Transcript of Arancha González at CCG: "making trade work for all" by being inclusive and responsive

Former Chief of Staff to WTO Director-General says WTO needs to address climate change, discipline industrial subsidies, reform dispute settlement, and balance national security.

On Nov. 3, Arancha González delivered a speech at CCG where she introduced her new book and engaged in a dialogue on global trade dynamics with Dr. Henry Huiyao Wang, President of CCG.

Arancha González is the third Dean of the Paris School of International Affairs (PSIA) at Sciences Po. Previously, she served as Spain's Minister of Foreign Affairs, European Union, and Cooperation, Assistant Secretary-General of the United Nations and Executive Director of the International Trade Center (ITC), and Chief of Staff to the Director-General of the World Trade Organization (WTO), Pascal Lamy.

Kindly find the audio of the dialogue at the link below:

The video of the dialogue is available on YouTube. It was broadcast on Chinese internet platforms and remains available in China in Chinese and English on CCG's official WeChat account. It was also covered by Economic Daily and Beijing Daily.

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Introduction: Mabel Lu Miao

About Ms. Arancha González

Arancha González is the third Dean of the Paris School of International Affairs at Sciences Po, and the first woman to lead the world's third School for Politics and International Studies.

Ms. González started her career as a lawyer in the private sector and has been a member of PSIA's strategic committee since 2017. Prior to joining PSIA, Ms. González served as Spain's Minister of Foreign Affairs, European Union, and Cooperation. She previously was Assistant Secretary-General of the United Nations and Executive Director of the International Trade Center. Between 2005 and 2013, she served as Chief of Staff to the Director-General of the World Trade Organization, Pascal Lamy. Before that, she held senior positions at the European Commission in the areas of International Trade and Development.

Ms. González is also on the steering committee of the Paris Peace Forum, where many people, including Pascal Lamy and Justin Vaïsse from Paris Peace Forum, have stood on this stage for public speeches.

About CCG Global Dialogue Series

The CCG Global Dialogue Series was initiated in 2021, in which the CCG President Huiyao Wang has engaged in rational, objective, and in-depth conversation with dozens of international thought leaders. The viewpoints shared by these dialogues are invaluable for comprehending the evolving trends in global development. Among the distinguished dialogue guests are Thomas Friedman, Graham Allison, John Thornton, Joseph Nye, Pascal Lamy, Kishore Mahbubani, Martin Wolf, Justin Vaïsse, and Henry Paulson. It is believed that by understanding the insights of these dialogues, comparing and constructing their perspectives, a deeper understanding of critical topics, such as globalization, global governance, multilateralism, the world economy, transnational threats faced by humanity, and EU and US-China relations can be achieved.

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Keynote Speech: Arancha González

Well, thank you very much. Thank you for this great invitation to be part of the CCG family. It's my first visit to China as the Dean of the Paris School of International Affairs at Sciences Po. It's obviously not my 1st visit to China. But I certainly am very happy to be here.

At a time when the world is going through a lot of turbulence, we are seeing the impact, devastating impact of climate change; we are seeing the multiplication of conflicts in many parts of the world, including the return of war in particular, but not only in the European continent, a war that we thought was behind us; we have seen a pandemic that has devastated not only our health and led to lots of suffering in everywhere around the world, but also has a huge, a tremendous impact on our economies; we are seeing rising geopolitical tensions; we are seeing gaps related to income, growing income inequalities in many parts of the world.

This is a world that is in a lot of flags, in a turbulence, and obviously, in this world that is in search of a new world order, international trade is one of the fault lines of this new world in the making. This is why, I was very tempted to put a few thoughts on a handbook that I have recently published. It's called Making Trade Work for Prosperity, for people and for Planet. And the message in this book is a very simple one:

Trade, which has been an incredible vehicle for prosperity, for lifting billions out of poverty, for generating growth, for helping with innovation, competitiveness, can continue to be this incredible too. But we now need to make sure that we harness international trade.

We harness to make sure that it responds to the concerns that many have on the climate change front, that we make it work towards planet, that we harness international trade to make it also work for all, and not just a few.

Now, this is a bit the, let's say, the challenge we have ahead of us. As I said, trade has been an incredibly effective tool for prosperity and for global development but also we have seen how international trade has now become a source of weakening others. We have seen the weaponization of international trade. So we have seen how much it has helped others, but we have also seen that others have lost in this process. We have seen these many faces that international trade has.

So the question is, trade, like globalization, has all these many faces for good and for less good. How can we harness all these forces? And this is a bit the task that we have ahead of us. And I like to a sum it up in three steps. It's almost like if we had to do a dance with three steps, not just with one step. In the past, it used to be just open markets, and the rest will follow. Today, we have to be a little bit more sophisticated.

Step number one is obviously, to make trade possible. And we make trade possible when we open markets through unilateral trade policies, but more often through bilateral agreements or through multilateral negotiations. That's what makes trade possible, when we agree to reduce, collectively or bilaterally, originally, the obstacles to international trade.

