In a recent address at the Vine and Wine World Trade Forum in Dijon, France, Deputy Director-General Jean-Marie Paugam shared insights into the shifting dynamics of global trade and its implications for businesses and international institutions. Paugam highlighted the significance of strengthening the multilateral trading system embodied in the World Trade Organization (WTO) to address the evolving challenges of the increasingly fragmented global trade landscape.
Paugam acknowledged that the world of trade is witnessing the emergence of a new narrative grounded in geopolitics, climate considerations, sustainability, and quality-related regulations. This narrative, he noted, is contributing to some degree of trade fragmentation. He asserted that the key to addressing these challenges lies in reinforcing the multilateral trading system rather than diminishing its role.
The Deputy Director-General began by recognizing the positive growth in global wine exports, reflecting the expanding international trade in vine and wine products. He pointed out that over the last two decades, the share of internationally traded wine has more than doubled, with regions such as California, Australia, South Africa, and Chile making notable gains alongside traditional European producers.
Paugam then delved into the evolving trade landscape, highlighting three key trends:
- Increased Political Influence: Paugam noted that trade is becoming increasingly influenced by political factors, with political affinity or hostility starting to affect trade flows. He cited the trade relationship between China and the United States as an example, where sectors impacted by high tariffs have seen stagnation. He also mentioned that groups of countries voting similarly at the United Nations have started trading more with each other. Additionally, the number of quantitative restrictions notified to the WTO under the guise of national security measures has risen significantly, and the share of global trade affected by international sanctions has grown.
- Sustainability as a Trade Policy Trend: Sustainability has become a central aspect of trade policy, with implications for the multilateral trading system. While trade is not inherently opposed to sustainability goals, uncoordinated trade and environmental policies could lead to trade and economic losses, as well as hinder sustainability objectives. Paugam highlighted the importance of global cooperation in addressing climate change, emphasizing the need for coordinated approaches to avoid inefficiencies and conflicts arising from divergent policies. He cautioned against the potential emergence of a complex web of standards and regulations, particularly in sectors like wine.
- Growing Emphasis on Traceability: Consumers' demand for information about product origins and quality has led to regulatory requirements related to traceability, often conveyed through certification and labeling schemes. These quality-related standards and regulations are submitted to the WTO as non-tariff measures. Paugam observed that while the number of such regulations has increased, the number of trade concerns raised by WTO members has remained relatively stable.
In response to these trends, Deputy Director-General Paugam emphasized the need to strengthen the resilience of global value chains. He underlined that the multilateral trading system is essential for mitigating the risks associated with political fragmentation, promoting sustainable practices, and achieving regulatory transparency and cooperation.
The Deputy Director-General concluded by advocating for "Re-globalization," an approach aimed at preserving the integrity of the world trading system, extending its benefits, and embedding sustainability and climate imperatives in trade policy. He called for collaboration between international organizations like the OIV and the WTO and interested stakeholders to address the new challenges of global trade.
In closing, Paugam encouraged the vine and wine sector to play an active role in advocating for the revitalization of the Multilateral Trading System, particularly during the upcoming WTO Ministerial meeting in February 2024.