minute or two to unmute him. John, would you like to put your question?
John Mason
Yes, thank you very much. So, my question is, can I ask a question regarding will it be possible for all nations to protect animal welfare where future trade and trade deals are concerned? When we try to safeguard the environment and carbon, will it be also possible to safeguard the animals’ welfare within that, that concern about the biospheres mentioned, especially where different standards exist? And finally, can animal welfare standards be levelled up, rather than levelled down in future trade deals? Which would be – obviously, Britain is a country which – and I’m sure other countries are also equally concerned on this issue. Thank you very much.
Creon Butler
Thanks very much, John. So, it’s – I think it’s – well, Ambassador, over to you. It’s an – obviously an important question to a great many people, looking at the world trade system.
Ambassador Jesús Seade Kuri
Well, it is certainly very important. He’s making a distinction, which is very valid, between animal welfare and the environment. But the environment, also, is not remotely sufficiently looked after in trade agreements in the WTO, or in trade agreements generally. I don’t mean to conflate the two, but the two are very important priorities, with some points of contact, some similarities. And the really thing is that in all these issues, of course, we have to continue to push for co-operation. That’s one answer, co-operation. We have agencies that work on this, we have lots of NGOs that work on this, we have to support them. Our governments have supported. I’m not trying to shirk the issue by saying all this. All this is necessary, it’s very important.
At the same time, I find it almost unconscionable that the World Trade Organisation should have, basically, nothing to say about these issues. It has not been possible to bring questions of the environment and the broader environment, as you describe it, into our work. One reason is that the environment can very easily be used and abused for protectionist resource. It is very easy to say, “Ah, you are not doing what you should be doing,” when the real aim of my initiative is to protect my producers. And that conflict between protectionism, or fair trade or free trade, and the environment, has made us, essentially, freeze and not do anything. I really very much think the time has come when we cannot continue to ignore the environment completely in the WTO, we need to take it up. What we need to do is to identify areas, issues, where it is possible to agree on – to negotiate. But the negotiations would be not so much the creation of potential to stop your trade, because I say that you are not doing enough, but more creating space, policy space, for positive incentives for governments to do the right thing, for governments to reward protection of the environment, for governments to reward animal welfare.
So, I believe that the time has come for co-operation. This is not something where we have anything going, and the WTO is a member driven organisation, so I could tell you anything and it doesn’t count for anything, unless the countries agree to go in this direction. But in my sense, we have to start going in the – in this direction on a co-operative win-win basis.
Creon Butler
Thank you. I mean, I think it highlights a broader issue, which is where, in a way, for the overall system to work, you not only need the things that are negotiated in the WTO, but you also need the appropriate national policies to go alongside that. So, whether that’s in this case of labour standards or the protecting the environment, or whatever and so, my question, really, is how do you think, from a WTO point of view, you can handle this? Because, you know, if you try and draw everything into the WTO, the negotiation will fail. But at the same time, if countries don’t complement the outcomes of WTO negotiations, it will also fail? So, what is the solution to that challenge?
Ambassador Jesús Seade Kuri
No, I think you’re right and I remind you of my introduction, I said that my mentality of how the world should function well beyond the WTO, is that “We need open societies, socially open, economically open, free market, but at the same time, with governments that have a clear role, with regulations that look for the good of all.” So, there are lots of things that governments should be doing, there are lots of things that governments didn’t do in the 1990s and 2000s that were decades of excessive fascination with the free market. I am a free marketer myself. I believe in the free market. I would fight in the defence of open trade. But I recognise that when you have open trade, for example, you can have changes in the profile, the production profile of countries, where some industries in your country begin to go down. And it is fine, as long as other industries begin to go up, but it is not quite fine unless you, internally, help people in the sunset industries redesign themselves, re-education or whatever, redeployment, and incentives to begin to expand in the industries, high technology, whatever it may be, where your country is in a more promising upswing.
Well, the same applies to issues on the environment, to issues on animal welfare, to issues – for example, it is absolutely not surprising that the bulk of the benefits of globalisation have gone to big firms, okay? It’s not surprising, because technology is making transportation cheaper, technology’s making information more universal, so you can be sitting in Argentina or in South Africa and you per – you know perfectly well what the Koreans can consume and at what price. And you feel envy that they can get something cheaper and good quality, so, you begin to demand across the world. So, the world begins to be a small place and that makes it possible for the biggest firms to conquer the world. So, that gives you the basis for the expansion of economic giants, like Siemens, or like General Motors or Toyota, or whatever it may be. Well – and pharmaceuticals, of course, in many – in your country.
