Strengthening the Global Trade and Investment System for the 21st Century E15 Full Thematic Policy Options Policy Options Papers E15 The Initiative STRENGTHENING THE GLOBAL TRADE AND INVESTMENT SYSTEM FOR SUSTAINABLE DEVELOPMENT Acknowledgements E15Initiative Co-Conveners Ricardo Meléndez-Ortiz, Chief Executive, ICTSD Richard Samans, Managing Director and Member of the Managing Board, World Economic Forum E15 Knowledge Manager Harsha Vardhana Singh, Senior Associate for Strategic Research and Policy Analysis, ICTSD E15 Managers Marie Chamay, E15 Senior Manager, ICTSD Sean Doherty, Head, International Trade & Investment, World Economic Forum E15 Editor Fabrice Lehmann, ICTSD E15 Programme Officers Rashmi Jose, Programme Officer, E15Initiative, ICTSD Kate Ziemba, Junior Programme Officer - Communications, E15Initiative, ICTSD E15 Joint Project Team ICTSD World Economic Forum Ahmed Abdel Latif Francesca Bianchi Vinaye dey Ancharaz Katarina Hruba Christophe Bellmann Cristian Rodriguez Chiffelle Kimberley Botwright Aditi Sara Verghese Shuaihua Cheng Sofie H. Flensborg Jonathan Hepburn Ingrid Jegou Anne-Katrine Pfister (2012–13) Miguel Rodriguez Mendoza (2012–13) Sherry Stephenson Alice Tipping Petra Walterova (2012–13) Marie Wilke (2012) Vivienne Blyth-Moore With the support of ICTSD’s Core and Thematic Donors: ©ICTSD and World Economic Forum®, 2016. Readers are encouraged to quote this material for educational and non- profit purposes, provided the source is acknowledged. This work is licensed under the Creative Commons Attribution- Non-commercial-No-Derivative Works 3.0 License. To view a copy of this license, visit: http://creativecommons. MINISTRY FOR FOREIGN org/licenses/by-nc-nd/3.0/ or send a letter to Creative AFFAIRS OF FINLAND Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. ISSN 2313-3805 REF 281215 E15 Knowledge Partners: Center for International Development at Harvard University Note on the E15Initiative and this Volume Jointly implemented by the International Centre for Trade and Sustainable Development (ICTSD) and the World Economic Forum, the E15Initiative was established to convene world-class experts and institutions to generate a credible and comprehensive set of policy options for the evolution of the global trade and investment system. In collaboration with 16 knowledge partners, the E15Initiative brought together more than 375 leading international experts in over 80 interactive dialogues grouped into 18 themes between 2012-2015. Approximately 150 overview papers and think pieces were commissioned and published in the process. This full volume of policy options papers covering all topics examined by the E15Initiative is complemented with a synthesis report that consolidates the options into overarching recommendations for the international trade and investment system for the next decade. The second phase of the E15Initiative will see direct engagement with policy-makers and other stakeholders to consider the implementation of E15 policy recommendations. For more information on the E15Initiative: www.e15initiative.org Published by International Centre for Trade and Sustainable Development (ICTSD) 7 Chemin de Balexert, 1219 Geneva, Switzerland Tel: +41 22 917 8492 – E-mail: [email protected] – Website: www.ictsd.org Publisher and Chief Executive: Ricardo Meléndez-Ortiz World Economic Forum 91-93 route de la Capite, 1223 Cologny/Geneva, Switzerland Tel: +41 22 869 1212 – E-mail: [email protected] – Website: www.weforum.org Co-Publisher and Managing Director: Richard Samans Policy Options for a Sustainable Global Trade and Investment System Participating Experts and other Substantive Contributors The E15Initiative organizers wish to thank the authors of the policy options papers presented in this volume as well as all the experts who participated in the project. These experts, conveners, and contributors have been the brain trust behind the E15 enterprise and the engine of the initiative’s success. Roderick Abbott Liam Campling Sékou Falil Doumbouya Ahmed Abdel Latif Burcu Can Jane Drake-Brockman James Abraham Jim Cannon Peter Draper Rudolf Adlung Otaviano Canuto Margareta Drzeniek-Hanouz Manzoor Ahmad Antonio Capobianco Memory Dube Usman Ahmed Jean-Guy Carrier Jeffrey Dunoff Grant D. Aldonas Antonia Carzaniga Cédric Dupont Peter Allgeier Olivier Cattaneo Mark Dutz Jose Alvarez Julien Chaisse Dorothy Dwoskin Scott Andersen Ramesh Chaitoo Jappe Eckhardt Robert Anderson Anupam Chander Lorraine Eden Emilie Anér Steve Charnovitz Kimberly Ann Elliott Pol Antràs Bipul Chatterjee Manfred Elsig Jean-Louis Arcand