tv Peterson Institute Discussion on the State of World Trade CSPAN December 26, 2018 4:25pm-5:49pm EST
much power with getting it done for the american people i fear that it will not change. >> watch conversations with retiring members of congress. saturday 8 pm eastern on c-span and c-span.org. listen with the free c-span radio app. >> next, alan wolff, deputy director general of the wto talks about the importance of the organization, agreements and resolving disputes between member nations. he spoke at an event hosted by the peterson institute for international economics in washington. [inaudible conversations] >> let me welcome all of you today to the peterson institute
for international economics. our friend, fred bergsten, director emeritus and senior fellow and happy to host today's session for very close and dear old friend, alan wolff. alan wolff, as all of you know is now deputy director general of the wto. has been for a little over one year. this comes after a very distinguished career in government and in the private sector. he was one of the leading international trade lawyers for many years. having in fact prosecuted some of the most -- going back to kodak fuji, semiconductor cases in a variety of other landmark international legal decisions. alan was the deputy u.s. trade
representative in the u.s. government way back in the carter administration. when he was one of the key architects of the tokyo in the gatt which launched many of the changes in the global system. he also chaired the seal committee at the time which dealt with overcapacity problems that have some similar residences today. alan was a pioneer in many respects. in the international trading system now and then. prior to serving as deputy was head of the office of general counsel and after earlier serving in the u.s. treasury, with a wide variety of international legal issues. while lawyering in dc, alan was
also chairman for many years of foreign national trade council. chairman of the board of the institute for trade and commercial diplomacy. and literally, one of the dean of international trade committee in the united states peer were delighted when he was appointed to his current position at the wto when your go. today's topic is the status of the global trading system. some of you may have noticed that larry kudlow, presidents chief economic advisor, said one of his recent press briefings, the wto is dead. he went on to say, this was after the g 20 summit in buenos aires. the rest of the g 20 agrees the wto is dead. now, larry kudlow, who happened to be a friend of mine, is a lifelong free trader. a little hard to explain his
current position but a lifelong free trader. and so, when he says it, i think he says it with positive thoughts in mind. he went on to say in the same interview, president trump is a trade reformer. he wants to reform the international trade system. well, we have nobody better than alan wolf to tell us, is the wto dead or not? industry reform -- alan, it is great to welcome you back to our platform here in washington. [applause] >> a pleasure to be here. a little known fact that after one dies, one's nails and hair continue to grow. and i may be a living illustration of that fact. >> i can't hear back here. >> can't hear back there!
is that better? well, you actually missed nothing. [laughter] too many people ultimately, too many people apparently some famous ones, are questioning whether a liberal international order, which includes geopolitical as well as economic, can be maintained. in the original reason for founding all of this is, tends to be forgotten. back in 1947, the idea is memory does not exist beyond two generations. so on the occasion of george h. w. bush death a couple weeks ago, writing in the financial times, they wrote social order
to some extent is self canceling. the longer people have it, the more they take it for granted. historic events that warn against such complacency task in living memory to folklore to something more like rumor. i am with that sentiment part of the way. another book that has influenced me a lot is by robert kagan. the jungle grows back. in which he says that the last 70 years were in operation. that is not the norm. major countries go to battle with each other regularly. and free trade is not the norm. and that we, our next urinary period. the u.s. coming out of world war ii, there were two wars
separated largely by the great depression. and the, the results were putting into place, international what we have. but that is not the norm in human history. so i am with him part of the way. when he says is, if you do not tend the garden, the jungle does grow back. in other words, what you have, you tend to deteriorate in terms of liberal trading order. i think it is a path forward. i think that many important people seeing a path forward. that reform is needed. and most recently evidenced -- in the g 20 buenos aires they
support the wto to improve functioning. one year earlier, before that you would not have heard any of that. it did not exist. and last week, and the last formal session of the year of the general counsel of 164 members of the wto the authorized to go forward with reform. that is extraordinary. it is a change. the, what's required now is not where it -- there's been plenty of service paid over the years and very little investment. very little investment in business, very little investment most of the trading centers. and i have a litany of those
that i would consider under that. i will leave it off the agenda for the moment. i'm very optimistic. i came away from buenos aires one year ago ecstatic. euphoric. because the legislative function, the rulemaking function which they found a way forward. those who wanted a sitdown to talk my electronic commerce, or investment, or domestic relations services, or micro-medium and small enterprises or how gender, how women can have a greater participation in trade. they all got together, not all the same selection of countries but accounted for three
