Margaret Thatcher does not come across as a person wracked with self-doubt when thinking about an appropriate global trade policy.
She expressed her views cogently in a speech on March 3. 1994 — when the world trading system stood between the era of the GATT and the promise of a new World Trade Organization, the WTO. She was absolutely clear-eyed on the achievements of the former and the promise of the latter.
Of course, she would talk of history, of Britain’s choice to open its market with the repeal of the corn laws. She did not think that Robert Cobden got it wrong to open the British market for food.
She did not think that Churchill and Roosevelt got it wrong when in the summer of 1941 at Argentia Bay they set as a cornerstone of their war aims that the post-war global economy should be characterized by equal access to markets and to raw materials for all – a policy designed to underwrite a more durable peace.
She understood the need for strong leadership, praising Arthur Dunkel and Peter Sutherland, the two individuals who had the vision and strength to bring the last great round of multilateral trade negotiations to a successful conclusion, which resulted in the creation of the World Trade Organization.
She was absolutely clear that trade was what ordinary people wanted to do, to better their lives, that it was not some artificial construct of experts.
She did not see open markets as something solely of value to the world’s largest economies. She saw this as a path forward for prosperity for small and large countries alike. She was focused on the success of the economies that were known at that time as “the Asian tigers”, places like Hong Kong, Korea and what was then only known by her as Taiwan, each growing rapidly during the last third of the last century.
She did not shrink from attacking rigidly centrally-controlled economies that chose to have the state substitute its judgment for the market.
She saw the need for curbing subsidies, for bringing services, intellectual property protection and agriculture fully into the rules-based global trading system.
She worried that preferential trading arrangements could well undermine the global system of nondiscrimination and equal participation in trade.
Margaret Thatcher gave these assessments over a quarter century ago, but they are as fresh now as they were then. They have stood the test of time. We now have just over a quarter of a century of experience with the WTO and the world’s leaders have called for its reform.
There is a need to be able to restore the negotiating function to the WTO as it was envisaged by its founders. There is a need to have again a dispute settlement system that is binding and recognized as legitimate by all. There is a need to have an institution with a strong executive to achieve full transparency with respect to national trade measures that affect trade, to make proposals to break impasses in negotiations, and to help plan for the future — to meet global challenges such as pandemics and climate change.
As Brexit was occurring, I had the privilege of being called upon to give my views on the proper role of an independent Britain in the world trading system. I testified before the International Trade Select Committee of the House of Commons. I met with officials of the Foreign and Commonwealth Office and advisors to the Prime Minister at number 10 Downing Street. There was a reasonable concern then that the views of Britain might not count for much at the WTO given the much larger shares of world trade represented by the European Union, the United States and China.
What I said to those with whom I met, is that when I first attended GATT meetings in the early 1970s, I heard the independent, strong and articulate voice of the United Kingdom, and, while that voice had been of value in the councils of Brussels over the last forty years, it was a voice that was now needed and would be welcomed in the deliberations at the WTO. The world trading system that we benefit from is very much a heritage of the partnership of the United States and Great Britain, based on the same vision that Margaret Thatcher enunciated in her 1994 speech. Progress in that system is supported today by a number of WTO members – including prominently Australia, New Zealand, Canada, and Singapore to name a few — each of which is a disciple of the Britain that believed in open markets. They act on the precepts enunciated by Margaret Thatcher with respect to the benefits that the world trading system can provide and has so demonstrably provided.
It should be seen as no accident that the United Kingdom has now applied to rejoin several of its Commonwealth countries and others in the CPTPP. This arrangement should be seen as a building block towards improvement of the multilateral trading system, and as a further guarantee of opening of markets, and not as a means to replace the global trading system with a preferential arrangement. With the withdrawal of the United States from the Trans Pacific Partnership, that forward-looking agreement, the inclusion in the CPTPP of the United Kingdom will contribute additional strength to what had been a regional agreement and now will be a proto-global one.
I was asked what Britain can contribute to the WTO
It can contribute to solutions to the major challenges that the trading system faces today.
Britain has just been host, in COP26, to the world’s largest gathering of countries concerned with the future of this planet in this era of global warming. In many respects, there is a vitally important trade component to climate challenge. Carbon border adjustment mechanisms (CBAM) need to be deployed only within agreed international rules, or serious trade conflicts will erupt. The WTO is the only appropriate global venue for that effort. Sustainable development must be addressed as part of a solution to the challenge of climate change. The WTO has the global membership with which that task can and must be accomplished.
Britain has much experience relevant to addressing the issues involved in reform of the WTO. These are constitutional questions. By far the greatest challenge is to restore the deliberative and legislative functions of the organization. As having one of the oldest if not the oldest representative parliamentary bodies in the world, Britain is familiar with the frustrations of building consensus and the skills needed to achieve results. That experience can be very useful in finding a way forward to create anew the ability of the trading system to meet current and future challenges through producing new trade agreements.
The second challenge for reform is to make sure that the chief distinguishing factor of the world’s trade institution is once again the enforceability of rules to which all have agreed. Britain has fresh experience with the delicate balance of national sovereignty with a judicial system outside of its national boundaries. Finding a solution for dispute settlement is an extraordinarily difficult task but it is a very necessary one, as WTO Members must again be able to rely fully on the enforceability of the WTO’s rules.
The third element of reform is the creation of a strong executive with an independent voice to bring about solutions, to provide full transparency with respect to national measures that affect trade and to aid in the enforcement of the rules. Britain has long experience with the evolution of executive powers with a sovereign parliament, as well as having created a body of corporate governance law that can inform the task of building an institutional structure to better serve world trade.
I conclude that Britain — acting within the construct of Margaret Thatcher’s clear vision of a world trading system that she knew without doubt would best serve the world’s peoples — can and should exercise a global leadership role. Working with those WTO Members who are like-minded, Britain should make improvement of the multilateral trading system a reality.
To read the full commentary from the Peterson Institute for International Economics, please click here.