Dr Robin Niblett CMG
Ladies and gentlemen, welcome to this next Chatham House session, which we have currently, to be able to discuss the future of the WTO, and in particular, our ability to be able to talk to each of the speakers, who have been with us over these last few weeks. The candidates that we’ve already had the pleasure of being able to have conversations with have included Ngozi Okonjo-Iweala, Amina Mohamed, Jesús Seade, in the last four weeks or so specifically. And a great opportunity now for us to be able to have a conversation with Dr Liam Fox ad I am thrilled, Liam, that you’ve been able to join us today. We’re going to hard stop at 1 o’clock ‘cause Liam Fox has a number of other calls, I suspect, to be able to make, to keep himself on this very tight timeline of all the candidates to get their visions and their ideas shared with the member states, who are all going to be making their decisions as to who will take over from Roberto Azevêdo, when he steps down, actually formally, at the end of this month.
I just want to say very quickly as well, this is the Chatham House centenary year, and as an institute we were involved back in the 40s in helping thinking about the future global multilateral trade system. So, to have this opportunity in our centenary year, to host this conversation, we’ve had a global trade policy forum, which is running on through all of 2020 and will run it into 2021. And therefore, to have this opportunity now to speak as well and go into the big topic of the future of the global trading system, with each of these candidates, is a real privilege.
And Liam, I want to say, Liam Fox, a huge pleasure for you to be with us again in this, guise. You’ve spoken at Chatham House, in the past, in your other positions. Just as a quick couple of words of introduction, Dr Liam Fox joined Parliament as a Member of Parliament back in 1992. So therefore, somebody who brings a lot of political experience, in the Shadow Cabinet, so he knows what it’s like to be on the shadow side, but then served as Secretary of State for Defence, 2010 to 2011, and then most relevantly, for this role as Secretary of State for International Trade for three years, from 2016 through the summer of 2019.
So, if I may, I will say, Liam Fox – Liam, if I may call you Liam, as we do know each other, it’d be a little strange, at least Robin me, in return, as I know you will. But just let’s try and set the scene at the moment, because you’re somebody who I think of always as very much a free trader. I think you’ve described yourself as somebody who believes very much in the benefits of free trade. Could you just share a little bit with us, just to kick off, your, kind of, philosophy about international trade, the role it plays in international prosperity and security? How do you – you know, what’s your vision of trade? ‘Cause it’s a very contested world today, maybe a lot more contested than it was five or six years ago, just share with us a few opening thoughts for Liam.
Dr Liam Fox MP
Yeah, well, thank you, Robin, and congratulations on 100 years. Let’s hope that the WTO lasts that length of time; it’s the objective of many of us to ensure that it does. Well, first of all, I think that you alluded to one of the great benefits of global trade. We have managed to take, through an open trading system, a billion of our fellow human beings out of extreme poverty in a generation, one of the greatest achievements, I think, in human history. Why? Because we looked at the concepts economically behind free trade of comparative advantage, but how we could use them, in a shared endeavour, in a multilateral way, so that we could make compromises at nation state level for the greater good and that greater good certainly came to be realised. So, I think that the proof is already there that if we have the political will to take it forward and the vision to take it forward, it can be achieved.
But I would say there is something else about trade that needs to be recognised, and that is, if we didn’t understand before COVID that we live in a very interconnected and interdependent world, then we certainly do so now. And we need to understand, therefore, that trade is not an end in itself. Trade is a means by which we help spread and create prosperity around the globe, and that’s important because that prosperity underpins that social cohesion. Social cohesion underpins political stability, and that political stability is the building block of our collective security.
In other words, it’s a continuum that you cannot break without there being severe consequences. So if you want to apply protectionist measures, you need to understand that if you deny people the access to poverty through trade, you cannot be surprised if you get more mass migration or you get more political radicalisation or other consequences that may come from the emergence of failed states. And I think it’s understanding that we can bring these huge advantages to global prosperity and stability through multilateral trade, but to try to block it in an era where we have this interdependence, is likely to have consequences for us all, in terms of security, and I say that with both my experience as Defence Secretary and Trade Secretary. In the modern world, we cannot differentiate in the way that perhaps we were able to do in the past between what is over here and what is over there.
