WTO boss stands up for global trade against populist tide

Roberto Azavedo, director general of the World Trade Organization
Updated 13 February 2018
0

WTO boss stands up for global trade against populist tide

DUBAI: Roberto Azavedo, director general of the World Trade Organization, mounted a staunch defense of his organization, which has come under attack from rising anti-globalist and populist sentiment in the US and Britain.

“The world does not have a future if the WTO does not have a future. It is the platform on which all global trading agreements are made,” he told a session on “the outlook for trade in a hyper-connected world” at the World Government Summit in Dubai.

The WTO, the 164-member organization which oversees trade issues and tries to arbitrate in disputes, has come under pressure from the anti-global philosophies of the Trump administration in the US, and from the decision of the UK to withdraw from the European Union — “Brexit”.

President Trump has pulled the US out of the Trans-Pacific Partnership and threatened to withdraw from the North America Free Trade Association (NAFTA) with Canada and Mexico.

On NAFTA, Azavedo said: “I think it will change. There are three parties to an agreement that has been in place for 20 years, and that will require updating. What one partner sees as progress another sees as backtracking.”

He agreed that withdrawal from NAFTA would be a “job killer” in the US and would lead to higher prices.

Trump has complained that the WTO machinery is too slow and that the organization is not modern enough. “We are not slow. We are actually very fast compared with other international adjudicating bodies,” Azavedo said.

“In negotiations, we are 164 members and they have to agree. So that takes time. It would be good to be more flexible and nimble in negotiations,” he added.

On Brexit, he said the current standoff between the UK and the EU showed the need for an organization such as the WTO. “Imagine Brexit without the WTO. What would happen? Without an agreement it would be a no man’s land, completely chaotic and unpredictable.”

Azavedo said there was a large group of people in the world who feel they’ve been left out of the modern world, that their governments are doing nothing for them, and that globalization is not for them.

But he denied that globalization was responsible for the loss of jobs in traditional sectors, claiming that 80 percent of jobs lost in the world were because of new technology, not because of globalization.

“This will only accelerate. For example, when automated vehicles really come — and that’s a when rather than an if — millions of truck drivers will be out of a job, as will all the service staff — petrol stations, roadside motels — who service them.”

On big trends in trade, he said that the logistics industry was going through a change that would have big repercussions. “Fintech and Blockchain is going to blow up logistics. We are moving from the era of the container to the era of the small package.”


Foreign investors hope India dials back policy shocks after Modi win

Updated 24 May 2019
0

Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

Opinion

This section contains relevant reference points, placed in (Opinion field)

“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”