quarters of gdp came together and said we are going to discuss these things and see where they lead. my purpose today is to talk about first, why optimism is justified. which i think it is. and then, what some of the crises are and how to approach them. what wto reform can be all about. the measure of what remains to be done and something about my personal experiences which make me quite hopeful about the wto. and appended to the text that i messed up this morning on my own laptop. i will forward that to fred and it will be available. is a list of areas which the wto underwriting the basis does a number of claims that are of value to its members. reasons for optimism. first, it is physics, namely
open borders and rules-based trade. i added the rules base trade i'm not sure that they had that in there. our better financial economies on the whole. then protection. it is about efficiency and efficiency is a gravitational force. is what countries eventually all have to come back to. it is truer today than anytime in the past. especially in a digitalized world and e-commerce. and vastly more capable, transportation systems. the efficiency drives economies. and therefore, countries have to eventually live with that reality. second, despite noteworthy exceptions, there is a widespread fundamental understanding of nearly all governments of utility of having the multilateral system. not just regional systems. not just bilateral but multilateral. >> the only way to get tariffs across the board with an agreed
bounds only to have nondiscrimination, the only way to have products standards that work worldwide is to do it multilaterally. next, the wto delivers benefits to the multilateral trading system that cannot be duplicated through polar lateral agreements. for example, as i say, nondiscrimination on a global basis. agricultural subsidies cannot be negotiated among the few countries. they have to be negotiated more broadly. industrial subsidies have to be negotiated more broadly. fisheries subsidies, which is the one thing that was pledged to and we pledged every couple of years, is going on about 20 years. fisheries subsidies cannot be negotiated by some plural lateral. has to have all of the major players in it.
next, the wto agreements keep the world from being redivided into trading blocs. and the rules of the multilateral trading system underpin the usnca. the new -- fifth, a common effort to improve the system, not scrappy. the sharpest critic of the wto, his name will be familiar to all of you, said in may at the ministerial, if we did not have the wto, we would have to create it. that is not anyone running for the door and affect known members left and 22 are seeking entry.
currently. six, the multilateral trading system will prevail because nations have tried alternative longs fail. the ussr is a model example of failure. japan had to change and did. a number of countries in latin america changed for the better. in central asia, there are economic reforms in a market oriented direction. quite a number of countries. in moldova, in belarus, uzbekistan, they're all moving the same direction of wanting to come into the wto and moving towards market oriented reforms.if a company is large enough it might be able to move towards -- but the goal is a dead-end. and mercantile has its limits.
others don't play long. ultimately it is self-defeating. seventh, without the rule of law, this chaos, trade depends upon certainty. certainty depends upon rules. there is no place where you can craft rules of general application other than in the wto. my conclusion national policies will ultimately align themselves with economic reality. part two, system at risk. you will know what the headline challenges are. when is the u.s. china tariff four. neither side has to my knowledge, claimed illegitimacy under the international rules for the latest rounds of tariffs escalation against each other. it is not my position to condone or condemn any party.
any member. but my neutrality does not extend to the wto. which i happen to favor. and i think that the rules have to play a role. when china came into the wto, a european negotiator and a chinese negotiator, were talking and the eu negotiator said, you drive on both sides of the road. what he meant was, the market orientation and there is the party. it is non-market aspects. and the person on the other side reportedly, the eu person told me, said, we are always going to drive on both sides of the road. okay. the u.s. and the chinese are now driving a bus of the road but slightly different context. mainly some things within the rules and some things are not.
what should be done, the way to a solution i would hope, the truce that exists, not the final outcome, which no one can predict but i think xi jinping can, i'm in donald trump necessarily can. but the middle position, is through a truce to broaden the rules peers with the u.s. does is more within the rules and with the chinese side does is more within the rules. and there are efforts in that direction. the last great contest that fred and i and others here are veterans of, was the rise of japan. i only had two brief exchanges with george bush 41. one was, i congratulated him on one marketing opening initiative with respect to japan.
and he said, his response was, japan would never deliver on trade. he was wrong. but he never gave up. he was going to japan and i called benson, then chair of the senate finance committee and i said would you raise the following issue with japanese prime minister and he said he would and did. and asked the president to raise it, the president did raise it. george hw bush never give up. the lesson is in this town for any subject, persistence and persistence for opening markets. there is something that -- the next crisis. in the united states, we do not expect cabinet offices to stay beyond noon on january 20.
none of them, i am not finished with my work so i will just continue. it would be, they have to be asked to do it. the members continue beyond the term of office to render opinions. 163 countries say that's okay. it's rather practical. the u.s. says wait a minute, we the members didn't tell them they could do that. they are just doing it on their own initiative. and that's not acceptable. it is one of several counts in the multiple count indictment. that the u.s. has of this is overreached. most of the countries actually do not agree with united states. they are not that concerned about this at all. they are concerned about the death of the appellate body. because es blocks appointments.