Traditionally, we have done this in the World Trade Organization, multilaterally, and it is true that today, multilateralism in the area of trade, like multilateralism across the board, is suffering a lot of headwinds. We are hearing many declare the WTO too inefficient, not good enough, not modernized enough. And I think our collective task is to make sure that we have today a WTO that is fit for purpose. And fit for purpose in the WTO means that the members of the organization make trade possible, which is what the WTO does — by focusing on a few areas that today are at the forefront of the disagreements between the members.

How can we make sure that the rules of international trade and our aspiration to protect climate change are compatible? Climate Change is our existential threat, so we need to deal with climate change. We've agreed to do this. In the Paris Climate Agreement, we have agreed, every member of the international community has agreed, to take national measures to reduce emissions and to help us keep the temperature of the Earth below an increase that is no more than 1.5°C. But these national measures we are seeing today can have big spillover effect on others. So we need to find the spaces, I think the WTO is a good place to do that, where we ensure some sort of compatibility between the measures that different countries take to protect against climate change, so that we don't do this through beggar-thy-neighbor policies, but we do this in a manner that will help all members of the international community fight against climate change, and do this while preserving our possibility to maintain more sustainable growth, including through trade.

WTO is also confronting the need to discipline a little bit better industrial subsidies, subsidies in general, and industrial subsidies in particular. It's clear that to achieve this climate transition, to achieve the digital transition that many countries are embarked on, incredible amounts of public financing are being used, and how we use this public financing will matter a lot to whether or not this transition works for every country or not just for a few countries. And this is why the WTO needs to look a little bit more attentively at disciplines around industrial subsidies, so that it helps all countries achieve these massive transitions that that we have ahead of us.

WTO is also at the moment confronting a dispute settlement that has lost a little bit of shine compared to the system as it was set up in 1995. The WTO dispute settlement is not just a very unique dispute settlement. it is a very effective one in making sure that businesses, whether they are big, and more importantly, whether they are medium or small; countries, whether they are big, and more importantly, whether they are medium or small, can fight with the law, I suppose, than with pure force. And this is why it's important that WTO members also look at the reform of the WTO dispute settlement, so that it can help members in finding a way to deal with their trade differences and prevent those trade differences from escalating into trade wars, which is, as we know, detrimental to everyone in the international community.

Now, WTO members also need to look at how they will consider national security. Every country wants security for itself, and it's understandable that every country wants to have the ability to protect its own security, but however a country does that matters to the others too. That's why in WTO, there was an exception to the WTO rules to be invoked in the cases where national security with a capital “N” and capital “S” was at stake. The impression I have looking at the situation today is that this exception is being interpreted in such a wide way that may end up being the rule and emptying a lot of the forces the WTO rules have in ensuring a level playing field for all its members. So WTO members need to have a bit of a look at how to deal with national security.

Some would say this is a very tall order. I would say that, judging from the last ministerial conference that took place at the WTO last year, where a big deal was achieved to cut subsidies that contribute to overfishing, showed that when there is a will, um, there is a way for members of the WTO to get to a result. That's what they demonstrated last year, where China, the US, Ukraine, Russia, the European Union, every member of the WTO agreed to this deal to cut subsidies that contribute to the degradation of our biodiversity. So I think it's possible, but we need to create the spaces where this possibility translates into action to modernize the rules of international trade.

But here we are still in the step one of this dance in international trade, which is about making trade possible. We still need to make trade happen. And this is not only about trade agreements. It also has to do with the investments that are necessary in the trade infrastructure, in the customs infrastructure, in digitalizing those customs and making them more speedy. On trade finance, which is the part of finance that is the lifeblood for international trade.

So in addition to making trade possible through trade agreements, through negotiating in the World Trade Organization, there is still a second step to be undertaken to help businesses of all sizes, big or small, medium, micro, men entrepreneurs, women entrepreneurs, join international trade. And it's important that they can do it because we know that at the end of the day, participating in international trade is the more lucrative part. It is more lucrative than just being confined to very, often, very small, domestic markets. So step two for governments, for the private sector, is to ensure that they make trade happen.

But this is not enough. There is a Third step, and this is a very important third step that, in my view, we have underestimated over the years, and this has to do with making trade work for all. We know that opening markets generates "winners," but we also know that open markets, advances in technology, advances in digitalization, advances like we are seeing now in artificial intelligence, in robotics, also mean that others will "lose."

Now, how we manage the transitions matters a lot for the legitimacy of policies to keep markets open. So what we have seen is that in countries where measures have been taken in the form of a strong social safety net to help this transition, legitimacy for open markets has been great. And in countries where social safety nets are not robust enough, there is a lot of resistance to keep markets open. So the third and most important step, it's a step that's not in the hands of trade ministers, it's not in the hands of trade negotiators, it's not in the hands of very often, businesses. It's in the hands of a whole-of-government approach to strengthen social settlements, to improve education, to improve health care coverage, to ensure there is a possibility for those who lose their jobs to be retrained and rejoin the labor market, taxation policies that are fair. This is also what we need to get right.