Well, one problem there is that we have left the visible hand to do all the work for the society, but there can also be assistance by the government, assisting small and medium enterprises. And that has been a common cry from Manhattan to London, to Mexico, to the – to Hong Kong, to everywhere. And so, we need to develop ‘policy space’ again, the term that I used before, in relation to the environment, we need to develop policy space, that means agreeing that certain measures are not offensive, to the contrary, are encouraged to help, for example, in the example I’m giving you, small and medium enterprises, to help them gain scale, to help them do their financial borrowing collectively. So, you might have some kind of intervention by government to enable syndicated borrowing by 50 small firms in a given sector, who are going to pay much lower interest thanks to that, or procurement, they can buy in bulk and pay cheaper, or creating a brand. So, you can do lots of things by having governments take a more proactive stance in supporting society, in combination with international agreements. Not everything has to fall on the back of international agreements, as Creon says, that’s very correct. But in any case, even international agreements have to start taking onboard issues concerning the environment and animal welfare, by all means.
Creon Butler
Thank you very much. Actually, that’s a very good link to another question that we have from Ignacio Garcia Bercera. If we could – Bercero, Ignacio Garcia Bercero. If we could open up and unmute Ignacio, please. Ignacio, would you like to put your question? Yeah, please go ahead.
Ignacio Garcia Bercero
Yeah, yes, hello, Ambassador. As you know, one of the most difficult topics is the issue of industrial subsidies, where the United States, Japan and the European Union have been putting forward proposals to [inaudible – 36:41] the rules of the WTO on industrial subsidies. But China, through its WTO Ambassador, has indicated that they are clearly opposed to such negotiations. What can a Director-General do in those circumstances, how we can help to break the impasse?
Ambassador Jesús Seade Kuri
Well, there are many difficulties that the WTO faces now, the Appellate Body and the definition of who – what flexibilities developing countries have in agricultural subsidies, lots of very serious difficulties. But by far, you have touched on perhaps the most serious one, because it goes directly to the very dire conflict that we face between the United States and the West and China. The West says, “China has not continued to evolve towards the market economy. The convergence that we’re having is nowhere to be seen.” And China says, “There’s – there was no commitment on such convergence. We have accepted the commitments that were negotiated and now you want me to negotiate something else, that’s difficult.” Whatever can be achieved, between the United States and China, it’ll be for China and the United States to define and all I can do is to provide my best offices, forceful intermediation, a helpful Intermediator to find a way to move forward.
For a starter, one area that I think can be considered as helpful in this kind of area, related to this, is transparency, for example, not only in relation to industrial policies or subsidies, but also, in relation to trade policies. That’s very much a demand that Japan has separately made, placed on the table, enhanced transparency, and their transparency on investment policies that could be of interest to other countries. So, I believe that transparency is a powerful agenda that could be embarked on that could touch on some of these issues and could help the countries concerned to begin to find a way to move forward. But otherwise, it is really for the United States and Europe to formulate what exactly – and Japan, in this case, what exactly they want to discuss with China and for China to accept the process of moving forward. They’re not going to accept whatever comes to them as is. It may be that they need other things on the table to be handled at the same time, so we will have to see. That’s a very, very tricky issue.
Ignacio, you’re clearly a well-informed participate in all this. That is the key issue and I certainly want to help countries find a way to make progress, to the satisfaction of everybody.
Creon Butler
Thank you very much, and another very tricky area, which could well become more tricky in the future, is the whole question of, and you’ve touched on it to some extent, but the interaction between the need to accelerate action on climate change, on the one hand, and everything that follows from that, in terms of carbon taxes and net zero commitments and so on, and how that interacts with the world trade system, on the other hand, and the rules of trade. And, obviously, you will have observed, in the EU, for example, the discussion around border carbon adjustment mechanisms. So, it’s been, really, the only way to, kind of, square the circle, in a way, between what the EU needs to do internally and its, you know, its relationship with other countries, who may not have the same commitments.
So, how – do you have a, kind of, view as to how you – how this should be handled? Is it something that – I mean, it’s not crystalized yet, but it looks like it will be a major issue in the next two or three years. Do you have a view as to how to handle that?
Ambassador Jesús Seade Kuri
Yeah.
Creon Butler
Should we try and get ahead of the game, or wait until it hits us, then tackle it at that stage?
Ambassador Jesús Seade Kuri
Well, a bit of both; negotiations are between the countries. I’m not going to start negotiations in even less difficult negotiation areas that have not gone our way. We have an offer on a plate. But nevertheless, as it – as with everything on the environment, I really hope that we can make every effort to move forward in a way that does not create too much room for hidden protectionism. Carbon taxes, it very much depends on how you gauge them, how you frame them, how do you put them together? So, will they apply equally to all your domestic consumption, or do they relate to trade? That would be a gigantic difference, if you are applying carbon taxes on everything your economy consumes, on a national treatment basis, affecting domestic and foreign suppliers the same. It may be that foreign suppliers still have a grudge. It very much depends on the composition of trade, but that would be a very good start with something equitable. If it is something related to trade, it’s a very different proposition.