not later than a year from now there will not be one where i believe is a shame. because i think that there should be an appellate function and jennifer hellman has suggestions i simply cannot endorse as a neutral member of the wto secretariat. but actually, the eu was thinking about it. the canadians are thinking about it, there is a proposal on the table from honduras. countries getting to come to grips with the fact that the appellate body is going away. one thing that i have remarks, being too cute. one former member of the appellate body said that the united states was asphyxiating the appellate body. my own view is, it is more of an assisted suicide. but the result is the same. it is not a good result.
so something has to be worked out. this was not designed to be a system of rule by judges. that is -- that is a word you have to look up in the dictionary. it was designed to have a legislative function that didn't function. a legislation of sorts that didn't function. so the appellate body had, it was supposed to report to this new settlement body. a political body. and the dispute settlement body in fact, does nothing except act as an employment agency for the appellate body. they have no other role in life. ambassadors do not attend the appellate body. because they have no function.
whatsoever. it is a place where if you're lost you can say, that was unfair. if you won you can say that was a pretty good decision. it has no effect. and i don't know the fix for that. how you introduce a political element, which every government has, into a system that requires a policy element as well as legal decisions. after all, the appellate body and wto dispute settlement was to resolve disputes. and a role for the other elements of the wto, including members, is necessary. there is a pragmatic decision as to how to do this. back in 23 years ago. when the wto was created. at the end of the uruguay round. and i'm quite sure that there are pragmatic ways to solve the problem. and if i suggested one, that
would rule it right off of the list so i will not do that. at the moment. but -- the motto of the city of geneva, -- after dark much light. there is a way to solve this. and i believe that it is very likely that it will be solved. when? don't know. as we go over a cliff first? perhaps. but the fact, the approach of the end of the appellate body which could be as soon as december of next year because if one of the remaining three is recused as his or herself, there are not three members to make a decision, there is no appeal. what happens when there is no appeal? the panel report is not final. the panel report not being final, a country that they say
we won, conforms to the decision, the panel, the country that was assessed, we are appealing. and then dilettante just as there is no appeal. country b says, whose fault is that? and there is exactly what we have between the u.s. and china today. namely, retaliation on both sides. i do not think we can return to the system. the, what is viewed as -- there are at least three tests. one, i was telling fred earlier, he was on the domestic international sales incrimination. i worked on it. a serious measure that was inconsistent, on its face. what happens if that decision would replay today? not that it would.
but if it comes up again and the u.s. says, the rule makes no economic sense. with the u.s. comply with a negative decision of a panel that was nonbinding? that could black -- block the panel. with a simply repeal the measure? i don't think so. if the, if there were a decision against the united states, with respect to the definition of public body and the u.s. said the chinese are subsidizing, and a panel says, we can't see that, we don't see that. with the appellate body said it. with the u.s. refrain from taking any further action against what it considers a subsidy? in other words, is it the same self-restraint? if the u.s. lost a 232 case, national security on steel and aluminum, with the u.s. automatically comply today?
that is the system. you would lose, you change your law, you repeal it. i don't think those conditions exist. at present. so the whole notion that would go back to that and it won't work, i don't think so. for a variety of other alternatives. plan b is interim as well. we can talk about that in a bit. so, u.s. has not said what it takes to resolve the appellate body. as i said, i think an appellate function is necessary for consistency of decisions. and to deal with egregious errors. because there will be egregious errors. but we are not there yet. the conversations have begun today in geneva. consultations are starting today and tomorrow in geneva with interested countries, member countries as to what they think should be done with
respect to the appellate body. so the beginning, the next section is, the reformation. why did i think the ministerial in buenos aires a year ago was so good? i mentioned the joint initiatives. a way to begin the process of thinking about rulemaking. as well as who has showed up. that was not a foregone conclusion in early december, one year ago. he did not know if it was going to come and he did come and he said there needs to be reform of the system. it was a three-minute intervention because there are three-minute interventions. but he said, there shouldn't be differentiation among the developing countries. self designation, 120 countries of the wto membership are self designated as developing
countries. including singapore and several which middle eastern countries. so, and they want to keep it that way. mostly i think. china has said it's airline. we are a developing country. some others don't agree with every country is a developing country for all purposes. the, also he said you should not gain through litigation. what you could not have gone through negotiation. a clear enough point and reiterated in the last week. by the u.s. ambassador to the wto. and should live up to your notification responsibilities. transparency. which the u.s. is now tabled a proposal, cosponsored by the eu and japan and costa rica and several argentina included.
