24 Sep 2015
Trade rules and the WTO: interview with Prof. Joseph Francois
The University of Bern online magazine Uniaktuell spoke to WTI Managing Director, Joseph Francois, ahead of this year’s World Trade Forum on ‘20 Years of the WTO’, which opens on 25 September. An English adaptation of the interview is reproduced here with kind permission.
uniaktuell: The World Trade Organization, based in Geneva, began work 20 years ago. To what extent does the WTO impact on day to day life?
Trade and investment agreements, including the WTO but also including regional agreements like the WTO and the Swiss-EU Agreements, define the rules that make the modern economy possible. For example, almost 32 percent of Swiss value added (including jobs) is exported. In other words, one-third of Swiss employment is tied to exports. These exports depend on rules and regulations that ensure what is known as “market access” to export markets. At the core of this system is the WTO. The World Trade Organization provides the basic framework for rules governing international trade and investment, and the jobs and living standards that depend on trade.
uniaktuell: What are the main topics at this year’s World Trade Forum devoted to the WTO anniversary?
We are focusing on three sets of issues during the World Trade Forum. The first is to look back at the first 20 years, to assess in hindsight what we had expected, and what was actually realised. The launching of the WTO came with many expectations, but also uncertainties about how the system would actually take shape. The second theme is current challenges in the operation of the WTO. This includes the workings of the dispute settlement mechanism (a form of international court for enforcing WTO commitments made by Members), the role of developing countries in the trading system, and the status of suspended negotiations. The third theme is how to meet future challenges in the decades ahead. Here, we focus on what needs to be done to face future challenges.
uniaktuell: Where does international trade law most need to adapt?
Starting in the early 1990s, firms have increasingly organised production across borders, and even between continents. Motor vehicles finished in North America may include parts from Asia and Europe, while consumer electronics can be designed in North America and assembled in China with parts from South East Asia, and finally sold in Europe. Data server farms based in the United States may support data services in Europe. All of this is quite different from the world of trade and investment flows anticipated when the post-World War II trade architecture, in particular the GATT, first took shape. Another manifestation of the phenomenon of growing interdependence is the increasing importance of multinationals in local labour markets.
With increased interdependence and operation of firms in multiple regulatory regimes, differences in regulatory requirements are seen as raising the costs of international trade. As such they have become of increasing concern to businesses. At the same time, large firms operating on a global scale pose regulatory challenges for purely domestic agencies. So, again, there is an incentive for cooperation.
At the moment, these new challenges are being taken on through “mega regionals” or large scale trade and investment negotiations outside the WTO. A basic challenge for trade and investment law is how to ensure that the multilateral system can be extended to address these issues.
uniaktuell: Since 2005 the WTI has housed the Swiss National Centre of Competence in Research (NCCR) Trade Regulation. With just two years left for the NCCR what are your research plans?
The WTI is a world leader in research and education on the legal and economic challenges facing the global economy. Looking forward past the NCCR, we will be facing the same issues confronting the trading system itself. This includes a renewed commitment to investment, a shift in focus to regulatory cooperation, and continued study of regionalism alongside the WTO itself. We are adjusting both research and teaching themes along these lines.
Interview: Brigit Bucher