At the same time, carbon taxes, as an Economist, I always think of taxes being positive or negative and the effect of a price distortion, in the opposite direction, can be exactly the flipside of a tax, both in terms of revenue and in terms of the incentive for the economy. So, it could be that your current taxes are exclusively punishing traders, in which case, there’ll be much more room for people to not accept it, or it could be that, for example, you create a commitment or a rule that a country is going to utilise carbon incentives, carbon price signals that will, on balance, be neutral. So, your trade that comes in that is relatively harmful, faces a certain carbon tax. And in exchange, you are bound to lower trade barriers to trade that is relatively well-behaved on the carbon question. So, if you do something like that, you are not creating an anti-trade bias, you are creating an anti-carbon footprint bias. So, all these things would be issues that I would like to understand what countries have in mind, but it very much depends, but the risk of protectionism is absolutely clear. Sorry, no, you are…
Creon Butler
Yeah, okay, that’s a very – can you hear me? It’s a very good example of if one can come up with a really smart formula, as indeed the WTO has in the past, I guess, that may get you through a clear challenge, but you obviously need time to work on those approaches. So, Dr Seade, very unfortunately, I’m afraid we’re almost at the end of our time and there are a number of questions I’m afraid I haven’t got to. I – but I would like to come back to this question, and a colleague of mine, Marianne Petsinger from Chatham House, has asked this, and a number of other people I think have referred to it, as well. You got into it, to some extent, in your discussion around subsidies and, in particular, the tension between China and the US and how this, you know, in a sense, all the good work you might do, or all the good ideas you may have, are conditional on an improved, kind of, relationship and an improved willingness to work together from those two really important countries. And underlying that is this whole question of special and differential treatment, which is another issue, in the tension between those two countries.
So, I guess the question is around this, I mean, it’s – I think you, rightly, said that, in a way, what you can do as, actually, you know, WTO Director-General is limited, but are you hopeful that this will improve and that, in a sense, you will have a better environment in which to work, as one looks ahead? I mean, do you think this is something that we could all hope for, or do you think, in a way, you’re going to be battling against this, if you are successful as – in your candidature for this role?
Ambassador Jesús Seade Kuri
No, absolutely I have a basic optimism that things can begin to turn. We have had 26 years of non-negotiation in the Appellate Bodies on the floor. So, let’s not put everything in the basket for assessment. Relations United States-China will not improve overnight. I hope they begin to have a point of inflexion on trade issues. Security issues is none of our business, it doesn’t pertain here on trade issues. But I believe that we can regain – recover the path of dynamic negotiation, important, significant negotiation, involving China, United States, Europe, everybody. We can do that, and I believe we can resolve the issues around the Appellate Body. With those two in place, I believe that the chemistry that prevails in the WTO will begin to change to something more constructive. In a real negotiation, one essential ingredient is the basis of confidence, and basis of trust. If you mistrust your counterpart, you better sue them and go through the legal angles. Negotiation has to be more like creating a business together. So, for me, it is vital to place myself in your shoes and to understand – as much as I understand my needs, I have to understand your needs and I have to battle for them, for your needs. That’s the only way to get what I need and that doesn’t exist now. So, we will begin to have negotiations moving and repair the Appellate Body and begin to gain efficiency. I’m hopeful that we can begin to do bigger things in 2021 and 22.
Creon Butler
Well, that’s a really – a good note on which to end. I think to be putting yourself forward for a role like this, optimism is one of the most essential qualities and you clearly have a lot of that.
Ambassador Jesús Seade Kuri
And…
Creon Butler
So…
Ambassador Jesús Seade Kuri
…masochism, optimism and masochism in equal…
Creon Butler
Indeed.
Ambassador Jesús Seade Kuri
In equal…
Creon Butler
Convey the image, yeah.
Ambassador Jesús Seade Kuri
In equal measure, in equal measure.
Creon Butler
Indeed, indeed. So, unfortunately, we’re out of time. I’d, first, like to thank all our participants for joining us and for putting their excellent questions, but particularly Dr Seade, can I thank you for sparing this time for some very insightful points that you’ve made and for responding to the questions? And I’m sure we would all like to wish you well in the period ahead.
Ambassador Jesús Seade Kuri
Thank you very much. It was a great pleasure, a great honour and you are a great Chairman, so thank you very much, Creon. Best wishes to Chatham House and to all the audience.
Creon Butler
Thank you very much. Thank you, Dr Seade.
Ambassador Jesús Seade Kuri
Goodbye, goodbye.
Creon Butler
Bye [pause].