Dr Robin Niblett CMG
Very important point you said at the beginning about trade having helped bring a billion people out of poverty. But as you said, trade is not an end in itself. I’m wondering how you deal with the accusation, these days, that while a billion people may being brought out of poverty, many people in the developed world, the countries that, let’s say were at the frontend of globalisation, many of them have felt the trade actually has undermined their prosperity and ultimately, their human security within their own countries. I remember President Trump’s inaugural speech, talking about the tombstones dotted across America, which he believes were driven very much by unfair trade, that in a way, trade had sucked the jobs out of America, and there are many people who’ve held similar views across Europe. And I suppose there’s a risk at some point maybe in the developing world, we’ll start to think this as well. How do you counter this idea that trade, while it’s helped some people out of poverty, has thrown other people into poverty or made their lives feel more insecure?
Dr Liam Fox MP
I think it’s a failure to understand the benefits that actually come from free and open trade. When you think about in the developed world, we take all the benefits of free trade for granted, and we seem to think only about the – some of the downsides that might exist. You go to a supermarket and have a look around you and then decide what would be on the shelves, if we didn’t trade with the United States, with Europe, with Africa, with Asia. We have taken completely for granted that basic things like food now are available to us all year, different types of foodstuffs, because of open trade. Our TVs have got bigger and the prices have got smaller. Our mobile phones have got more complex and more capable, while the prices have hardly changed. We have taken the benefits of not just free and open trade, but of global value chains and the integration of global trade for granted, in recent times.
And you’ve always got this trade-off between the ambitions of the liberalisers against the sacred cows of protectionists, but the bottom line is that protectionism is ultimately extremely inefficient and ineffective, even domestic economies. If you have more protectionism politically, what you end up with is industry worries about having better lobbyists to government, not having better products to sell to market. Ultimately, it is inefficient, it fails to take account of comparative advantage and we wouldn’t have made the huge advances we have in global trade and the availability of products to consumers.
It’s funny because very often the debate about trade mentioned – it fails to mention consumers. I sat in Davos a couple of years ago at a Trade Ministers’ meeting, and it was 55 minutes before anyone said “Consumers” in any way, shape or form. And we almost have forgotten that, that is one of the basic advantages of having trade, is that people can have a better choice of what they buy, at better quality and at lower prices. That’s what competition brings.
Dr Robin Niblett CMG
So, you’ve defended the benefits of open trade, free trade in those first answers, but as you, I think, alluded to already, we are in a time where the WTO is probably never been under as much challenge as it is today. It’s big supporting countries in the West, the United States, in particular, has become incredibly sceptical about its value and the insistence on the need for reform, the rise of protectionism and so on, you’ve alluded to already. If you were to, kind of, lay out, I don’t know, your top three challenges that you think the next Director-General will face when he or she takes up that position, what would you have at the top of your list, what would be the top of the list of the inbox that you’d want to deal with, if you were to be the next Director-General?
Dr Liam Fox MP
Well, there are different types of issues. I think, first of all, one I mentioned, we have to reconnect with this vision about a shared endeavour. One of the dangers of undermining the multilateral system is not only that we see ourselves in a more fragmented way globally, but that the alternative to a multilateral system and a rules-based system, is a free for all, and that’s likely to help the very biggest players, or at least not harm the very biggest players, but countries, even big countries, will be very susceptible to a breakdown in that. So, the United Kingdom that exports 31% of our GDP, that imports 33% of our GDP, Germany, that exports 49% of GDP. This is not a breakdown in a system that would simply harm the smaller countries, this could harm some of the biggest countries, as well who are open to that global trading system at the present time.
The – and my lighting seems to be going off in the room, so we’re going to be operating in the darkness. So that’s one thing. So, it’s getting that shared vision and reconnecting to that shared vision is absolutely key. Secondly – I’m not sure if you can see me now.
Dr Robin Niblett CMG
Not currently, Liam. So, if you’re able to get the lights working again, that’d be brilliant, but we can’t see you currently. We can hear you perfectly. We can’t see you.
Dr Liam Fox MP
Sorry. Yeah, you should be able to see me now.
Dr Robin Niblett CMG
You’re coming back. It’s – we can hear you, but it’s still dark currently.
Dr Liam Fox MP
Yeah, we should be getting lighter. We’re working in a building with some of these – and my picture’s stopped again.
Dr Robin Niblett CMG
Timer things you mean, yeah. Whatever you do before worked better. You’re still – no, and there we are, we’ve got you.
