In recent years, we have seen the concurrence of various global challenges and black swan events — unpredictable events that have severe consequences — as well as rising instability in international relations, the global economy and security, and acute environmental and public health challenges.
The international community is gripped by a growing sense of anxiety and confusion. At such a challenging time, strategic thinking is needed.
Looking back over the course of history, it can be seen that the development of human civilization is a process of continuous integration. Openness allows different civilizations to learn from each other and enables countries to exchange ideas and knowledge and conduct reciprocal cooperation. Openness is the inevitable path for the common development of humanity, and cooperation is the best solution to the common challenges facing the world.
Is the trend of economic and trade globalization being reversed? According to the latest World Openness Index released during the fifth China International Import Expo, the global level of openness has been declining since 2008. However, this is not the dominant trend of the era. From a longer-term perspective, we are still advancing toward a more open world.
The World Trade Organization has been closely tracking the economic and trade policies of member countries. We have noticed a growing openness in different sectors across the world.
More and more countries hold open attitudes toward emerging issues, such as climate change and the transition to a digital economy, and show willingness to solve the problems through international cooperation. But in some countries, we have seen heightened government interventions in the market, and a shift from off-shoring to home-based, near-shoring or friend-shoring manufacturing on the grounds of national security concerns.
The WTO understands and respects member countries’ reasonable concerns in terms of security, but it is concerned about the impacts that abuse of such policies may have on global trade. If applied improperly, these policies could have significant negative effects on the global market and division of labor, and harm the welfare of people around the world.
According to a study conducted by WTO economists, a complete decoupling between the East and the West would reduce the welfare of all countries — in some regions by as much as 12 percent — with low-income countries hit the hardest. Indeed, for some countries the costs would be unbearable. In some ways, decoupling and isolation can bring a sense of security, but in other ways, doing so makes countries less secure.
The solutions to these problems are reform of the global governance system and policy changes by countries.
The North-South gap in global governance should be bridged in order to assist the less-developed countries and regions and help them integrate into the global economic and trade system. Members of the WTO are discussing the organization’s reform. Although specific measures have not yet been hammered out, the general direction of reform is clear: to make the global trade body more transparent, inclusive and balanced.
Openness in the future will be more green-oriented, inclusive and sustainable. Over the past decades, WTO rules focused mainly on free trade and open markets, which led to the misunderstanding that the organization cared only about trade and neglected social values. This is not true. Since the founding of the WTO, as well as its precursor, the General Agreement on Tariffs and Trade, the organization has been pursuing more employment, increased incomes and better livelihoods, as well as sustainable development and the optimal allocation of resources across the world.
In fact, the WTO has made great efforts in this regard. At its 12th Ministerial Conference held in Geneva in June, members reached agreements on a package of key trade initiatives that aim to address some of the hot issues and promote green, inclusive and sustainable development.
Among them, the historic Agreement on Fisheries Subsidies sets new rules to curb harmful subsidies and protect fish stocks in a manner that also recognizes the needs of fishers in developing countries. In addition, the decision on the waiver of intellectual property rights for COVID-19 vaccines will boost the production capacity of vaccines in developing countries and increase the affordability and accessibility of vaccines, and the decision to extend the moratorium on applying customs duties to electronic transmissions creates better conditions for the development of e-commerce. The conference also put forward trade solutions for addressing the global food crisis.
Going forward, the WTO is committed to tackling common challenges and encouraging greater openness, with negotiations to agree on new trade rules to help the world adapt to climate change and solve other environmental issues, build more resilient global supply chains, push for the transition to a digital economy, help the least-developed countries integrate into the global value chain, facilitate the participation of small and medium-sized enterprises in global trade, and elevate the socioeconomic status of women by engaging them in trade.
The world stands at a historical crossroads. Openness or exclusiveness? Cooperation or confrontation? Those are the choices that countries need to make.
Opening-up and reform are complementary: Opening-up can ameliorate a nation’s external environment, and reform can boost its own capacities. Opening-up in the absence of internal reform may lead to failures of some industries due to their inability to adapt to the new environment.
In fact, many countries have failed to make the achievements that China has realized after its accession to the WTO, partly because they didn’t effectively reform their domestic systems and, as a result, could not translate a better external environment into growth impetus at home.
We believe that the anti-globalization trend is temporary and is a readjustment of unbalanced development and a rebalancing of existing interests. Solving the problems that have arisen will create conditions conducive to greater openness. Therefore, the current stage can be called a process of re-globalization. In this process, all parties should strive to enhance communication, seek equal consultation, and make concerted efforts to steer the giant ship of the global economy to an even brighter future.
The author is deputy director-general of the World Trade Organization.
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