Global trade reform must include China, U.S., Jim Carr says after hosting WTO meeting

Trade Diversification Minister Jim Carr said today that any efforts to reform the global rules-based trading order must include the world's two largest economies,China and the United States.

Carr made the comments after a day of meetings in Ottawa with representatives from 13 World Trade Organization members who came to Ottawa to start work on fixing the increasingly troubled global trading system.

"We are setting the framework for a more constructive momentum around real measures for reform," Carr said at the closing press conference."Starting small has allowed us to address problems head-on and quickly develop proposals.

"That said, we recognize that we are in the process of setting the table for a larger effort, broadening to all members, and that effort must include the United States and China."

Carr also said the workwould have to expand eventuallyto include all 164 members who currently subscribe to WTOrules.

Only12 otherWTOmembers joinedCanada forthis first gathering:Australia, Brazil,Chile, the European Union, Japan, Kenya, Mexico, New Zealand, Norway, Singapore, South Korea and Switzerland.

The group wasintentionally diverse, with representatives from different geographic regions and from statesat different stages of economic development and integration.

Nevertheless, they all "share the value and belief that the rules-based international order is worth preserving,and the best way to preserve it is to reform it," Carr said earlier in the day.

RobertoAzevdo, director-general of theWTO, said that the idea behind the meeting was to start small and find common ground that could be sold to the wider membership.

"I think what this group wanted to do was have a conversation among what you could describe a little bit as 'like minded people,'"he toldCBCNews Network'sPower & Politics."So, an open-minded conversation about where to go, what steps to take."

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After the meeting, a joint communiquwas issued outlining three areas that require "urgent consideration."

Azevdosaid his number one priority was to resolve issues around the dispute settlement system.

"This is a critical element of the system because, at the end of the day, we all negotiate rules and we need some degree of enforcement," he told host Vassy Kapelos. "If there are doubts about interpretation of the rules, there needs to be a third party that will look at it and say and say,'This is how you should interpret.'

"If we don't have that element, it is going to hurt that system significantly and we are stuck at this point in time on this one."

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International Trade Minister Jim Carr opens a 13-country meeting about modernizing World Trade Organization rules.

Carr hosted the group for a private dinner Wednesday and joked Thursday morning that some participants might have gone short on sleep. In the morningsession, Carr said he was"very impressed with the candour and the sense of the importance of the discussion."

Delegates shared their feelings on the status quo and the impetus for reform with a lot of passion, he said, while declining to describe any of the specific views shared in the closed session.

Talks amid tariff warfare

While beefs about the WTOhave been around almost since its formation in 1995, the global disruption caused by an escalating tariff war between the U.S. and China has focused minds on the inadequacy of current rules for present-day threats to fair trading.

The U.S. worked hard to buildthe WTO, but it's no longer clear it wants to maintain it. When U.S. President Donald Trump threatened to pull out altogether, it became obvious the status quo could not stand.

Carr was careful in his opening remarks not to pin too much blame on the Americans, whose blessing will be needed for any reform process to succeed.

"The problems facing the multilateral trading system were notcreated by any one WTOmember. They are not new and they cannotbe solved by any one member," he said.

Organizers of the Ottawa talks thought it could be more constructive to hash out early reform proposals through a fellowshipof "like-minded" trading partners who weren't currently in active economic combat.

Senior American officials areskeptical of the value of the multilateral rules-based trading system and are pursuing "America first" policies that allow the U.S. to use its economic clout as leverage in negotiations. The WTO, by contrast, was designed to addressthe concerns of smaller economies and less-developed countries.

In particular, the U.S. objects to China's status inthe WTO. It argues that it shouldn't be treated like a market economy, since the state effectively controls its industries. American officials want any WTOreform process to focus on clamping down on China's unfair trade practicesbut it's not clear that wasthe mainfocus ofthe Ottawa talks.

Business associations from Canada, Europe, Japan, Brazil, Australia, New Zealand and Mexico issued a joint statement Wednesdaysaying theWTOis "badly in need of an update to reflect the realities of a changing global economy," and urging members "towork together to enhance its functionality, transparency and fairness."

"TheWTOplays an essential role in helping to adjudicate and resolve trade disputes. Unfortunately, the dispute settlement system has become overburdened and mustbe fixed if theWTOis to live up to its potential," it said.

'It's not easy'

Several initiatives are underway to change the WTO. The Americans have engaged the EU and Japan in one process that appears to be focused on rewriting rules that allow China to hold an unfair advantage. Anything hashed out by this group must complement the work others are doing, Carr said.

"The fact that there are a number of parallel initiatives illustrates theimportance trading nations place on the rules-based system," he said in his opening speech.

"If you had a meeting of 163 of your closest friends could you agree on much? And how long would it take?" Carr told reporters. "It's not easy."

This group plans to meet again in January 2019 to review their progress.

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