We recently spoke to Jean-Pierre Lehmann, Professor Emeritus of International Political Economy and Founder of the Evian Group to find out his thoughts on the future of Global Trade*.
What do you think could be the most significant change in global trade in the next 10 years?
There are many forces driving the contemporary trade scene, including new actors, China in particular, the volatility of commodity prices, the development of supply chains, the rise of major metropolitan areas across the planet, as well as increasingly strong headwinds of protectionism and fragmentation.
With the collapse of Doha, the multilateral trade system and its governance is completely adrift. Some major force will be required to put things on track. Otherwise the least worse scenario is one of muddle-through where we continue in limbo with neither trade peace nor trade war, but policies based on brinkmanship. The worst case scenario is a breakdown of the system and the proliferation of trade conflicts.
What do you think the World Trade Organisation’s role will be going forward?
Of the two main pillars of the WTO, negotiation and dispute settlement, the former is clearly moribund. In the prophetic words of former WTO Director General Mike Moore, the WTO has become the “League of Nations of the 21st Century World Economy” (i.e. impotent and irrelevant). The question is whether the dispute settlement mechanism can operate with an amputated negotiating arm. The ideal of course would be for the members to return to the table in Geneva. But the WTO per se has little power. It is a member-driven institution. The only way this could happen would be if some of the major powers, notably China and the US led the way to Geneva.
What is your view on recent developments in trade governance?
Terrible. Personally, I especially blame the United States. For domestic political reasons the US aborted and forced the collapse of the WTO Cancún ministerial in 2003 and it has been downhill ever since. The so-called mega-regionals (TPP, TTIP) are deeply flawed (exclusive and discriminatory) but will in all likelihood fade anyway. The global trade governance scene evokes headless chickens running a marathon.
What is your current area of research?
The overall theme of what I am doing at the moment is “Asia in the New Global Disorder”. Basically in the early 21st century we had the effective end of the order that had been defined by Churchill and Roosevelt in the so-called Atlantic Charter. That order served the world superbly during the 50 years or so following WWII. Asia, with the exception of Japan, was pretty irrelevant to that order, as most Asian states were either in political turmoil (China) or following inward-looking import substitution industrial policies (India, Indonesia). The phenomenon of the rising Asian newly industrialising economies (Hong Kong, Singapore, South Korea, Taiwan) caused some disquiet, especially in the textile sector (leading to the Multi-Fibre Trade Agreement), but they hardly constituted a systemic threat. Currently, on the one hand there is the economic and in some cases (especially China) geopolitical rise of Asian powers, with considerable turmoil within Asia and between Asian states, a growing menace to American hegemony, but with no order having replaced the Atlantic order. There is no Pacific Charter. We live in interesting times.
*Please note that the views expressed above are of the speaker and not of Chatham House.