Title: A World in the Changing Global Trade Landscape

Submitted by: FDP (Germany), German Group of LI (DGLI), LibDems, British Group of LI (BGLI), VVD, Venstre (Denmark), and FDP (Switzerland)

Notes that: 

• The contest between liberal democracy and authoritarianism is one of the defining issues of our times, having a profound impact on the world, including global trade.
• Despite progress in some areas, the overall lack of dynamics regarding multilateral trade negotiations within the World Trade Organization (WTO), and the risk of the WTO losing further importance as a defender of free trade.
• The landscape in which we conduct global trade has changed significantly due to disruptions caused by the pandemic and, most recently, the new geopolitical reality of the Russian invasion and war of aggression against Ukraine.
• Recent crises have exposed and exacerbated the vulnerability of supply chains and particularly the vulnerability resulting from a heavy dependency on a single or few suppliers; they have also demonstrated the increased complexities and exposure of modern societies to disruption.
• For a long time, the global rules-based order has been under pressure by authoritarian countries playing by their own rules, notably China, particularly in the field of human rights.
• Trade policy over the past years has often been used as a substitute for foreign policy and diplomacy, which led to high expectations towards trade in the absence of other effective foreign policy tools.
• The balance of power in global trade policy is increasingly shifting towards Asia.
• Trade has become a highly controversial topic in many parts of the world but particularly among the public of EU countries, which contributed to stop the Transatlantic Trade and Investment Partnership (TTIP) agreement.
• The World Trade Organization (WTO) faces tremendous challenges in its three main functions: providing a negotiation forum to liberalise trade and establish new rules, monitoring trade policies, and settling trade disputes.

Believes that: 

• Free, fair, sustainable and open trade is vital for the countries worldwide and has been instrumental for prosperity and peace. 
• It is of fundamental importance today, more than ever, that democracies work together in all areas, including especially in the trade arena.
• Economic nationalism and protectionism are the wrong medicines for the COVID-19 pandemic and other disruptions of world trade; further believes that national hoarding, increased self-sufficiency and disorganised reshoring of industrial production will not solve the complex crises we are experiencing globally.
• Disruptions in international supply chains, which have reached unprecedented levels, will require companies to reorganise, adjust and diversify their supply chains, as well as re-shore highly strategic relevant production at least to neighbouring and likeminded countries.
• It is important to foster partnerships among democracies, especially in uncertain times, and therefore they should pursue a positive trade agenda and economic cooperation to strengthen its partnerships.
• Diversifying trade relations in order to strengthen the supply chains has become increasingly important to safeguard and increase the resilience of countries and regions as well as decrease asymmetric dependencies.
• The G7 states are trade superpowers that can use their trade policies to promote their values and push for positive change worldwide. Trade should remain available as part of their foreign policy toolbox but used with care along with other means of persuasion, noting that Chinese economic interventions in third countries under sanctions are undermining the effectiveness of trade as a tool to support human rights.
• Trade is a tool to increase our common prosperity and lifting people out of poverty by creating new opportunities globally. Trade can bring likeminded partners together; it can and should support democracy, promote human rights and fight climate change.
• Trade and sustainable development chapters are important parts of free trade agreements, and should increasingly be used in other trade agreements, where appropriate.
• The WTO is an indispensable part of the rules-based trading order and needs to be reformed to contribute to open and free trade.  

Calls for: 

• Continuing exploration of possibilities to restart a global trade round with interested countries because a multi-lateral rule-based approach to trade liberalisation is the best option from a liberal perspective.
• The swift ratification of already concluded trade agreements.
• Speedy conclusion of ongoing negotiations on free trade agreements to prove mutually beneficial cooperation and to strengthen strategic partnerships, particularly among liberal democracies. 
• A comprehensive reform of the WTO, in which the reformation and restoration of the dispute settlement body must be a reform priority and should address the problems of the Appellate Body by increasing the number of members, while also striving to limit the subject matter of the dispute to the actual case. Furthermore, the WTO needs to enhance its capabilities to monitor and facilitate plurilateral and regional trade agreements, so that they become building blocks for a rules-based trading system, rather than obstacles. Moreover, the WTO needs to reform its approach to developing-country status, because the current mechanism relies on the self-declaration by member states and has been misused by countries such as China.