so it is the first initiative changing the rules has now been tabled. and we'll see how it turns out. papers have been tabled. as i mentioned, the canadians have detailed papers, eu has a detailed paper, china does. it, reform will be at least considered and i would think, we will take place. it is a good time for an acceleration. i know they've done a lot of the subject but it's a good time to think about what should the reforms be? going beyond the was a just mentioned. if you have a system of governance, usually it has actually three branches. no matter what government is. some of them tend to be
concentrated in one person. i visited some of those places. but you have an executive function who is going to monitor? who is going to make sure that there is compliance? who is going to administer the agreements? it is a worthwhile question. the wto system is ambassadors, ambassadors under some constraint because they are listening to it's happening in the room in to that but who will drive the system forward? who initiates new ideas? and it now devolves upon individual members. legislative functions. how do you go about rulemaking? does consensus mean -- one alumna of the wto officials have said, it can't mean
unanimity. yet cannot all have to say we support that. but you could have a degree of self-restraint of, we will not take it all hostage. and you know, we are used to hostage taking in the country. -- justice merrick garland is not seen sitting with the supreme court today. hostage taking is not unknown to us innocently is not unknown. the -- the attitude of me before you, is going to have to give way to an idea, a cultural shift to making every country given that positive contribution. i work with a con development
assistance. i think i'm known as that because no one wants to remember name, they come and go. but they tear nothing with one exception. on behalf of the director general, i chair the development assistance on con. there is a driving force behind the initiative. they're extremely poor. they are not very good at growing cotton. they may not like that in the press but, they see a need to improve their yield. they see a need to improve their income. what is their net positive contribution when they have nothing in terms of a market? to offer others? the net positive contribution is a think about what they need, what would help them and
they help others actually do the right thing. there is a room full of people, representatives of countries and the international organizations, pakistan, egypt, brazil, china, the us, the eu. they are all they are spending an entire day with one purpose. how can we help you better in your developing? that is a net positive contribution to some of the poorest to make the system work. we talk about dispute settlement. leadership.i have been criticized by only three members so far. of the wto. the eu, china and united states. and i may add the developing countries shortly to my list. of those who are unhappy with what i have to say.
the, the u.s. did not disappear from geneva. it is probably the most active, second to none only in terms of activity in geneva tabling proposals, making the system work. it is very active. that does not mean that us, china exchanges in the general counsel do not take place. they do. but the u.s. is there. and when dennis shea is in washington, proposals in the technical trade committee, proposals and agriculture proposals in activities.the u.s. is there. the -- but the u.s. would not claim that it does not differ from prior administrations. it is not, it does not say that we are the guarantor of the system. do not worry about a thing, none of you have to do anything else. we will take on britain, we
will drive the process. we will come up with trade initiatives. not so. what is needed is collective responsibility. collective leadership. and it is beginning to happen, in ottawa in october, 12 countries and the canadians met to talk about how to make the system better. it is beginning to happen and it is what is absolute essential if the u.s. is changing how it approaches the wto, it has to be the others come forward to think about how they might help make the system work. and they are doing it. ...
who are international specialists. i mean, that's what they're headed towards. i was concluding a talk on the trading system in a central asian country in the first question was from a student, and ugg, what is the wto going to do about the death penalty? and i explained that actually we don't regulate -- the wto does not regulate domestic behavior, domestic policies. in the environment it does men in the area. one common misperception is somehow among those who care about the environment. actually, very rarely does any complaint come up with respect to the environment and must it is designed as a protectionist measure than as a measure for the environment here than it does get involved.
and there was a program at the public forum and not sober. there is a current concern with excessive subsidies in agriculture and in industry. it is a matter of creating employment in one place at the cost of another. in the u.s. is then there is occasional criticism of one's date grabs the plant from another as they compete with each other with domestic subsidies come in e.u. deals with the code globally it's a question of offloading the burden of adjustment from one place to another so that i was in djibouti two weeks ago for a conference, and actually sessions. you look out the window of your hotel room and they were very large ships. tinkerers and freighters and warships.
because of piracy. djibouti has six major camps in the major installations. china, the u.s., japan, france, italy, germany and i may be missing one. why besides fighting terrorism what is the problem that got them there. fisheries subsidies. and they turn to other oceangoing neck dvds which were grabbing other people's ships. so these things have repercussions and the only thing that wto members have pledged themselves to solve the fisheries subsidies problem by the next ministerial and i hope they do.
a lot of what the world trading system is about leaving policy space for domestic act committees. but i have another assignment potentially for the peterson institute and that is to what extent can policy space be a developmental tool for e-commerce? we had jack mom of alibaba speaking at the public forum in geneva and he said as stated to young punch retorts from african countries, we need the platforms that are provided by others by google and microsoft and others, including alibaba. we need the platforms or we can develop things. in belarus to have a very popular app. i don't know that they had that popular app for their cell phones unless they had platforms on which to develop them.