So, I think we are, at the moment, seeing a lot of pushback on open markets and international trade. I think we need to listen to this pushback, but more importantly, we need to ensure that we respond to it. In my view, judging from history, the response will not come from closing our markets, adopting protectionist policies, or beggar-thy-neighbor policies. The response will come from our collective ability to establish new rules that facilitate trade, invest in ensuring that these rules benefit all aspects of our economy, and, most importantly, from our collective ability to provide necessary social safety nets both domestically and internationally.

So, this is the actual challenge that confronts all of us today, especially at a time when it is true that geopolitical rivalry is on the rise. As I like to say, the laws of geopolitics may have changed, but the laws of economics have not. If we want the laws of economics to remain effective, we need to collectively find a way to manage geopolitical turbulence. This message aligns well with an audience like CCG, an organization that has long worked towards achieving a more balanced, equitable, and sustainable globalization, which is indeed what lies ahead of us.

Thank you very much for this opportunity to be with you today, and I am very much looking forward to the dialogue that will follow.

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Dialogue: González & Huiyao Wang

Huiyao Wang:

It gives me great pleasure to host the very distinguished Your Excellency Arancha; we're so pleased you've come to CCG personally. And we're also going to broadcast this on social media and on the CCG website. So it's really important that you're coming at a very right time, and now China opens up. But of course, as you said well in your speech, the world has changed a lot, and geopolitics has changed a lot. But globalization, we are a promoter of globalization. You have such an impressive professional career. You've been working for European International Affairs, but also served in a top position at WTO for many, many years, and, of course, also the United Nations, and a very international career.

So what I would like maybe to talk with you is, how do you think the world where we are going to go? Because since the Bretton Woods System, I mean, the World Bank, IMF, WTO, has really carried us for a long time now. Now we are having a lot of challenges. And the world has been fragmented also into different regional trading blocs. Can we really overcome that? Of course, WTO is the backbone of globalization. You've been the top expert. You are also the dean of one of the most famous schools in the world. So probably give us a bit of your views on how we can promote globalization. And you already talked a bit about that. But also, I would like to highly recommend your book, "Making Trade Work for Prosperity, People, and Planet." So making trade work for three "Ps," right? This is an excellent book. I just glanced at it, and I found it very stimulating. So how about giving a bit of an overview of this, and then also, how do you see the globalization forward, to start with that, and then we can talk more on other issues as well. So, Arancha, please.

Arancha González:

Thank you very much, Henry. And let me tell you that it's true, we are seeing a lot of narratives about globalization that go in the direction of division and fragmentation. We hear about de-globalization. We hear about friendshoring. We hear about reshoring. We hear about fragmentation. We hear about pluralization. And the noise is very loud.

When we look at the data, for now, the data is not showing that. Data is showing much more resilient economic ties that are in some ways probably moving from one country to another, but not necessarily going back national. So the rhetoric is very nationalistic. The economic data is still showing interdependence. And maybe this is because, you know, the global connectivity that we have built over the last decades is very sticky. It's very difficult to undo because it has a logic. It has a logic of comparative advantages. It has a logic of value chains that have been invested in by companies through very heavy investments in the last decades to make them work. So we are seeing a divorce between the narrative that is going in the direction of division and the data that still shows a lot of interdependence. I guess our task is to make sure that our policies are not driven by rhetoric, that our policies are driven by some sort of understanding of the economic opinions of our view.

And it's clear, Henry, that what we have at the moment is attention between two worlds. On the one hand, we have the world of security. Security is pretty much a zero-sum game. That's one part of the equation. And on the other side, we've got the economics, the comparative advantages, the value added. And this is not a zero-sum game. This is more win-win. So how do we find a new balance between those two worlds, the world of economics and the world of security? This is the task that we have to face. It's true that, for many reasons, we probably have to find this new balance, probably climate change and climate resilience are one reason why we have to find this new balance. We have to make businesses understand this very well. They cannot make their value chains solely focused on efficiency; they have to make them climate-proof. They've got to invest more on the side of security for climate reasons and probably be a little less efficient but more capable of resisting the impact of climate change. We also have the sector of raw materials, where there is a lot of concentration of production of certain raw materials in various specific locations around the world. And probably it is fair that countries want a bit more diversification in order to build more security of sourcing. So this quest for security is an important one. I don't think we can disregard it. But we also cannot disregard the other part of the equation, the question about economic efficiency. So we have to find this new balance, and where we put the cursor will matter a lot. So, in my view, this is the conundrum we have to deal with today. Obviously, I have not spoken about technology. I'm sure we'll have ample time in this conversation because security in the technological space is a significant part of where we have to find this new balance and get it right if we are to continue benefiting from this win-win that can be international trade and open markets.