Dr Liam Fox MP
Yeah, we’re in a building where if somebody’s not moving in the room, the lights will go off, this is the benefit of being environmentally friendly at the present time.
Dr Robin Niblett CMG
You’ll have to start waving at the right moment.
Dr Liam Fox MP
It is, I need someone to stay in my room to keep moving from time-to-time. So, it’s the vision thing, Robin, the first thing is making sure that we’ve got a commitment to that shared endeavour. Then we’ve got the – some of the practical issues to do with, the Appellate Body, getting that up and running, because if you’ve got a rules-based system, but you don’t have a mechanism to adjudicate disputes within it, you’re actually denying members one of the main value-added reasons that they have for being there in the first place. So that needs to be done. And of course, we’ve got to deal with the magnitude of the COVID crisis and what that will mean across the global economy, the implications of which are only beginning, I think, to be understood at a macroeconomic level, and the specific impacts on trade. And the other issue, I think is, is a much more domestic WTO issue about how we treat our members in Geneva. I’ve done about 73, I think, if I count this as a bilateral, which is taking a bit of a liberty, but if I count this, that would be 73 bilaterals I’ve done, since we had the hustings in Geneva.
And the message coming across to me time and time again is that small members who make a nuisance of themselves get listened to, big economies get listened to, and there are a group in the middle, who don’t feel that their voice is properly heard. Now, that may seem a housekeeping issue, but it’s not, because this concept of that shared endeavour comes to fruition when you’ve got trust, that’s a prerequisite. And trust is actually based on co-operation between members, and if members feel that they’re not being listened to, they feel their voice is not being heard, their concerns are not at the top of the agenda, that trust starts to break down. But when I was still practicing as a Doctor, medicine as a Doctor, which you didn’t mention at the beginning, but that was my pre-career, or as my wife says, “When you still had a proper job before politics.”
One of the things that you have to learn is, if you don’t listen to what your patients think is wrong with them, you won’t be able to tell them what the diagnosis actually is. And I think that the lack of connection with members of the WTO at Geneva is quite a serious underlying problem. Maybe not something that would come to outsiders quickly, but I think that how we treat our own people is important. So, there will be a full to overflowing inbox for whoever the next DG is. They will not be looking for work for very long.
Dr Robin Niblett CMG
And that I have no doubt at all. I’m going to ask at least one more question, but at 12:40, I’m going to just let folks know that I will turn to questions, so as noted in the chatline on the side, do type your question into the Q&A. We’re only taking questions on the ‘Q&A’ function today, for those of you who joined since we started. So just type your questions into the Q&A. You can always like somebody else’s question, if you want, and I will work my way through them when they come on.
But you did mention the COVID context and this idea of needing to listen better to members, are you concerned? I would think one of the big challenges is going to be is that members are going to be much more actively involved in their economies post-COVID than they were before, protecting consumers, focusing on resilience, closer supply chains to home are likely, are they not, to be part of the new future? What do you think the WTO is going to be able to do to get ahead of that wave, or we could end up in a very messy world trade environment? Lots of members that the DG is listening to, but a lot of members asking for particular consideration and protection, how do you deal with that COVID environment, Liam?
Dr Liam Fox MP
Well, I think your first point’s absolutely correct, that governments will be much more concerned with their domestic issues, and that may make some of the current disputes take longer to settle. Actually, I think it is actually a good argument for saying, we should go more quickly to try to take things off the table because we’re going to have new considerations. So, perhaps we need to look at things like Fisheries and Agriculture to see whether we can expedite to the extent that we can. No small challenge I accept, but there would be some logic in trying to do so.
Governments will be preoccupied, when the cost of intervention comes and their consideration about repayment of both sovereign and commercial debt starts to rise up the agenda, so I have no doubt about that. But I think you make, if I may say, the key point, which is about resilience and I think that one of the things that we have learned is that the way in which we’ve organised global value chains, particularly just-in-time manufacturing chains, for example, has tilted the pendulum away from resilience towards efficiency, so I think there’ll be some rebalancing of that. I think that’s most likely to manifest itself by greater holding of stock. I think you will get some onshoring that’s likely to happen, but I think that the lesson there is back to comparative advantage. There’s a reason why some big economies don’t manufacture certain things, and that’s because the fixed costs in their economies make it uneconomic to do so.