so in the world of e-commerce that sort of the alexander hamilton notion of industry protection work. i don't think so. but it deserves some attention because the cry on the lips of a number of folks from the south in the southern hemisphere is we need policy space, which means don't put obligations on us. let us do whatever we want. the soviet union and its member countries had policy space for 80 years and its economy collapsed. it depends what you do with policy space. somehow the koreans had policy space in the japanese did and it worked very well in a number of other countries who opposed the policy space that didn't work well at all because domestic policies actually matter.
next to last, mind the gap. this can be very brief. the u.k. treasury said in its memorandum to list secret but not -- now not so much, if the u.k. get an agreement like norway, we lose 2% of our gdp by the year 2035. if we get an agreement we lose 5% of our gdp by 2035. if we go to the wto blessed, blessed be its name, we lose 80% of our gdp and seven save 10%. what i would be interested again a piie challenge. what's in the gap? were never going how global challenge. nobody wants it. but clearly we could do better. there are missing elements that
could improve the lots of gdp for the world is close to $90 trillion by 2035 by not being a single market. we're not going to be a single market. just for the sake of comparison all the gdp of africa today is three-point 3 trillion. that is a big deal and what needs to be done, services and the one area. what needs to be done to close the gap. lastly one of the exciting parts of my job is dealing with countries that wish to exceed. and why do they want to exceed? a number of them are conflict affected -- afflicted. the last two were liberia and afghanistan. liberia had both ebola in the civil war.
afghanistan still has the occasional problem. why they have the leading evangelists were coming into the wto because they want to improve their economies, gain some stability and get peace. it's all about peace, which is what the gap was formed for in 1947 to underwrite peace through economic development. who else is in the? somalia. they lost one of their people at the commerce ministry within the last year. they would like to raise their economy for peace. sudan, south sudan. the first president sat next to me at a meeting in a foreign we had in geneva in october.
he read a great statement and i asked him, could you sum up and he didn't really want to do that, but he said in her halting english, you said excuse me, i learned my english in prison and come in seven years in prison. he was leader of the military that got where it is today, that is in favor of reconciliation and decide we want to integrate into the world economy to raise the level of the standard of living of our peoples in order to obtain peace. serious as in the last end when i was in djibouti, the way the sudan ambassador, by the way, sudan and south sudan were sitting next to each other on the program. but the ambassador of sudan said if there was trade there will be
peace. so we are back to where we began. for these countries it is 1947. they want a shot at establishing peace to themselves and they want to do that through economic development and they want the economic development to come through integration into the world economy. and it's always a very good feeling to be in one of those meetings where the value of the system is very real to some countries they really desperately need it. thank you very much. [applause]
>> thank you very, very much. thank you for your optimism. thank you for your reminder of some of the internal parody, trade, peace and the like and thank you for some of the challenges you laid out including the institute, your $90 trillion number is staggering, but it is worth assessing. we did a study here ago, gary hoffpauir on the impact of globalization on the u.s. economy, which showed not only to regain $2 trillion figure, but going all the way to a
global market could gain the u.s. another half trillion dollars a year. we'll take another look. all the things are great. thank you very much. i'm sure there'll be a lot of questions. you quite rightly said that the u.s.-china confrontation is at the heart of the reform. the reform of the wto. elaborate a little bit on how you think that part of the reform process might work out. we know the basic issues between the u.s. and china and china and maybe the rest of the world trading system. the subsidy issue. can we build on the subsidy code you and i both have a role in negotiating, can we build on the
subsidy code, improve its implementation, is that a big part in dealing with the subsidy? state owned enterprises. that's another big piece. the transpacific readership which is going ahead without the united states has some breakthrough language and new discipline of state owned enterprises. cannot be brought into the wto system in use for that piece of the equation? the technology transfer peace, which is another big component. there are elements of that to the wto. utilize more broadly. the question is are there already to pieces of the reform
package that can be built on, broadened, affect did crucial part of it are both china and the united states as you see it ready to go down that path in a meaningful way? >> the subsidies have been thought about for a long time by alice and our forebears and their successors. there were only two ways to do a subsidies. one is disciplined and the other is to write a response. when do you get to respond? if you play back the growth of the flat panel industry and you said we see a number of factories coming out of the
ground. they're not producing at, but they are whatever, 80 or 100 factories to produce flat panels. if you're aware of that, some transparency, then you have -- have to consider a policy response. one is napping. that's one end of the extreme. another is let's punish our consumers with the industry is severely injured by putting on antidumping duties on it not going to bring back productions. two ends of the spec drachm. sam gibbens who is chairman of the ways and means away back said trade problems are like glaciers. you don't look out your window one morning and say look at that, there's a glacier in my backyard. you can see it coming a long way
off and you have a choice. you deal with it in one form or another and wins the point the international system would say you can deal with it and be what is the point that it looks a lot like a phrase from the 1930s when a country says were going to achieve -- were the major market for x product in the whole world and were going to achieve 70% self-sufficiency by your acts, which means you out there are going to lose your market. when do you respond? we are not good at anticipating events that are going to be a shot to the system and we don't have domestic -- one formal responses we will lose the
industry because they're better at it and more power to them, that's great. were going to have an adjustment mechanism. we don't do either. we sit there and wait until the problem is not only an economic problem or a political problem and that's where we are today. transparency would help in the chinese just notified this morning a whole raft of subsidies and the agricultural area so they're bringing notifications up to date in that area. disciplines on state owned enterprises, certainly there are at least 12 countries plus the e.u. out there given the subject a lot of thought. so the chinese say that's not an issue.