Huiyao Wang:

That's right, great. Thank you, Ms. Arancha. I agree with you, actually. I found this very compelling; it's that the law of economics has its logic, and it has its rhythm, and it has its powerful momentum. Sometimes people want to, you know, think about other things as more important. But actually, as a matter of fact, the integrated economy, embedded in each other, is sometimes so resilient. And we can see, until now, we haven't had the 3rd World War happen. I mean, we are quite precarious now. But it was because of trade, investment, people flow, labor flow, for the last 70 some years. I mean, globalization has really prevented us from the 3rd World War. And this economic movement, which is, I think, has made the world more prosperous, it's so important now. And so, you mentioned about, you know, we need to really stick more to the economic and trade, which is absolutely so important. And China is a good example. China has benefited from this global trade and has lifted 800 million people out of poverty. And China joined the WTO in 2001, and China's GDP has gone up twelve or thirteen times. And that is exactly, you know, because of this openness, that China has been able to lift 800 million people out of poverty. That was a contribution of China, but also the world trading with China. So, what do you see of now, we have regional trading blocs coming up, and we know who is trying to overcome some challenges. What we see, you know, RCEP, we see CPTPP, we see NAFTA, and now it's USMCA and all those agreements coming up. So, how do those regional things? Are they going to promote WTO performance more, or are they going to fragment regional trade? So, those plural regionalism. And so, what do you think about that? And then there's also, we see, there's also, there's BRICS countries coming up. There's also the Belt and Road, maybe that's more on the infrastructure, but on the trade side. So, do you think it's regional, that the free trade agreements, would that can be upgraded, like, CPTPP could be another meaning of WTO. I mean, the UK has joined CPTPP now, and China wants to join. So, I'm a little puzzled about these two fronts, and that's what the public challenge of WTO to have as well. Maybe you can share some of your expert analysis and answer for that.

Arancha González:

So, I would say that what we are witnessing is a lot of activity on the, let's call them, megaregions, right? These are significant regional agreements. You've mentioned a few in Asia, whether it's RCEP or CPTPP, which is a megaregional agreement around the Pacific. There are other megaregionals, like the African Continental Free Trade Agreement, a big regional pact covering the entire African continent. The idea here is that it's crucial for African countries to enhance intra-Africa trade, which currently ranks as the lowest in the world for any region due to the numerous obstacles that still exist. Additionally, there is Latin America, which is working towards integrating the Latin American continent and the Alliance for the Pacific, involving several Latin American countries that face the Pacific.

I believe all of this is positive. It demonstrates that open markets still hold considerable appeal. It indicates that many countries still believe it's better to reduce trade barriers than to erect new ones. I think this is a crucial signal. Particularly significant are these signals coming from regions where international trade wasn't a major topic in the past, like Africa. This, in my opinion, sends a very important message because these are parts of the world where international trade isn't very popular.

Now, the question to me is not so much about whether we should decrease megaregional activity; I don't believe we should. I think it's beneficial. The real question is twofold: how can we better organize the coexistence between these different megaregionals and the WTO, and how can we work to ensure that many areas where these megaregionals are looking to establish rules can be more synergistic, so that we don't merely open markets at the regional level but attempt to bring all of this together coherently? Right?

Consider, for example, a sector like rules on digital trade. Several of these megaregionals are contemplating rules on digital trade, which is very positive. However, at some point, we will need to explore how these various regions can be harmonized, possibly within a WTO framework. So, to me, it's not so much a question of having to choose between regional or multilateral approaches; it's about how we can better organize the coexistence of these different approaches. I mean, there's this American expression that I really like, which is, "You have to be able to walk and chew gum at the same time." So you need to be able to "walk" in terms of regional trade opening while also "chewing gum" by investing some political energy into the World Trade Organization.

Huiyao Wang:

That's great, and thank you for that. And when talking about the WTO, we know it's under a lot of pressure, of course. I mean, during the Trump era, and now it's trying to reach more consensus. We know that the WTO Ministerial Meeting last time, they achieved quite a bit on fisheries, investment liberalization, trade, and also the plastic emissions into the ocean. That has also been proposed, with many countries responding. So the WTO is really moving towards quite a bit of a new area, like digital technology, green environment, and things like that. So what do you see in those new technology areas? You know, we are seeing AI coming up, we see data flows. We have seen many new challenges. There is no consensus in the world now. So can we really, you know, maybe WTO can spearhead a lot of research and building a new theory, or at least summarizing the practice, and then try to organize some new reforms on these new consensus. So would you say that this is really the WTO's role in how they have done these things, and what are the new things to really look forward to for the world to get put together? Because otherwise, we see different trading blocs doing things differently. So that could be a challenge as well. I mean, particularly facing the challenges of the digital economy, data, technology, and investment liberalization.