Where I think the WTO will come in is in two ways. Number one is to actually make the case openly and constructively for the fact that resilience is to be found in greater diversity of supply. The more we try to on-shore and do everything ourselves, the more we are literally putting everything in – all our eggs in one basket, and if you try to be utterly self-sufficient, you had better hope that you’re not the first country where the next new virus strikes because you will be alone, in terms of the global situation. So, I think understanding that we do need to accept this reality of interdependence and interconnectivity and plan for global resilience in that way.
There are some elements of global trade, which have already been disturbed and which we cannot avoid. For example, simply the fact that so many container vessels were tied up at the beginning of the crisis in the Far East, which has meant a disruption of supply because of the length of time that that takes, the fact that there has been less passenger traffic, meaning less airfreight being carried, that will also have an effect on supply and probably price, as you would expect economically. And then we’ve got the simple human costs of lockdown itself. The fact that in lockdown, there are fewer SPS inspections being done, fewer technical barriers to trade certifications being done, less work being done on disputes over dumping, for example. So, all these are disruptions inside the trading system.
But what’s common to everything we’ve talked about so far is that all these problems are not technical, they’re political. All the issues we face from the fisheries dispute to some of the elements of COVID and export restriction to the Appellate Body, all of them are political, which is why the reason that I’m standing in this race is I believe that an elected Politician is best placed to understand how to go about dealing with these issues, whereas, those with technocratic skills, of whom there are many tremendous minds at the WTO, have a different feel for how these situations occur. It’s going to be a very difficult time, I think, for the WTO, as it will be for the global trading system, but understanding that these problems will need to be sorted out in capitals, not by internal discussions in Geneva, is a common thread running through all the issues that you’ve mentioned so far.
Dr Robin Niblett CMG
Thank you. I can feel the timer in your room going there, so I’m hoping – hopefully, you’ve got somebody around there, and you’re waving your arms up. No-one’ll mind if you have to wave your arm at some moment to keep the lights going.
What I was going to say was just one more question for you, and we’ve got lots of good questions coming in from our audience right now, who I’ll turn to in a minute. But could you say a word or two about how you think of the interconnections between trade and the Sustainable Development Goals, the SDGs? I mean, there is going to be a critical moment, in these next five years, to really make progress towards the SDGs, deep concerns that the COVID crisis might knock us backwards, or it probably has already knocked us backwards on a whole bunch of areas. Where do you see the role of trade and the WTO itself in making that part of its DNA in a way and driving that forward? Could you just pick any part of the SDGs that you would like to draw off?
Dr Liam Fox MP
Well, I think if you go back to the Doha Round, it was very clear what our aims were then, it was to get settlement on agricultural issues, to deal with tariffs in non-agricultural goods and services, but at the same time, putting development at the heart of the organisation.
Now, I think that you, therefore, have to look and see what the WTO is and what the WTO is not. So, it is there to deal with the application of trade rules. It is there to deal with disputes within the system and negotiation on how we liberalise global trade. But the WTO is not UNCTAD. It has a huge overlap in the developmental interests with groups like UNCTAD. It is not the World Bank, it’s not the IMF, it is not the UN, and it is not the Security Council. So, we’ve got to try to keep within the WTO, the issues for which it’s responsible and not allow, for example, disputes between members to spill over into the trading system.
We need to keep that focus on development. We need to keep the focus on capital flows because capital flows, into developing countries, are essential for their ability to mature and develop capability. We’ll have to ensure that the development programmes, from individual countries, are able to continue and that we’re able to ensure that we get training done. We have to ensure that we encourage more women into the global trading system, and that’s been one of my very passionate issues, in recent years, in supporting the SheTrades initiative and others, because that’s not just an economic, it’s also a developmental and social tool as well. So all of these things, I think that what you need to do is to take that core function of the WTO, recognise where it overlaps with the World Bank on finance and the IMF, recognise where it overlaps with UNCTAD on development and looks at where, through trade itself that can be an adjunct to what’s happening elsewhere.
Sometimes I think that we have a rather siloed view of what happens in the international institutions, and I think we need to get them to co-operate better together. That’s not to try to get them all to do the same thing, but it’s to try to get them to co-operate, if you’d like, in a Venn diagram where they overlap with one another, in a more constructive way, utilising data in particular. I’ll give you a tiny element of where I think that’s important. If you look at some of the small vulnerable economies, one of their biggest problems that they will say is the way that they are categorised, for example, by GDP per capita.