but they have to -- i think everyone has come to grips with it. one thing i would say on the pro-china side which is not going to be a lot of voices speaking on the pro-china side, chinese agriculture has about 500 million people living on our countryside and small holdings that was told by the chinese. 200 million below poverty level, which in china has to be very, very low. what i would ask the chinese is what can you do to alleviate the problem that doesn't export the problem to us in any area, industry or agriculture because we can understand you have some problems. they cannot have all those policies -- they can't consolidate the land.
they are not putting enough investment and to ease the problem ease the problem so it's a money issue as well. there is room for a dialogue. the way in the tokyo round there was a breakthrough because bob strauss said are not going to attack the cap and you couldn't move a millimeter in the negotiation unless he said were not going to attack the cap in the reform came in the european union on the cap due to domestic pressure is. but it did come and you have to decide, can you absorb the adjustment cost while you're waiting to come along but do they have to be assisted. there is a more intelligent way of going about any of this current issues.
some degree of understanding of what we face in the united states with respect to displacement of employment has to do a little bit with exchange rates going back a ways. some understanding on our part with the chinese really need would help i think the move to parties towards a solution. but i think within the rules is part of it. not all of it. it's part of it. >> one other question and then i'll open it up. in your plea for optimism dimension among other things the pleural lateral agreement, e-commerce civilization. would you elaborate a little bit on now where do we stand now on the pleural laterals that has been underway for a while.
environmental goods agreement. is that source of momentum for new liberalization and maybe rule-making and where do we stand on the key aspects of that dimension of the trade equation? >> on e-commerce my understanding is they're very close to getting to a point where there can be some text, which is a major step forward. not everybody wants to go there, but the fact is those who want to have -- want to address the problem and they don't agree on specifics. the e.u. will have different concerns than china and the united states on free flow of data. >> they're all three in that negotiation.
>> the chinese i believe didn't sign, but are active. the u.s. only signed up to one, but it's active in all of them. the chinese are going to be left behind in any of these. i think an e-commerce the issues are going to start to be joined before too long. so forward progress, but there will be some difficult areas. they will not all be by the electronic signature. some basic things out there have to be addressed. >> how about some of the other services, environmental goods. >> environment, no one's mentioned it in the 15 months i've been there in terms of the ega. it is just disappeared entirely.
there is not an apt salé and of this is a great time with an upsurge of populism further. e-commerce is about rule-making. it's not in the tariff sense and market access negotiations. >> domestic regulation of services remake is some progress. not as far as e-commerce as far as i know. mike rowe and medium small enterprises is how you make everything better. he looked at all the codes and say like i said to the international standards organizations, make sure a small business can gain access to the standards out there so they can actually trade.