Arancha González:

So, what's the lesson we take from the recent success of the World Trade Organizational Ministerial Conference? I take a very simple lesson. I take the lesson that when China, the US, and the European Union can find points of convergence, they unleash a lot of energy that can lead to a good result. Obviously, they are not the only stakeholders; there are many other stakeholders in the organization. But if these three big parts of international trade, each representing 13% to 14% of international trade today, find a point of convergence, it's not easy for them to do so. Let's not hide where the difficulties lie. Let's acknowledge that technology and digital trade are challenging areas. However, if the three of them come to the WTO with the idea that they have to contribute something in order to achieve something and that it's better to do this cooperatively than in a conflictual manner, then we have good ingredients to succeed.

Now, these three partners are not in the mood for transacting. Transacting doesn't mean agreeing with the other. Transacting means that you have to give a bit of way for the other to give a bit away, and for everyone to find an agreement. If the disposition is not there, it's very difficult for the WTO to achieve a result when these three stakeholders, who represent a significant portion of international trade, are not ready to be flexible and see the value in sitting down and negotiating. Again, negotiating is not about agreeing with the other; it's about being willing to give something up to ensure that others also make concessions, leading to better results. That's how you build a trade agreement. So if this disposition is not there, it's going to be very difficult.

So, the big question is whether these three big partners are ready to respond positively. This is where, in my view, we need to invest some political energy. It starts with the idea that pursuing win-win outcomes is far superior to entering this conversation with a zero-sum mentality.

Huiyao Wang:

Good. Thank you. And yes, that's really the case. I think recently, just about a few months ago, I hosted three, as you said, the three largest economies, three largest emitters at the climate roundtable. I invited the Chinese climate envoy, Minister Xie Zhenhua. And he's actually going to the US now. Then also, we invited Nicholas Burns, the American ambassador, and also Ambassador Toledo from the EU. So we had three, you know, China, the US, and the EU, on climate. So absolutely, if you get those three biggest economies, that can talk together now, it makes things easier. So the global trust building among the three, particularly, is so important. And that's why I'm glad to see so many international leaders, particularly from Europe and the US, are coming back to China. And those leaders, like you, are not only political policymakers but also academic leaders coming back. It's so important.

So, I think now, you know, we will talk quite a lot about trade. So how do you see the China-EU relation? I mean, you also, not only on WTO but also on the EU foreign affairs side. So we're going to have a China-EU summit pretty soon. And in May, we had the Vice President of the EU, Josep Borrell, actually trying to speak at the CCG. He published his speech at CCG, which is still. We hope that there will be more strengthening of the China-EU relation. Because we have the longest civilization, we have a Silk Road that connected us 2000 years ago. And we don't have any geopolitical ambitions with each other. We don't have bordering issues. So how do you think we can strengthen the China-EU relations? Perhaps from a European leader like you, we would like to hear from as well.

Arancha González:

So I think there are many reasons why this is an important relation, and it's an important relation both for the EU and also for China. This is the beginning of this conversation, right? So I think we start from the premise that we are both important to each other, and that how we manage this relation will matter for how much we can translate this potential into reality. And we can see, take climate change, an area that Europe feels very strongly about. And it's not ideological. It's basically because our younger generation in Europe wants the fight against climate change to be priority number one. They see this as an existential threat to them. They see this as an intergenerational issue. They think that if we don't take the measures that we should take today to protect our climate, they will be on the short end of the stick. And I'm sure that if we ask this question in China, it's exactly the same. So here we have a big space where to build together, a fight against climate change. Now, of course, the fight against climate change means decarbonizing our economies, doing this in a fair manner, making sure that we take into account who's been historically polluting more, who has a historic responsibility. But also being very clear that if we do not translate this desire to reduce emissions today, it's not going to work for tomorrow. So we have there a bigger space where to work together. We care about protecting biodiversity and protecting marine spaces and protecting our polar caps. And I know for a fact that Europe and China have been working together in this space of protecting biodiversity because they do care about it. I know that we care about international trade continuing to be an engine for our respective growth. So I know there are many spaces where we find points of convergence. And I think the task ahead, Henry, for us, is to move beyond telling each other nice words and move into taking measures that will translate this desire that we have to strengthen our relationship with concrete action. And this is where we need now to put the little effort: taking concrete action. So let me focus on one area that I know best. I like to talk about the areas that I know best, and not the areas that I have less knowledge about. Take international trade. I think we have the ingredients to make those relationships more solid. But I don't think we're there yet. If I look at international trade, I see a growing deficit between Europe and China. I think this can be resolved. I think this can be addressed. But I think we have to move beyond nice words into action. My sense is that we have the possibility to do that. If we want to do that, we can do that. I know that in international trade we are having tough conversations at the moment. Because, let me be very frank, I think in Europe, there is a desire to keep European markets open. Why? Because it works best for us. Because a big part of our growth comes from open markets abroad. I think it's the same on the Chinese side. A big part of why China has been able to prosper is because they have hitched their growth wagon to international open markets. So if this is the case, and I can tell you, in Europe, we want to continue down the road, then we have to look at how do we address these trade deficits. How can we make sure that European companies are more interested in looking at the Chinese market, and continue to be interested in investing in the Chinese market. Because they see there are opportunities here, and there are fair opportunities. How can we make sure that China can continue to access the European market, because there are fair opportunities for Chinese companies in Europe? So this is where I think we have work to do. I think we should not avoid talking about the things that are less nice that we have to deal with. It's better to tell each other how we see it, because this is the beginning of having a conversation to address that.