Sudip Chaudhuri Alice Enders Mehmet Arda Song Chen Sean F. Ennis Jean-Yves Art Shuaihua Cheng Dieter Ernst Christer Arvíus Jung-Hee Cho Ana Escobedo Frank Asche Aimee Christensen Ilaria Espa Ken Ash Dan Ciuriak Joan Esteban Nick Ashton-Hart Peggy A. Clarke Antoni Estevadeordal Bosco Astarloa Cary Coglianese John Evans James Bacchus Terry Collins-Williams Simon Evenett Rob Bailey Jake Colvin Magdi Farahat Richard Baldwin John Arthur Cooke Mark Feldman Rubens Barbosa Marie-Claire Cordonier Segger Christopher Findlay Véronique Bastien Aaron Cosbey John Fingleton Christophe Bellmann Thomas Cottier Carsten Fink Daniela Benavente Beatrice Crona Sofie H. Flensborg Rafael Benke Andrew Crosby Eleanor M. Fox George A. Bermann Daniel Crosby Sven Frisch Johannes Bernabe John M. Curtis Henry Gao Nathalie Bernasconi-Osterwalder Uri Dadush Gabriel Gari Debapriya Bhattacharya Carsten Dannöhl Padmashree Gehl Sampath Francesca Bianchi Kasturi Das Damien Geradin Brian Bieron Jayant Dasgupta Michael Gestrin Sadeq Bigdeli Gillian Davidson Joseph Glauber Fikremarkos Merso Birhanu John Davies Ernesto Godelman Lara Birkes Pedro de Camargo Neto Hernando José Gómez David Blandford Jaime de Melo Anabel González Jan Bohanes Paolo de Sa Carlos Grau Tanner Thomas Bollyky Carolyn Deere Birkbeck Nicolle Graugnard Nicola Borregaard Fabian Delcros Michael Grubb Gabriel Bottini Rosa Delgado Francesca Guadagno Kimberley Botwright Gérard Depayre Moustapha Kamal Gueye Carlos Primo Braga Henry Derwent Patrick Guillaumont Jennifer Brant Melaku Desta Pierre Habbard Thomas Brewer Robert Devlin Christian Häberli Peter Brun Vinaye dey Ancharaz Khalil Hamdani Mathes Buhbe Michele Di Maio Stuart Harbinson Jean Christophe Bureau Eugenio Diaz-Bonilla Jeremy T. Harris William Burke-White Sean Doherty Ann Harrison Mira Burri Müge Dolun David Hartridge James Cameron Shaun Donnelly Milton Haughton Policy Options for a Sustainable Global Trade and Investment System Ricardo Hausmann David Lewis Kenichi Ohno Jennifer Haverkamp (2014) Beatriz Leycegui Gardoqui Marcelo Olarreaga Sean Heather Luping Li Federico Ortino Jonathan Hepburn Justin Yifu Lin Maika Oshikawa Nicholas Hodac Douglas Lippoldt Shotaro Oshima Anthony Hodge Alejandro Litovsky Habib Ouane Bernard Hoekman James Lockett Jorge Padilla Gary Horlick Guoqiang Long Maria del Pilar Pardo Henrik Horn Patrick Low Gloria Pasadilla Rupert Howes David Luff Joost Pauwelyn Robert Howse Susan Lund Mark Pearson Katarina Hruba Alexander Malaket Ulf Pehrsson Yanzhong Huang Tabitha Mallory Carlos Pérez del Castillo Gary Clyde Hufbauer Nikolai Malyshev Eduardo Pérez Motta Nicolas Imboden Abdel-Hamid Mamdouh Annie Petsonk Hiroyuki Ishige Shunsuke Managi Pierre Pettigrew Lorenza Jachia Marcello Manca Amy Porges Selina Jackson Howard Mann Bev Postma Merit E. Janow David Manning Tatiana L. Prazeres Alejandro Jara James Manyika Hassan Qaqaya Sébastien Jean Mario Mariniello Reinhard Quick Ingrid Jegou Keith Maskus Isabelle Ramdoo Frédéric Jenny Susan Mathews Imanol Ramírez J. Bradford Jensen Aaditya Mattoo Bill Reinsch Veena Jha Mario Matus Magnus Rentzhog Christine Jojarth Andreas Maurer Sandra Rios Emily Jones Petros C. Mavroidis Ángel Alberto Rivera Benavides Rashmi Jose Stephen Mbithi Mwikya Yose Rizal Timothy Josling Karen McCabe Cristian Rodriguez Chiffelle Anna Joubin-Bret Kevin McKinley Miguel Rodríguez Mendoza Sharmila Kantha Pradeep S. Mehta Githa Roelans Konstantinos Karachalios Udai S. Mehta Pedro Roffe Rohan Kariyawasam Ricardo Meléndez-Ortiz Cathy Roheim Jonas Kasteng Joshua P. Meltzer Sonia E. Rolland  Céline Kauffmann Bryan Mercurio Osvaldo Rosales Gabrielle Kaufmann-Kohler Patrick Messerlin Barbara Rosenberg Tsuyoshi Kawase Seth Meyer Jodie Roussell Fujio Kawashima Sébastien Miroudot Jayanta Roy Alexander Keck D.K. Mittal Luca Rubini Matthew Kennedy Kazuaki Miyagishima Charles F. Sabel Nathaniel Keohane Rodrigo Monardes Kamal Saggi Pascal Kerneis Raul Montemayor José Manuel Salazar-Xirinachs Christophe Kiener Corinne Montineri Richard Samans Meg Kinnear Theodore H. Moran Kaare Sandholt Jane Korinek Tyler Moran Maximiliano Santa Cruz Scantlebury William Kovacic Anna Caroline Müller André Sapir Rubén Kraiem Sophia Murphy Karl P. Sauvant Katrin Kuhlmann Darlington Mwape Pierre Sauvé Pranav Kumar Junji Nakagawa Akihiro Sawa Maki Kunimatsu Michitaka Nakatomi Stephan W. Schill Willem-Jan Laan Rafael Nava y Uribe Hubert Schillinger Jean-François Lambert Damien Neven Josef Schmidhuber Frans Lammersen Richard Newfarmer Carl-Christian Schmidt François-Charles Laprévote Hongxing Ni David Schorr Robert Z. Lawrence Jaime Andrés Niño Tarazona