standards are 100% on trade is supposed to any tears. you decide whether you can afford to get through it. standard you may be dead on arrival. in our family, my daughter-in-law and gave up a business that she had because it was shadow puppet sold online on platform some sort and was not designed for children. how do you know that the alligator clips that hold the puppet to the stake is made out of minerals that are conflict free? how do you know whether the stakes will be subject to testing and not break in certain circumstances or at how do you know the materials of the
plastic puppet? just give it up, forget about it. the standards kill you. >> okay, we'll open up the floor, identify yourself. go to the microphone in the the microphone in the back or microphone will be brought to you. fire away to alan. >> thank you mr. deputy director general. you called what is happening to the appellate body and assisted suicide, which i am for is a criticism of the appellate body. i'm wondering, what they did, they declared a role under their authority in article xvii to provide for what happens when one of the members of the appellate body's term is over and the members have not done their duty to fill that term or to reappoint that so the role
that the judge in office with continue to serve until reappointed similar in the way we have the international trade commission. should they have done the opposite? as a legal expert, do you think what they should have done is set up for in the middle of the case and one of the appellate body members turned in that day, we just get a new division of three appellate body members appointed and start the case again and would that even be permitted under the rules? >> i'm not going to instruct the appellate body and how it constructs it self. the appellate body members get their coffee under a window from just outside my office in the h. or yum and i take pictures and
variables to gather around a smaller and smaller table constantly and i take pictures and i send them off to appellate body members as a memento. a court requires legitimacy. whether there was any political, i would never think there is anything political involved in roberts court upholding obama cared in this country, but it did work to the political advantage of maintaining legitimacy of the court. where did they strike? the u.s. has indictments which other countries don't agree with by and large or didn't agree with, but are willing to agree with the u.s. or because they think it's worth saving the
appellate body they are willing to make some changes. the appellate body has a very high signed on to construct. it's the final word except by design the final word -- [inaudible] or cannot act with the general counsel which cannot act as a practical matter. >> because of the unanimity rule? >> well, the negative consensus in other words is just going to adopt the panel. it has some role. it just adopts the appellate body or panel decision is just adopt did and in the general counsel david e. consensus that there would be a positive
consensus. so, in the jewel in the crown happened to be in the crown of his deteriorating or never quietly fully formed in the appellate to their credit understanding them a bit, we lived up to the 90 day rule. this is a staffer andy said countries that come to us and a you didn't address several of the issues we raised in the appellate body would say that they were necessary to decide the case. but we are a member and we put something in front of you and we want an answer. we want to know whether that argument was any good or not.
so from an appellate point of view, it evolved into taking every case, every appeal, and they never found one they liked entirely as far as i know in no decision was that's perfect. take every case and we litigated and then they said more staff. but staff. but why were they commuters? why was there a 90 day rule. and i don't think it's drafting history. they cannot possibly do anything. the system did not have three of ranches of government believing to. it had one and they decided they knew the answers.
to some, that is exactly why they are there. there was a european chief legal officer of foreign ministry who came by and said that i like their decisions. i said good, put them in a scrapbook and if you take them out, look at them every now and then. which are not going to have an appellate body. is there room for some pragmatism? yeah. the system stopped working in the fundamental answer is if one big member complains over the course of three or four administrations complains that the system is not appropriate they are coloring out side of the lines of a populist administration comes in and saves over. getting done. but can there be a solution? i really believe it can be, but
it has to be thought through. the beginning is taking place. proposals are on the table, which is i think really superb. >> hi, i'm the business editor feature story news. i want you to speak if you can do these populist pressures you are talking about just then. how do you make the case to somebody who is suspicious of multilateralism and feels removed from the organization in geneva and doesn't think it's perhaps appropriate to resolve structural issues in the u.s.-china relationship. can you make the case of the world trade organization is an appropriate forum to address their concerns in structurally change around the world and with
all those tensions. >> it's up to government to tell their people that they're in this this for a reason. enlisted several of the outset that we don't want any other country to discriminate against their goods. we want a fair shot. but churchill and roosevelt said in the atlantic charter in the early part of the war was equal market access for all. consistent with current obligations which mac computer preferences. putting that aside, which the u.s. administration did, you
know, it can be explained that we don't want to be discriminated against in you is the wto and everyone is free to discriminate against you. what occurred to me this morning is not maybe the best analogy but anyone who's watched "game of thrones" coming you do not want to be on the other side of the wall at night. in other words, you want to be in the wto because everyone can discriminate against or trade with no limits whatsoever unless you happen to have a bilateral agreement. so you are in deep trouble. it's different than any other organization. you can grab another country in the u.n. may or may not act and that happens. but you withdraw from the wto
and everybody is totally free to discriminate against or trade or excluded entirely and that is a loss of a lot of jobs and a lot of farm jobs as well as manufacturing jobs and a lot of service jobs, too. so it's a total disaster to decide you don't have to be part of the system. it's a system of rules. as best they can find your scope for doing the things you might like to do, but on the other hand if you are on the outside, you are in the deepest possible trouble. >> next question. >> thank you, wolff. my question is the u.s. has been very vocal so president trump even threatened -- [inaudible] a couple times. do they propose any construct the plant? and also is there a timeline for
reform? thank you. >> to g20 put in a timeline to have a progress report by the next meeting in late june. so the reformists and they now signed up to by most of the world economy -- leaders of most of the world economy. it's not the way the wto really worked. each round take eight to 12 years of percolating through and we are talking about lightnings need. but there are real problems to be solved. one event is the real action is mother of two the appellate body
disappearing. i don't think there is a plan b. that is all as good as plan a, which is make that one work. i don't know that anyone would disagree with that actually. in the u.s.-china situation, how did they reach a new equilibrium they have a role to play in that. they may not think they do. maybe they just say you buy soybeans, drop your car tariff and will just move on in the truces maintained. stability in the truth needs a broader understanding and that
is the case i will make to both parties. >> alan, let me take up on that last point. maybe this will be the final question. most of us here at the institute and the trade policy in washington have felt as the administration raises legitimate questions about china's policy is, its biggest failure has been to rally around the traditional coalition of allies that could join it in raising those issues with china, particularly in the wto. now it's god's truces that looks like europe, japan, korea, result nafta. so you said in the cockpit looking at people coming to a coffee machine and doing these things, what is the prospect for
putting together a widespread -- i won't say universal, but widespread multilateral consensus that changes are needed in chinese policies, that as you were describing before could then be an essential part of the needed reforms in the system, convert the truth in two d. settlement. is there a prospect now for getting a multilateral consensus to move that process forward towards more or less lasting solution. >> i think there is a multilateral consensus that is possible in the incipient pages to deal with problems that have not been dealt with.