Huiyao Wang:

Thank you for your very constructive suggestion. I totally agree that, actually, you talked about the data not supporting, e.g., last year, we had historical trade data with the US. Also, the data with the EU also has gone up on trade. But of course, we understand that our European friends are a bit worried about the trade deficit now that they are having. But that's exactly the point. Maybe we need to strengthen the trade, maybe not de-risk too much. And then also, with this subsidy on clean energy vehicles, we have to be very cautious not to bring that into trade friction, or trade conflict. And so I think, certainly, we hope to get more technology sales from the EU to China. And I know there are some restrictions. So, certainly, there could be more done on the Chinese side as well. E.g., we have more tourism. We actually had a lot of tourism going to Paris, to Italy, to Spain, and I think COVID has had an impact; we are still recovering from that, but gradually I'm seeing it going to recover. So absolutely, trade and investment and economic ties are the strong bonds that we have to maintain. So that, and also our shared support for the multilateral system, is so important. So I agree that we need to strengthen our trade and also improve our balances, but also relax the restrictions on each side, on each other as well.

Now, Arancha, I want to change the subject. I know you've had a colorful career, very impressive. And now you are, you know, heading in the Spanish government. You also headed the WTO, international organizations. Now you're heading a very famous school, Sciences Po. I had the pleasure of visiting your school. Thank you for hosting us last time. But really, very impressive, at the heart of Paris, the heart of Europe, such a great number of talents being cultivated under international issues, and you have such rich experience to direct, educate those international students. So tell us a bit about your school. And I know you have a China office. You have a lot of Chinese students also there. And actually, you know, people here, you are coming, a lot of them say, "Oh, how did you get the Dean of the Paris School of International Affairs, Sciences Po, to CCG?" They were very, very curious. So tell us a bit about your school and what's your vision, and how you're leading that. Right? So far, what's your experience, and how do you want to let people know that you are leading a very advanced international school? And where is it heading? We're curious.

Arancha González:

So, I'm very proud to be heading the School of International Affairs at a French university called Sciences Po. It's a university that is 150 years old and was founded 150 years ago with the idea that we need universities to think about human and social sciences. And look at how important this has become, whether it's discussion about technology or the discussion about climate. Thus, human and social sciences have to be put at the center also of our knowledge. The second characteristic of this university is interdisciplinarity. So it's about mixing disciplines, which is what we also need today. Take artificial intelligence. It's not just a question for engineers. It's also a question for sociologists, anthropologists, political scientists, economists, experts on governance that need to be brought around the table to better understand how we govern technology. And the third characteristic of this university is its internationality. And this is where Sciences Po has a very strong relationship, a very old one, by the way, with China. We have relations with more than 14 universities across China, of course here in Beijing, with Beijing University or Tsinghua University, which I'm visiting during my stay in China, but also in Shanghai, with Fudan University, but also in other parts of China, whether it is Chongqing or Wuhan, or Guangzhou. I mean, there is a very strong link between Sciences Po and China. And our desire is very simple: keep the bridges of people-to-people connection. If we get more Chinese scholars to come to Sciences Po and understand and share and learn and cross-fertilize, and if we have more and more French students coming to China to do exactly the same, maybe the likelihood that we will build a more solid bottom of our society, a more solid base on which to build political, economic, and social ties. This people-to-people connection is very important.

So the school that I head at Sciences Po, the Paris School of International Affairs, welcomes every year dozens of Chinese, young Chinese, very interested in learning about international affairs, learning about the international economy, international development, governance, and diplomacy, learning about security and defense, learning about energy transitions, or environmental policies. These are all the topics that they understand. But again, with this idea of a commitment to strengthen people-to-people relationships, we have an office here in Beijing with colleagues that are doing everything they can to convey this message and to attract Chinese students to look at studying in France. They can study in French, but also in English in France, which shows, again, this commitment to interdisciplinarity, internationality, and human and social sciences. That is our Sciences Po.