If you’re in a coastal or an island community, you can have a very high GDP per head the day before your hurricane hits and a very low GDP per head six months after. And it seems to me that we have to look at the datasets that we have, we need to look at how we measure that. For example, should we not be looking at a rolling five-year GDP per head to give better predictability to some of the governments in these areas, so that they know what, sort of, trading preferences they will have, as a consequence of these measurements? And I think that getting some of the institutions to work together in a more creative way, perhaps, than we’ve had, you know, is no bad thing. And again, when you’ve had to work in – as a G7 country, at a global level in politics, then it, sort of, becomes your bread and butter as to how you think about that.
Dr Robin Niblett CMG
No, thanks, thanks for that answer. Look, I want to stick to time. The last 20 minutes is to get questions from our participants here, our members. Lots of good questions coming and let me start with one by Tina Intelmann. We’ve avoided the geopolitics a bit, but she asks the good question about “How would you engage the big players like the US, China, and the EU in this agenda that you have set for yourself, because the one thing we know is certainly the big players are at daggers drawn at the moment. What would be your approach to dealing with the big players and getting them behind your agenda?”
Dr Liam Fox MP
Well, again, it’s about getting the political commitments, it’s about getting them to understand, but actually, what their voters want is a successful economy. That is successful economies best served by an open trading system. That’s how consumer interests, as I said earlier, are best served. We do have quite severe global tensions in the system. Back in 2018, I made five visits as Trade Secretary to Beijing and five to Washington, and my message, whenever I was asked to take sides, was always the same. I said, “My side is the rules-based system.” Countries that operate within the rules-based system will get our support, but they will have to expect to be criticised, if they operate outside that rules-based system. I can’t emphasise enough just how important I think that multilateral rules-based system is because of the alternative.
In terms of the US/China disputes, well, why do trade wars normally end? They normally end because the economic cost of sustaining them becomes too great for the parties involved. And, you know, I don’t need to tell you, Robin, the amount of data that’s out there from the IMF, the World Bank, the OECD that’s producing estimates of how much 28% tariff rates being applied bilaterally may affect the GDP of both the US and China.
In a global environment, where the economies are growing quite well and global trade is growing, perhaps you might be able to sustain a 1.2% anchor on your GDP. Post-COVID, will that be the same or will there be an additional pressure on the incoming American administration and Congress who, whoever that is, as well as the Chinese, with a high need for good growth levels, for social and political reasons, will there be an increased pressure on them to be able to come to a compromise? I think that that is certainly arguable, but I think we need to see where the COVID numbers take us, because I think paradoxically, the worse the COVID crisis actually becomes, perhaps the greater the chance of resolving some of those bilateral differences, or at least an increasing pressure to come to the table to resolve them might become.
Dr Robin Niblett CMG
Thank you. Let me jump to another question by James Tudor-White, that’s the one that’s at the top of our list right now, talking about the fact that “UNCTAD has confirmed how much trade has contracted, on the biggest contractions last year since the 2008 financial crisis. What, in your opinion, are the most important measures to kickstart the economy and promote free trade, dismantle barriers? How can the Director-General facilitate that dismantling of barriers? What would you have at the top of your first 100 days, should we say, of ways of using trade to promote that growth?”
Dr Liam Fox MP
Well, the first is to deal with the COVID measures themselves. My worry, not least as a – from political experience, is that there is nothing so permanent as temporary measures introduced in a crisis. We need to make sure that some of those restrictions are removed as quickly as possible and that they all are removed in time.
To help us do that, we need to improve notification, so our members need to notify WTO of the measures that they are introducing, whether export restrictions or other barriers to trade. I think I have two particular worries in that, one is the export of medicines, potentially how that would impact vaccines, were we to get to that point, and secondly, food. 30% – or 30 countries in the world are now utterly dependent on the open trading system, not just to choose the food they want to buy, but to avoid starvation. That’s 17% of the people on our planet require that open trading system. So, it’s not just about livelihoods, it can quickly become about lives as well. So, we’ve got to make sure that we don’t turn the COVID crisis into a humanitarian crisis around starvation. So that’s, I think, the number one priority.