it wouldn't be lets all do this because china or any other country. it would be in domestic subsidies for example in fish. the chinese are certainly not the only problem. in terms of a transparency, that china's not the only issue out there. so there are broad things that i think and how the u.s.-china contest that can be subscribed to not because it's a one country problem or one country solution, but that is broader. you know, agricultural subsidies
have become as the developed countries for budgetary pressures perhaps a call back on their cultural subsidies, the subsidies have moved to the key developing countries. and so, there isn't a china problem that isn't also a problem with other countries in the chinese and the indians with say, you folks are the developed one. namely e.u. and the u.s. you have too much freedom under the 15 rolls. so is there a deal out there where one could strike the balance? i mean, we are dealing with trade negotiators, none of them philanthropists, but they do have to understand that you have to make a net positive contribution to the system for it to be maintained. so i don't see a coalition of everybody forms together and say we can do the following with respect to china.
it would be a broader approach should. >> alan, thank you very much. were a little bit past her witching hour the time has come to close. i went to thank you very, very much for bringing us with your wisdom and your optimism in your continuing efforts as you have for 40 years to drive the trading system forward to constructive direction. thank you and congratulations and good luck. >> thank you very much. [applause] [inaudible conversations]
>> you now, we go on out, our our devices, watkins quickly. and jefferson wrote this 14 years after the declaration of independence. the ground of liberty is to be gained by inches. to be content but we can get from time to time and press forward for what is yet to get. it takes time to persuade men even to do what it's for their own good. my point is that we culturally need to step back and say look, these things take time. we've got to have small steps in order to get there. >> to think we spent trillions down on these wars and the war in afghanistan has been going on 18 years i think is just ridiculous and i think all so these wars and our foreign policy has caused us to have more enemies. they've done more harm than
good. >> in the congress of the united dates, i believe in the house of representatives is simply still even with the reforms that nancy pelosi has pledged to accept based on my counterpart and problem solvers caucus, there is just too much power with too little getting done for the american people and i fear that's not going to change. >> the c-span bus traveled to tennessee asking folks what does it mean to be american? >> what it means to be american studying the history and sometimes they would say why does that replicate? specifically questioning things that go on now to really push
the idea of democratic citizenship, voting and see what you can do and how you can impact your community on the local level. >> to me to be an american means to be free, to think, to speak, to express my thoughts. and to relate to other people no matter who they are. i'm free to have the oxygen around me and express everything that i want to be and i'm free to be everything i want to be. it is so important to appreciate being an american. >> in america, you are part of the greatest experiment in self-government that history has ever known a part of being an american misunderstanding but we believe that our core that each individual is treated equally and they have the same god-given right as every other individual.
>> you are involved in your city, your state and local government and problem solving. we look at some of the areas and local government and see how you can use your voice, your background to improve and make it better. you are aware of the things going on in your local community center larger community across the nation and looking for ways to make it better for the next generation. >> it's a great pleasure to be here. that is one of the multifaceted questions. what can you do to better your community and then all that shovels out to your national opportunity. but everything is local. what do you do to make your company better by helping our younger generation, which is our
2019 budget request, which includes a proposed increase in shipbuilding rates but the goal of establishing a 355 ship fleet. the senate armed services the power subcommittee held this hour and a half hearing. >> the hearing will come to order. [inaudible] no it's not. i'm out of this. by agreement, we