Mark F. Schultz Vinhcent Le Hildegunn Nordås Yulia Selivanova Rafael Leal-Arcas Håkan Nordström Sourabh Sen Timothy Lear Ana Novik Shree Baboo C. Servansing Bernice W. Y. Lee Irmgard Nübler Gregory Shaffer Keun Lee Dick Nyeko Wenhua Shan Xiaodong Lee Herbert Oberhänsli Jingxia Shi Hosuk Lee-Makiyama José Antonio Ocampo Harsha Vardhana Singh Audun Lem John S. Odell Babajide Sodipo Policy Options for a Sustainable Global Trade and Investment System Marta Soprana Members of the E15 Steering Board Renaud Sorieul Muthucumaraswamy Sornarajah The E15 Steering Board provides Selina Stead overall strategic advice and guidance, Ronald Steenblik reviews progress, and makes Debra Steger recommendations for future evolution. Sherry M. Stephenson Andrew Stoler Jonathan Fried Jessica Su Ambassador and Permanent Surya P. Subedi Representative of Canada to the WTO Mahesh Sugathan U. Rashid Sumaila Paul Polman Xinhua Sun Chief Executive Officer, Unilever Kati Suominen Datuk M. Supperamaniam Nils Smedegaard Andersen Alan O. Sykes Group Chief Executive Officer, A.P. Amadou Tall Møller-Maersk A/S Akihiko Tamura Stefan Tangermann Mark Weinberger Antony Taubman Global Chairman and Chief Executive Mariana Tavares de Araujo Officer, EY Robert Teh Ellen Terpstra Ernesto Zedillo Vera Thorstensen Director, Yale Centre for the Study Julia Tijaja of Globalization (former president of Alice Tipping Mexico) Terri Toyota Pilar Trivelli Richard Samans Xinquan Tu Managing Director and Member of the Debra Valentine Managing Board, World Economic Guillermo Valles Galmés Forum Harro van Asselt Frank van Tongeren Ricardo Meléndez-Ortiz Scott Vaughan Chief Executive, International Brendan Vickers Centre for Trade and Sustainable David G. Victor Development Jorge E. Viñuales Tancrède Voituriez Christian Volpe Martinicus Martin von Lampe Xiaodong Wang Rolf H. Weber John Weiss Reinhard Weissinger David Weller Erik Wijkström Rorden Wilkinson L. Alan Winters Robert Wolfe Alan Wolff Jan Woznowski Ho-Mou Wu Mark Wu Alan Yanovich Yang Yao Tan Sri Michael Yeoh Margaret Young Jaime Zabludovsky James Zhan Naigen Zhang Hong Zhao Longyue Zhao Policy Options for a Sustainable Global Trade and Investment System Contents Introductory Note Agriculture and Food Security Clean Energy Technologies Climate Change Competition Policy Digital Economy Extractive Industries Finance and Development Fisheries and Oceans Functioning of the WTO Global Value Chains Industrial Policy Innovation Investment Policy Regional Trade Agreements Regulatory Coherence Services Subsidies Policy Options for a Sustainable Global Trade and Investment System Introductory Note The policy options papers presented in this volume are the result of a collective process involving 14 thematic Expert Groups, three horizontal Task Forces, and an overarching theme looking at the global trade and investment architecture, involving consultations with hundreds of thinkers and policy-makers. Each group has engaged on a broad range of trade-related subjects. The groups were comprised of 20–30 experts—including academics, intergovernmental and non-governmental organization representatives, business representatives, practitioners in international trade law, former diplomats and policy-makers—reflecting a wide range of perspectives and geographies. Given the cross-cutting nature of many of the issues, analyses, and recommendations, the papers have been ordered alphabetically by theme. However, they can loosely be categorized under the headings below. New Economy Global Supply Sustainability System Reform Development Networks Clean Energy Competition Policy Agriculture & Food Functioning of the Finance & Technologies Security WTO Development Digital Economy Global Value Chains Climate Change Global Trade Industrial Policy & Investment Architecture* Innovation Investment Extractive Industries Regional Trade Agreements Services Regulatory Coherence Fisheries & Oceans Subsidies * To be released in late 2016 Building on their empirical insights and theoretical knowledge, the experts have outlined ideas and strategies for strengthening the global trade and investment system for sustainable development. The groups had three specific and sequenced objectives: 1. Explore and provide in-depth understanding of current and emerging 21st century challenges and opportunities within their theme; 2. Assess the adequacy of the global trade and investment system, including the WTO, to respond to these challenges and opportunities; and 3. Identify and suggest policy options for enhancing the ability of the global trade and investment system