Davos Meeting Wraps Up with Warnings Against Protectionism

26 January 2017

The World Economic Forum’s (WEF) Annual Meeting in Davos, Switzerland, wrapped up on Friday 20 January, capping several days of high-level speeches and meetings that dealt largely with how to deal with a perceived public backlash on globalisation and fears of mounting mercantilist pressures, among other topics.

The early days of the high-level gathering saw speeches from Chinese President Xi Jinping and then-US Vice President Joe Biden, both of whom focused in different ways on making the case for strong international collaboration and addressing the negative impacts from globalisation, rather than retreating from it. (See Bridges Weekly, 19 January 2017)

The later days of the conference saw speeches from UK Prime Minister Theresa May as well as various G-20 ministers, along with European Commission First Vice-President Frans Timmermans; International Monetary Fund (IMF) Managing Director Christine Lagarde; and new UN Secretary-General António Guterres.

Looming over the weeklong gathering was the transition of power in the United States, with Donald Trump taking office as the new president on Friday 20 January, the last day of the conference. In addition, the EU’s ongoing difficulties in terms of wavering public support for integration also played a significant role in the speeches made in Davos.

Earlier during the week, Theresa May delivered a speech in London outlining her government’s negotiating priorities for the Brexit negotiations, making clear that she plans to seek a free trade deal with the EU rather than trying to keep the UK in the single market.

May subsequently referred publicly to the Brexit plans, making a staunch case of UK’s historical leadership and commitment to free trade and globalisation. The ongoing debate over the EU’s future also played a significant role in Davos discussions, officials say, including on how to improve ties between the EU as an institution and its individual member states.

Former European Parliament President Martin Schulz, who is expected to run against Angela Merkel for the chancellorship of Germany, was among those making a case in favour of strengthening the bloc rather than dismantling it.

“All Europeans together, we are less than five percent of world population, Germany less than one percent. Could somebody tell me how a single country in the worldwide competition in which we’re living in, with perhaps a tendency to protectionism, could survive without the EU?” said Schulz.

Azevêdo, trade ministers warn against protectionism

Also on hand during the Davos gathering was WTO Director-General Roberto Azevêdo, who similarly tackled questions on how to move ahead in a world where the public is often wary of greater attempts at trade liberalisation and increased globalisation.

“I recognise fully the concerns about globalisation and the need to respond to those concerns,” said Azevêdo to reporters. “The net positive effects of trade means nothing to someone who has lost his job, so we need better domestic policies to support people and get them back to work.”

The WTO chief also warned against “talking ourselves into a crisis,” cautioning that protectionism and so-called “trade wars” would be job-destroying, while noting that even in such uncertain times there are various opportunities ahead.

Azevêdo also noted that he has not yet spoken to new US President Donald Trump, whose approach to trade policy so far has shown a significant shift in tone and style from his predecessor, former President Barack Obama. The WTO head said that he would need to speak with Trump’s Administration before even beginning to speculate on the future.

“Clearly, from what I have heard – I have not had direct contact with the new Administration yet – but from what I have heard they have concerns about the trade situation in many areas of the world. And that’s fair. Everybody does,” said Azevêdo.

During a Financial Times-sponsored panel debate with Azevêdo, Chinese influential economist and former Deputy Managing Director of the IMF Min Zhu called talk of a trade war between China and the US an issue of great global concern, quoting estimates of possible resulting losses of up to one-third of Chinese GDP growth per year and one-half for the US. Azevêdo appealed to the responsibility of all countries to resort to dialogue rather than unilateral action and reaction to avoid “talking ourselves into trade wars” of possible catastrophic consequences.

WTO mini-ministerial: protectionism concerns

Another key item on the Davos agenda was the standing annual WTO “mini-ministerial,” an informal meeting bringing together ministers or vice ministers from various WTO members.

Johann Schneider-Amman, the Swiss Federal Councillor who hosted the informal meeting, noted that ministers expressed concerns over protectionism and an interest in “substantive” outcomes at the WTO’s Eleventh Ministerial Conference (MC11) in Buenos Aires, Argentina, according to personal concluding remarks circulated after the meeting.

“Ministers underlined the need to build on the successes of the last two Ministerial Conferences and to deliver further incremental, yet substantive results at MC11 in Buenos Aires and beyond, with development at its centre,” said Schneider-Amman.

The areas where ministers expressed interest in additional work between now and December were certain aspects of domestic agriculture support, including the long-standing discussions on cotton; a permanent solution on public food stockholding; fish subsidies; domestic services regulation and services trade facilitation; special and differential treatment and issues of particular relevance to the WTO’s poorest members; and following up on other work that was mandated during the last ministerial.

Other issues also raised included e-commerce; micro, small, and medium-sized enterprises; non-tariff barriers; investment facilitation; market access; rules; and export restrictions.

The meeting included ministers or senior officials from Argentina, Australia, Benin as the coordinator of the Least Developed Countries (LDC) Group, Brazil, Canada, China, Costa Rica, Egypt, the EU, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Mexico, Morocco as the coordinator of the African Group, New Zealand, Nigeria, Norway, Pakistan, the Philippines, Russia, Singapore, South Africa, Switzerland, Thailand, Turkey, and the US.

ICTSD reporting; “WTO ministerial meeting,” SWISSINFO.CH, 20 January 2017; “Wall Street Meets May in Davos as Banks Plan Own Brexit,” BLOOMBERG, 19 January 2017; “The biggest stories from Davos 2017,” WORLD ECONOMIC FORUM, 20 January 2017; “‘This double game is destroying us’ – EU strikes back at its critics in Davos,” WORLD ECONOMIC FORUM, 19 January 2017.

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