Reflections from the AIG Global Trade Series 2019

Last year I wrote an article entitled ‘Why Global Trade Matters to Insurance’, outlining the many reasons why the multilateral rules-based global trading order is of fundamental importance to AIG, as well as the financial services sector as a whole. At that time, it seemed that every day brought with it a new front page headline about global trade.

In the intervening months, from US-China to Brexit to the USMCA, trade has not moved far from the news agenda and is now planted firmly at the very center of the global economic and political debate.  

It is also no exaggeration to say that the rules-based order embodied by the World Trade Organization (WTO) and the global trading system, in its current form, is at a critical inflection point.

By the WTO’s own admission, the system is in the biggest crisis since World War II.

At this pivotal moment, and to coincide with AIG’s centenary year, it seemed an appropriate time to publicly reaffirm our support for the global trading system and launch the AIG Global Trade Series.

The Series, which recently came to a close in Shanghai, brought together policymakers, business leaders and experts from think tanks and academia to debate the complex interplay of factors shaping the global trading system. The high profile events held across Washington DC, Rotterdam and Shanghai addressed the challenges and opportunities of today’s trading environment. Holding discussions on three continents allowed us to examine these critical issues through a regional lens, highlighting both the commonalities, as well as the differences, driving attitudes towards trade across the world.

Regional perspectives came to the fore at the Rotterdam event, which was hosted by the Port of Rotterdam, Europe’s largest port. We discussed how Rotterdam, as a global trading hub, is responding to political, technological and climate change. New innovative products and digitization will have a significant impact on trade patterns, and the global trade landscape (including trading at the Port) will be radically transformed as a result.

An important theme which ran through the series was the recognition of the need to reinforce the important role of international trade and investment as a vehicle for inclusive, sustainable growth which benefits all.

According to the International Chamber of Commerce, over the past 20 years trade liberalization has helped double global GDP and cut poverty by 40%. In Shanghai, policy-makers stressed that China’s economic growth has lifted hundreds of millions of Chinese people out of poverty, and contributed to both regional growth across Asia, as well as global growth, a fact often overlooked when international trade is viewed as a zero sum game.

A clear message throughout the series was that compromises on issues of trade could still be possible if governments repudiate this zero sum mentality; however policy-makers in each of the 3 trading hubs made it clear that compromise in the face of threat could not be tolerated.

The Series constructively articulated approaches and solutions to strengthen commitment to global trade, needed more so now than ever before. For me, a critical takeaway is the tremendous opportunity and important responsibility of businesses to engage in the debate on the existential threat faced by the WTO. Make no mistake; I am not an idealist who believes the current system is perfect. Far from it, and valid frustrations will continue to grow with the WTO trading system unless there is urgent reform and modernization.

This was underscored at the Washington DC arm of the Series by John Denton, Secretary General, International Chamber of Commerce, who welcomed the opportunity for policy-makers to speak directly to businesses. He spoke of the crisis emerging within the current system, but also emphasized the need for businesses to establish a positive framework for a reformed WTO which advances sustainable and inclusive growth for all. 

This message was reinforced by WTO leadership, who highlighted their openness to engage with businesses. Ambassador Alan Wolff, Deputy Director-General, World Trade Organization, and keynote speaker at the AIG Global Trade Series, has stated in the past;

“The principle threat to the WTO at present may not in retrospect prove to be disruption but complacency.”

To avoid complacency, and sleep-walking towards the atrophy of the WTO, the business community should not only add its voice to calls for reform, but also articulate a clear picture of the risks to global prosperity from a fragmented global trade landscape – the consequence of a WTO collapse. The pathway forward requires sustained and vocal thought leadership on the part of business, government and academia. The reluctance of the business community to do this allows some to argue that reform of the WTO is not a priority; this misconception needs be tackled urgently to avoid it influencing policy thinking.

I am extremely proud of AIG’s leadership of the Global Trade Series, and in particular, of harnessing the collective energies of the business community to drive the debate on WTO reform. Historically, AIG has supported the rules-based trading system, playing a crucial role in the 1990s of advocating expanding its scope to include services.

In our Centennial year, it is therefore fitting that AIG continues to champion the role of the WTO. Next year’s 2020 Global Trade Series will help us further build on sustained engagement as we continue this important dialogue with policymakers, partners and our clients.

Special thanks to our international coalition of partners: Georgetown Law’s Institute of International Economic Law (IIEL), the Royal Institute of International Affairs (Chatham House), the Clingendael Institute, the International Chamber of Commerce, the Port of Rotterdam and the Shanghai Academy of Social Sciences.