The global trade war initiated by the United States has accelerated the process of counter-globalization. Under such a context, the call for the reform of the World Trade Organization (WTO) has also increased. Since 2018, the United States, Japan, Europe and China have proposed their own WTO reform programs. However, currently there are still many differences between the different parties, and no unified solution is reached. So, what kind of direction will the WTO reform take in the future? What coping strategies should China choose?
On March 23, former WTO Director-General Pascal Lamy said at the China Development Forum that the WTO is facing difficult position, both internally and externally. The internal challenges come from its member states. Lamy said that the vision of the WTO is to create a fair competitive environment and promote global trade. However, in the past decade, this goal has not been well realized. His opinion is that some countries have made certain progresses in the rules-based multilateral trading system, but the problem now is that these developments have not changed much compared to 20 years ago. In addition to this, some new obstacles have even emerged. The development of WTO's rules has not developed in the expected direction. For example, there should be more rules on subsidies, but this has not been realized. These rules are not in accordance with the direction expected by the WTO. On the other hand, the external threat comes from the attack of the U.S. President Donald Trump. According to Lamy, Trump has a theory that the WTO is not good for the United States, and that he wants to reform the WTO. In reality, Trump wants to completely eradicate the WTO. Lamy also questioned if Trump can represent the U.S. government.
Given the chaotic and ambiguous policies of the Trump administration, Lamy pointed out that different countries should study different scenarios. He pointed out that there are two feasible plans, Plan A and Plan B.
Plan A assumes that the United States wants to reform the WTO. Under such circumstances, the world should take time to resolve some pressing issues, such as solving the problem of subsidies, strengthening the formulation of rules, and further reforming the dispute settlement mechanism. Regarding the positions of all parties, Lamy believes that the current situation is that the EU and Japan share similar position, while China and the United States are at other two ends. In this triangular relationship, the United States is still in the middle. That being said, Europe and Japan hope that China would join them to play a more central role. Lamy said he is uncertain if this plan will work, and whether this is what the EU and Japan would want to do.
On the other hand, Plan B assumes that Trump wants to completely eradicate the WTO. In this case, it is necessary to prepare a WTO without the United States. Lamy said that while this is not the result that he desires, there should be a Plan B if Plan A does not work. It is also worth noting that Lamy stressed that China must stay in the WTO. There is no other alternative.
Anbound's researchers believe that Lamy's analysis of the pattern of WTO reform is very thorough and has important referential significance for China. In fact, when the U.S.-China trade friction just started, Anbound suggested that China should be prepared for a WTO reform and actively participate in it because of its importance in maintaining the system of globalization. China should strive to obtain more initiative and interest in the future reform of the WTO through participation in reformation as soon as possible and come up with its own reform plans. The current WTO reformation is still in its infancy. It is still without clear and specific ideas, and no broad consensus have been formed. Therefore, China needs to adopt different strategies for different scenarios. On one hand, China must seriously consider the possibility of "aligning" with Europe and Japan. As Lamy proposed in Plan A, the EU and Japan hope to leave China in the current WTO structure, and they hope that China will play a more central role with Europe and Japan. This is a rare opportunity for China. Under the threat of Trump, China, Europe and Japan can fully look for common interests. China must strive to seize this opportunity. In fact, the expectations of the EU and Japan coincide with the "1+3" pattern previously proposed by Anbound, which should be the direction of China's key efforts to participate in WTO reform in the future.
Concerning Plan B proposed by Lamy, China do not have to be fully prepared for that. Based the behavioral track record of Trump, one cannot rule out the possibility of the United States completely eradicating the WTO. Therefore, China also needs to develop its own Plan B. However, China's Plan B will be different from the WTO's Plan B. It is necessary for China to consider how to maintain its function in the global trading system in the event of the eradication of the WTO by the United States. Under a competition of global market space, China's biggest bargaining chip is its domestic market. The positive strategy that China should adopt is reform and opening-up, maintaining international trade participation to establish multilateral and bilateral trade agreements. Through this, China will not only enlarge its market space, but also attract more countries to join in to this new trading system. This is the focus of negotiations that China should seize when responding to changes in the global trading system in the future. However, Plan B is not the optimal solution. As Lamy has said, China's best option is still to strive to stay within the WTO framework.
Final analysis conclusion:
Under the backdrop of counter-globalization, WTO must conduct its reforms, and China should respond with its corresponding strategy and actively participate in it. First of all, China must stay within the WTO framework and focus on strengthening its cooperation with Europe and Japan. At the same time, China should also be prepared to respond to the situation in which the WTO has been completely eradicated.
