Economy

No alternative to multilateralism in global trade: Karel De Gucht

V Rishi Kumar Hyderabad | Updated on December 01, 2019 Published on December 01, 2019

Karel De Gucht, the former EU Commissioner for Trade, in a conversation with R Srinivasan, Editor, The Hindu BusinessLine

In a conversation with R Srinivasan, Editor, The Hindu BusinessLine, the former EU Commissioner for Trade, said the EU, as the biggest trader, would continue to work towards free trade

“The European Union is the biggest trader and the biggest importer, and as a block, we are the biggest exporter as well as the biggest investor. As the most important trading block, we are convinced that we should show the way, through a rule-based approach, on the need to remove trade barriers,” said Karel De Gucht, a former EU Commissioner for Trade, and a Belgium minister.

Taking part in a conversation with R Srinivasan, Editor, The Hindu BusinessLine, on ‘Overseas trading and doing business with Europe after Brexit,’ he said, “There is no alternative to global trade and going about it through multilateralism. Countries need to open up and that is the way to go.”

They were speaking at a discussion on the theme ‘Your pharma and life sciences hub in Europe, Belgium,’ in Hyderabad. 

“Europe is still in the forefront of free trade. We have been making important FTAs and have concluded one with Japan and ratified it in five months. In the past, it would have taken about five years. We are convinced that this is the only long-term solution. There is no other alternative. Hope others will understand this and join. The basic approach that you need to develop global trade is unquestionable. The problem with China is they want to go global their way,” he said.

Setting the discussion in the context, Srinivasan said, “India-EU trade is about 92 billion euros, the EU accounts for about 13 per cent of all of India’s trade and is an important trading partner. It accounts for about 18 per cent of India’s exports. India is the EU’s ninth biggest trading partner, trade has the potential for improve. China accounts for 15.3 per cent of trade with the EU and for the US it is 16.9 per cent. India’s trade in goods with the EU is very strong and has been growing substantially.”

“Trade is picking up speed. Services are becoming an increasingly important component of economic relations between India and the EU. The EU has investment in India through FDI accounts for 18 per cent. There are plenty of opportunities and challenges. Everybody is talking about Brexit .What if Brexit actually happens?” Srinivasan questioned.

Brexit likely by January-end

Gucht said, “Actually, I think Brexit will happen at the end of January. Of course, there is an election in December. Each election throws up surprises. I think they will leave. If they leave by January and have two years during which they have to live up to the decision taken up earlier. It is like divorcing and then deciding that you will have to live together for two years, stick to all the decisions already taken and those that will be taken later.”

“It is difficult to predict the outcome. I have been negotiating with the US for the past four years and have learnt that in practice the US is a very protectionist country. I have negotiated with India for four years, including in the area of parts for cars, data exchange, etc. I don’t think all of a sudden Modi will make an agreement. I don’t see any willingness on the part of the Indian Government to have far-reaching trade agreements in the near future,” he said.

“Modi wants swift industrial development of the country. To do so, he has to open up the economy. He is thinking too much about infant industry. In a number of sectors, you are really on top. for instance, in IT, you are the No 2 hub after Siliocon Valley, and though 60 per cent of the population is engaged in agriculture, it is still at the subsistence level. Modi is not alone in this approach. Donald Trump wants to do the same with Germany. He can’t do it. China is doing the same. China has a yearly meeting with East European countries and Balkan States. We decided that this cannot happen with the presence of the EU,” he said.

“Trump has tried to destroy the multilateral-rule based system. If he gets re-elected, it will get difficult. If he loses, things could be brought around,” he said.

On US-China trade issues, he said "while some believe they will be resolved soon. I don't think this can happen overnight. Might even take a decade."

Published on December 01, 2019
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