Huiyao Wang:

Very open, very impressive. You have a very nice campus there. It's so impressive. And I'd like to also, maybe because Mabel was very curious about the question she wants to ask you. Because, you know, on the topic of women's leadership, I mean, also, CCG cooperated with UN Women for the last two years in a row on International Women's Day. We had a big roundtable. And there were a number of ministers, traders, representatives from various embassies in Beijing, and they admire you as well. So, from a professional point of view, that's right...So, we want more of our audience to know, and what are the key success factors? I mean, how do you work internationally, but also make a lot of impact in government, business, and academia? So what are the three or whatever key success factors that you have? Your secret or your therapy that others can learn from. How to make women successful? What should be done? And particularly for women's leadership, which I think we need to know more about. That's exactly... you are the role model for many people. And that's really interesting to know.

Arancha González:

Well, thank you, Henry, for this question. And let me tell you that it's a very interesting question to be asked here in Beijing, because it was here in Beijing that all members of the United Nations agreed to end discrimination against women. The Beijing Declaration was signed here. So, Beijing is very closely associated with this idea that more equal societies are stronger societies. And this is where we have to place this conversation, right? Because it's Article 1 of the UN Charter that says there shall not be discrimination for reasons of gender, that men and women have equal rights, and they should have equal opportunities. But it's a rights issue, but it's also about the solidity of our society, the solidity of our economies, the solidity of our companies, or our think tanks, comes from letting all these flowers bloom, making sure that every person, including all these women that are there, that are part of our economy, that are part of our businesses, that are in our public administrations, reach also the same level of responsibilities that men have reached. So I'm very adamant that we work, that we take action towards equality, because I think it makes for more solid societies ultimately. And it's not an easy discussion. So how do we make this? How do we take steps forward in that direction? I think what I have found is very important is to frame this conversation. It's not a discussion between women, talking with women about women. This is not the point. It is about societies working together. Because if we make this an issue of women against men, or men against women, it ends up being a zero-sum game, right? So we end up, like geopolitics, in a dead end. So we cannot make this a zero-sum game. We have to frame this conversation as being about achieving win-win results.

The second thing I would say is that, in my view, what's important is to, wherever we are, whether we are in the government, whether we are in the administration, whether we are in a company, whether we are in a think tank like CCG, is to take steps that we anchor in our processes, that we anchor in our institutions, that we anchor in our rules, in our laws, so not just do good things, but make sure they are part of our governance structures. Because we may go, but those that come after us will be able to benefit from these changes that we have inserted into our governance structures.

And the third thing I think is very important is to take whatever steps we can to help women that come afterwards, the younger generation. Work to make sure that we inspire them, we work with them, we give them advice, or we take the time to mentor them, to provide them with what we have learned. Now, careers, the good things, and also the less good things, and the bad things, because there have also been bad experiences. I mean, I think we can all do that in our respective areas. I certainly do that a lot. I do that a lot in the university. I do that a lot with this younger generation. But if they can learn from the path that we have already walked to the extent that it helps them, then it's good. So be kind to our other women, as I learned from my great friend, Madeleine Albright, who used to say, you know, there is this very special place in hell for women that hate other women, so be kind to other women.

Huiyao Wang:

That's good advice. Yes, excellent. So, probably we still have some time. We will open to our audience and any questions from the floor. And yeah, okay, we have one at the back.

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Q&A

Question I: What are the key points for China and Europe to promote trade cooperation and also the global governance cooperation?

Arancha González:

I think international trade has been a big win-win for both the EU and China. Again, for the EU, keeping its markets open and opening the markets of other countries has been a recipe that has worked well in the past. This obviously had to be accompanied by rules of the game to make sure that this opening was done in a fair manner, that the trade would be conducted in a fair way, and also that we would spend in Europe also in building the social safety net that would help our societies and our workers adjust to the changes that open markets created in Europe. And this is a recipe, again, that has worked well between the EU and China.

If I look at China for a moment. When I started my career as a young trade official, China represented 2% of international trade. In my lifetime, China has moved from 2% to 15% of international trade. This is not a small thing, and it worked, obviously because of a lot of hard work on the Chinese side, a lot of ingenuity, creativity, a lot of hard work that went into China. But it also worked because countries were open to China's insertion into the economy.

I think what we hear now, in Europe, from many European companies, is that they would like to trade more with China, they would like to invest more in China. And they are having difficulties doing so. And I'm sure that if I were to sit down with China, I would also get the Chinese side of the story. So I'm not trying to take sides, but I'm trying to explain how in Europe, many companies are feeling today that trading with China is becoming more difficult. And I think it is important when we have differences like this one, which are reflected in the trade figures. Today, China continues to increase its participation in the European market, but Europe is declining in its participation in the Chinese market. So instead of shouting about this, I think it would be useful to sit down and look at what can be done and take these complaints that businesses have—and I'm sure that there will be complaints on the Chinese side, don't get me wrong—but that we take steps to address those difficulties.