to better respond to emerging challenges and promote opportunities. To fulfil this mandate, the groups met 2–3 times in different venues for formal meetings and deliberations. Through the convening power of ICTSD and the World Economic Forum, the E15Initiative gave these world-class experts a forum to discuss pressing issues, develop original thinking, and identify forward-looking policy options. As conveners, ICTSD and the Forum selected the leadership within each group, including a Theme Leader and a Knowledge Partner—an institution or organization globally recognized for its expertise and leadership in the theme. In addition to formal meetings and informal exchanges, the Expert Groups and Task Forces commissioned succinct Think Pieces, mostly authored by group members, on select issues that were considered to deserve additional in-depth analysis, and designed to feed into the dialogue process towards formulating policy options. Outside experts from government, business, and civil society were also invited on occasion to enrich and help validate the ideas. Policy Options for a Sustainable Global Trade and Investment System The Theme Leaders prepared the policy options papers on behalf of their Expert Group or Task Force. The papers were distributed internally for thorough group review. The accompanying Note to the papers makes clear that the options do not represent full consensus given the wide variety of views and the at times contentious nature of the matters at hand. As Ricardo Meléndez-Ortiz and Richard Samans indicate in the foreword to this volume, the options come in many forms and cover a broad range of issues. A key variable behind many of the options is political feasibility—concrete recommendations that can be implemented in the short to medium term. However, in view of its mission as a strategic project with a vision, the E15Initiative has also encouraged the generation of proposals of a more aspirational and systemic nature to be considered over a longer time horizon—“North Stars” worth striving towards that may animate discussions on the improved governance of international trade and investment over the coming years. The papers all recognize the need to ensure that trade and investment policy frameworks advance sustainable development and that multilateral progress in recent years has been slow. However, the assessments vary between groups, some leaning towards a market efficiency approach and others focusing more explicitly on public goods and developmental constraints. Moreover, the papers cover diverse priority areas of relevance to countries at different levels of development. Additionally, while the multilateral trade regime governed by the WTO gathers the attention of much of the policy insights and recommendations, the global trade and investment system is explored across its multiple institutions and layers—from plurilateral to regional and unilateral rule-making as well as informal networks and non-state initiatives. One consideration that virtually all papers bring to the fore—in a world characterized by growing economic interlinkages and sustainability imperatives—is the need for greater coordination and reciprocal engagement between the trade community and outside constituencies, regulatory authorities, policy communities, and regimes. The papers are structured in similar fashion. Following an introduction and background analysis, the policy options are presented under specific headings, areas for reform, or work programmes. Where appropriate, suggestions concerning the implementation process are outlined. The main options are ordered in a summary table found in annex to the papers. The Expert Group and Task Force members are also listed in annex. The E15Initiative has brought together some of the best minds in the world to critically engage on the intricate issues surrounding the governance of international trade and investment in a newly emerging global economic landscape. The resulting policy options offered for consideration in this volume are relevant to policy-makers and stakeholders, including the business community, from developed and developing countries. Their purpose is to work towards strengthening the global trade and investment system in a manner that is responsive to new demands and advances sustainable development. Policy Options for a Sustainable Global Trade and Investment System Agriculture and Food Security: New Challenges and Options for International Policy Policy Options Paper E15 The Initiative STRENGTHENING THE GLOBAL TRADE AND INVESTMENT SYSTEM FOR SUSTAINABLE DEVELOPMENT