We’ve also therefore got to understand how we differ from where we were at the end of the financial crisis. Back in 2009, only 0.7% of G20 countries’ imports were covered by restrictive measures. Now that doubled almost every two years, so that by the end of 2019, 10.3% of G20 countries’ imports were covered by restrictive measures. That is a massive increase in the barrier to trade facing other countries in the trading system, and the G20 needs to learn to lead by example. I would not have any problem holding up a mirror to the G20 and saying not only are you not moving quickly enough in the right direction, you’re moving in the wrong direction. And we’re now making it much more difficult for countries, in the COVID crisis, to trade their way out of poverty or to trade their way perhaps into livelihoods, than we were at the end of the financial crisis.
So, you know, you have to practice what you preach, and one of the key elements will be making that case to the G20. Now, this is not about making the case to G20 governments, but very often to the electorates, and the people who genuinely do worry about what the impact of restricted trade on hunger, for example, or medicines might achieve.
I was briefing Members of Parliament at Westminster not long ago on this, and they were horrified that the UK was one of those G20 countries, where we have to take responsibility for those measures being in place. So, getting an understanding that we are in a bad place to start with. We are in a worse place than we were at the end of the financial crisis, and we’re in danger, through some of these protectionist measures, of worsening what is, as you readily say, has been the potential impact on trade, talking about constriction between 13 to 32%, according to WTO figures.
So, wakening up, we cannot have business as usual. This is business unusual, get real and get ready to deal with it.
Dr Robin Niblett CMG
Thank you for that point, and lots of other questions coming in, I want to make sure I do them justice. Just to piggyback on that, very quickly, if you could give a short answer to this, would you try to pick a particular sector at all? Do you think that there’s a space where the WTO can play a particular role, either on digital trade or in some particular sectoral area, where you could get everyone behind the moment of progress, does that feature as part of your agenda, trying to find a space where you could make a bit of movement to show forward progress at this time of restriction?
Dr Liam Fox MP
Well, I think you have to look at the connected problems we face. We’ve got a trading crisis, as if that wasn’t enough, we’ve got the COVID crisis, and for good measure, we’ve got the ongoing climate crisis. How do we look at, again, where those areas intersect? We could be sending some important signals. I think, for example, the Environmental Goods Agreement, which is a plurilateral involving 46 members, I think we could get that moving because it sends a signal about development, about reducing the cost to sustainable energy generation for developing countries. It says something about our commitment to the wider environment on the climate change issues, and it’s probably doable. Is it possible to conclude a big multilateral? Well, possibly Fisheries. But again, here’s a point I would make perhaps instinctively as a Politician. We’ve got a Fisheries agreement, which is all about sustainability. We need to use strategic communications much better to get the NGOs and those billions of young people across the planet who really do worry about sustainability and the health of the oceans, to be putting pressures on their governments to try to get this done.
And what I said earlier, it’s not just about what happens in Geneva. It’s what happens in capitals and how we can get the global public to understand what is happening in trade, can have an impact on issues way beyond what they may think traditionally constitutes a trading one. So, I think EGA is really important because it’s so totemic in many ways. It sends a lot of messages about how we understand that interaction between trading issues, between climatic issues, and developmental issues. Fisheries will be another very good example, and they’re probably the only two potentially doable ones, I would have thought, and in the short-term.
Dr Robin Niblett CMG
And there’s a lot of talk, just sticking to this issue for a second, there’s a lot of talk in the EU in particular about establishing a border carbon adjustment mechanism, to actually start to take the carbon content of imports and apply, in essence, a tariff, depending on the differential between that content and the content in, let’s say, in EU countries. Where do you think the WTO should stand on the potential emergence of carbon tariffs, or let’s call them carbon border adjustment mechanisms around the world, something that should be supported as working towards SDG goals or something that should be resisted because it’s maybe a free-for-all, where would you stand on that?
Dr Liam Fox MP
Well, you love to pick these complex ones to dissect, and you’re quite right, because it is going to be a big issue. So, for developed countries, who may be offshoring manufacturing capability, which is in breach of many of the climatic targets that have been set, should a price be paid for that? Yes. Yes, it should, and it’s entirely justifiable and understandably politically and in terms of climate change, why we would want to do so.