I think we have to be very attentive to overcapacity that is being built. We know that in the past, overcapacity has led to destabilization of international markets. We saw this with steel and aluminum, and we had to, in a way, together take steps to rebalance that. I think there is the potential now for overcapacity in the green technology sector to destabilize international markets in green technology. I think we have to be attentive to addressing these difficulties before they become a trade irritant that transforms into a trade war. So this for the EU-China relationship. And again, in my experience, it's always better to sit down around the table and address the difficulties than go to the media to shout or choose or to do bigger speeches.

Secondly, on where China and the EU could work together multilaterally. I think China and the EU care about the multilateral trading. They care about having rules that will help China and the EU keep their markets open. But address a number of questions that have become important, whether it's the link between trade and climate change? Whether it's the link between trade and subsidies? Whether it's the questions related to national security, whether it's the dispute settlement that both the EU and China care about? Again, I think it's very important to have a positive agenda to strengthen the World Trade Organization, its rules, and its functioning. Not just by saying that we care about the multilateral trading system, obviously we do, but taking concrete steps, like we did last year when we did an agreement on fishery subsidies. We have now a few issues that will come up in the next ministerial conference that the United Arab Emirates will host at the beginning of next year. This would be an important moment for the EU and China to together make an effort to advance a number of issues that are on the table, including in the areas that I have mentioned, which, in my view, would help in building a more solid multilateral trading system.

Question II: Concerning your remarks in your book that "make trade happen, make trade work for all," what do you think governments, enterprises, and other global trade participants can do to promote global trade?

Arancha González:

Now, I think governments need to be much more attentive to this 3rd part of making trade work for all. Because when there is growing inequalities in countries, or when citizens feel that the social safety nets are not strong enough, and they have to save a lot of money, because they don't feel safe enough to spend because they know that there are a number of things that they will have to deal with in the future, from healthcare to pensions. if we do not address this, the legitimacy for open markets will be very low. Governments will have pressures from citizens, from businesses, to close markets, because they will feel that if governments don't do that, they are going to suffer. So we need to find a way to address concerns from those citizens. Strengthening social safety nets. In my view, it's an important ingredient. It's an important ingredient across the world. It certainly is the case in Europe. It's the case, a big important discussion that we had in the US where social safety nets are weaker. And I think it's a very important conversation to be had in China too. So here is a topic where we could see a lot of discussion and a lot of dialogue possible between China, the US and the EU, how to build more solid social safety nets that will help with managing the maintenance of open markets internationally. This is an area where exchanges between the three would be extremely helpful, because I do think that moving forward, this will be a very important ingredient to take into account. Take the case of artificial intelligence. Artificial intelligence has an incredible power to address lots of intractable issues, from diseases for which we had not been able to find cures before. We know that through artificial intelligence, we can look at data and patterns that can lead us to solutions for these diseases. But we also know that artificial intelligence will have an incredibly disruptive effect on labor markets, especially on white collar labor markets. So we better start looking at reinforcing our social safety nets, because otherwise what we will face it's another wave of protest from our citizens that will look for protection through trade protections. And we know that trade protectionism will not help us in protecting our citizens. So a good discussion of social safety nets on making trade work for all, as I call it, step number three in this trade dance, in my view, is one there should be a basis for learning and sharing between US, china and the EU, together with many others. But this industry, it's is capital because, again, given the sheer size that they're three represent in the international economy.

Huiyao Wang:

Yes, absolutely very important. You give a very good suggestion. I mean, to really to get country corporate more the government has a lot of role to play. And an increasing safety network is such an important issue. So we probably running out of time, but I would really, thank you, your excellency Arancha for coming to CCG today to give such an excellent a book presentation, making a Trade Work for Prosperity, People and Planet, which is a new book. And we hope to to read more on this issue. And maybe we can hope that you will publish in China someday too, and we could look into that. and again, you have said many things this morning. We, we learnt a lot. I mean, the law of economics is really, you know, resilient. We have to strengthen that. We could not let the geopolitical disturbs open dialogue, you know, we have a lot of those things that we can put it on the table and and see people face to face to to go through the issues. And absolutely, increased the trade, increased economic activity, is is the way to go. And we could encourage regional practice. But also, you know, on the multilateral front, on the particular WTO, will we continue to support and and for that, you know, EU, china and even the US, the three largest economy, has a moral responsibility to really do that. So we really appreciate your coming personally to CCG, to share your views. And we have a very good record of this, and that we are actually making a transcript that into our future new books on that. But also very important, I think you've been busy in China. You're meeting a different universities, your partnership, but also you going to Shanghai, the largest international trade import-export in China. And then we will also invite you to one of our other section the resilience of the supply chains, which is, which is another topic we will see you sharing a few days time. So once again, I appreciate your coming. And also, we probably go to see you again also at the Paris Peace Forum. We are both at the Steering committee at the Paris Peace Forum. And so I'm glad you you came and and made your sharing at the CCG. We appreciate so much.