I think that where the difficulty in that would come would be in this concept of green subsidy, because you can easily turn what are distortive agricultural practices, which we want to get rid of, into subsidies for agriculture by another means, by calling it a green subsidy. So, if it were purely in line with climate change objectives, that’s one thing, but where it’s become distortive, in terms of trade, in areas like agriculture, I think that would legitimately be part of the remit of WTO. You’re right that it encompasses a number of different objectives and goals within that, and it’s going to be quite a tightrope, I think, to walk as an issue, but then again, it’s a political issue. It’s not really about the technocratic skills, it’s about a willingness to both accept that if we want to see the climate change objectives met, that there will be a price attached to that and to trying to divert it into something else would be to fail to, I think, meet the primary objective of some of those very laudable ideas.
Dr Robin Niblett CMG
You – thank you for that answer. You advertised your political skills and your political experience as one of your strong suits for the position at the WTO, and I expected that you would get at least one Brexit question, which will test your political skills of course. Somebody just said, could I please read it out, so I will do, Thomas Cole, the readout. So, he notes in his question that you championed Brexit, “But it’s erecting barriers to trade between your native UK and its largest trading partner, the European Union. So how do you square the fact that you’re a backer of raising barriers to trade with wanting to be Director-General of the WTO, whose aim is to liberalise and promote trade? How do you square that contradiction,” is Tom Cole’s question?
Dr Liam Fox MP
Yeah, well, I mean, I don’t think it is a contradiction. I was – I campaigned to leave the European Union purely for political reasons, for constitutional reasons. I always wanted us to have a full comprehensive trade agreement with the European Union, which I still believe is in our bilateral interest to do so. I never wanted to see barriers to trade erected, and I still hope that in the negotiations, we don’t get erections of barriers to trade. My objection was purely about political control and constitutional control.
Dr Robin Niblett CMG
But there will be some barrier, and sorry, just to push you a little bit, there will inevitably be barriers, once you leave, even if there were a zero-tariff arrangement with the EU, there would be barriers, in terms of rules of origin, I mean, the Customs controls, etc. So, it is inevitable, isn’t it, or not?
Dr Liam Fox MP
That’s entirely possible. But again, you have to look against what it might be counterbalanced against, from the UK’s point of view, and whether you get overall liberalisation elsewhere. But I would also say that I’m not a Member of the UK Government and nor am I going to be the UK DG if elected. If I become selected, the UK will become one of 164 countries that will be treated without fear or favour by a DG who believes in the rules-based system and believes that everybody should be subject to those rules. And I think that, but understanding the political complexities is no bad thing, when it comes to issues like Brexit or any number of other political problems, where we have blockages in the trading system at the current time.
Dr Robin Niblett CMG
Another question here from Alex Folkes, which was on the political dimension as well. Trade is more and more the weapon of choice for governments to pursue political objectives, and he notes here about the question of sanctions being increased more and more, and being used, and they were probably used, he mentions, against Belarus for any election rigging, it’s being used against Russia for annexation of Crimea, it’s being used by the US over Hong Kong. Where does the WTO going to position itself and where do you think it should position itself in this expansion of trade as a kind of weapon, if you see what I’m saying, of political objectives?
Dr Liam Fox MP
Well, there are circumstances, as you know, within WTO rules where countries can use sanctions legitimately for political reasons. Where would I put it? I put it as a last resort. I go back to the point I made earlier, that the WTO needs to know what it is and what it isn’t. It is there to ensure that we expand trade liberalisation, that we apply global rules for trade, and that we adjudicate on disputes. If we, frankly, allow all our global institutions to be part of the same conversations and disputes between members, we’ll end up all doing the same things. We’ll end up all having the same conversation, and there’ll be little point in differentiating between those institutions.
So, I think that – I think I would also say that understanding the rule of trade in security, which I alluded to at the very beginning, trade is the lifeblood of the global economy. Trade is the bridge between prosperity and security. And while we may, in extremist, want to use restrictions of trade as a particular weapon against what are perceived as genuinely difficult global adversaries, in whatever situation, I think we’ve got to be very reticent about doing so, because restrictions of trade will have consequences and there will be victims and there’ll be a price to be paid for doing that. So, yes, within what is strictly allowed, but what we mustn’t allow is for trade disputes to become the proxies for political or security disputes elsewhere. There is a danger in that and it’s understandable that – and as a Politician, I understand you cannot create a sterile environment inside each of the global institutions, where those problems never spill over, but we ought to try to restrict them to the appropriate fora where we can.
Dr Robin Niblett CMG
I’m conscious, you’ve got a hard stop at 1:00, and we’ve got two minutes left, so I think this will be our last question, and I’m going to just pull on an issue that wasn’t covered in the list of questions next, I think we’ve covered most of the issues that are there, and there’s one about a UK/US FTA before the end of the year, which I think is probably not appropriate for you to answer, unless you want to say something about that.
But the key question, I think, in your role is this rise of regional trade agreements in parallel to the WTO. Where do you think – should the WTO be accommodating, working with the regionalisation of trade, we have a new Africa continental agreement, we’ve got a CPTPP obviously, etc.? Is this helpful, or are you worried that in a way the WTO, it needs to reassert its discipline and fight this spread of regionalisation?
Dr Liam Fox MP
Well, the WTO is a multilateral organisation, therefore, a multilateral agreement is the gold standard, and that is what we are committed, as an organisation, to try to do. It’s at the heart of all the assumptions about the creation of the WTO. It was at the heart of the understanding of the Doha Round and has continued to be at the centre of thinking.
At the ministerial conference, which I attended in Buenos Aires, we reached the point, however, where in some attempted multilateral agreements, it simply was being held back by a small number of members. And I remember Ambassador Lighthizer memorably saying of that, “Well, there’s no point trying to take hostage when no-one’s willing to pay the ransom.” That, in other words, that we needed to make progress in areas like eCommerce, where the initiative moved forward after that. And I remember having a conversation with the DG, Roberto Azevêdo in Argentina at the time, about this concept of multilateral, versus plurilateral, versus regional, versus bilateral, in terms of agreements on trade. And my view was that if you saw plurilateral agreements as an alternative to multilateral, then you were missing the point of the WTO. If you saw plurilateral as providing a steppingstone by which members would ultimately reach a multilateral, that was a different concept.
So, in my mind, I see a very clear range of these agreements, multilateral being at the top. I see the next one in the division down as being open, plurilateral agreements that will lead to multilateral agreements, then we have regional trade agreements and then we have bilateral trade agreements. Some of these are done out of frustration at the lack of multilateral progress. I’ve always seen the regional trade agreements as being, again, steppingstones to creating a multilateral, open, liberal, free, and fair-trading environment. And I think that some liberalisation is better than none, but multilateral is better than everything else, and it takes me back neatly to the very first point I was making.
We can only do this, and we can only operate multilaterally if we have a genuine concept of a shared endeavour and the vision that will allow us to have the trust necessary to make the compromises upon which a multilateral agreement depends. And if every country puts its own national interests exclusively at the centre of its thinking, we will not have the space to do that. And we should remember those billion people that we did take out of extreme poverty and not only the responsibilities we have to take them to the next level of prosperity, but that it’s not only economically, and in my view, morally reprehensible to say we have benefited from that free and open trading system, we’re now going to pull up the ladder behind us. So, it is a political judgment, and in many ways, it’s a moral judgment, too.
So, whatever happens in this election at the WTO, over the next few years, it is going to literally be an existential period for the multilateral trading system.
Dr Robin Niblett CMG
Liam, thank you very much indeed for answering those questions. We’ve taken a little bit past your 1 o’clock deadline. I know you’ve got a lot of other calls to make, and a lot of other discussions to have. Thank you very much for taking us both into the philosophy behind your position, but also, your connection to security, that idea of trade being central to this as well, and I think your hierarchy, I’ll use that term, of different types of agreements and how you see those playing out.
Good luck to you, as good luck to all of the candidates with their pushes, you know, over the coming weeks to be able to get their messages across. Just to remind everyone on the call that we do have another one the day after tomorrow with Abdel-Hamid Mamdouh from Egypt and we have Yoo Myung-hee, the South Korean Minister just before the end of the month. But all of these things will be sent out to you. For the moment, I want us to do a very big thank you to Dr Liam Fox for taking the time to take a lot of questions on top of the rest. And thank you to our members for joining us and asking some very good ones, as well along the way. Please join me in thanking Liam Fox virtually. You won’t hear them, Liam, but thank you very much indeed for taking the time and sharing your thoughts with us and in getting these ideas into the mix. I’m delighted we’re having the debate.
Dr Liam Fox MP
Thank you, Robin, and here’s to the WTO scoring its century. Thanks.
Dr Robin Niblett
Exactly. Thanks very much. Goodbye, everyone. Thank you so much. Bye, bye.
