Leaders call for ‘an economy of trust’, upholding multilateralism at SPIEF 2018

At Russia’s ‘Second Capital’ of St. Petersburg, leaders from several nations and economic organizations called for an ‘economy of trust’. The theme was aimed at combatting the selfish protectionist measures that have been emanating from various nations in Europe and, most notably, America, the latter of which has been levying tariffs both targeted and global in their scope, as well as economic sanctions, in an attempt to restore the heights of its glory days, when its economy represented half of the world’s GDP, in order to ‘Make America Great Again’.

Xinhua news reports:

ST. PETERSBURG, Russia, May 26 (Xinhua) — The 22nd St. Petersburg International Economic Forum (SPIEF) concluded a plenary session Friday as world leaders gathered here to discuss pressing economic challenges.

Held under the theme “Building a Trust Economy” this year, the forum, often referred to as Russia’s Davos, attracted some 15,000 participants from 70 countries to Russia’s “northern capital” and second largest city.

The leaders noted that there are alarming trends that might compromise economic growth, including rising protectionism and unilateralism, the spiral of sanctions and risks from radical technology transformation.

Recognizing the need for a concerted effort in response, they called on countries to enhance mutual trust, remove trade barriers and boost bilateral and multilateral cooperation to drive forward global growth.

NEED FOR COOPERATION

“Global mistrust is calling into question the prospects of global growth,” Russian President Vladimir Putin told the forum.

In a speech at the plenary session, Chinese Vice President Wang Qishan urged countries to build trust and boost cooperation in order to tackle international challenges and cement a foundation for sustainable global growth.

Noting that no single country can cope with today’s challenges alone, Wang said building an economy featuring equality, mutual trust, mutual benefit, inclusiveness and good faith between enterprises, markets and countries, is an effective way to unleash the potential of global growth.

Also speaking at the forum, French President Emmanuel Macron said trust is being lost in the international arena and “we need to develop a multilateral approach” to solving international issues.

Describing Russia as “an inalienable part of Europe,” he said, “In view of our history… and our common interests, we must work on strengthening mutual trust.”

Echoing Macron’s remarks on cooperation and interdependence among countries, Japanese Prime Minister Shinzo Abe said Russia’s economic growth would benefit its neighbors including Japan while highlighting the importance of cooperation in solving their territorial disputes. He also expressed a willingness to conclude a post-World War II peace treaty with Russia.

In response to Macron’s and Abe’s appeals, Putin said, “A prosperous future cannot be created by working in isolation … I am sure we will certainly be successful if we strengthen mutual trust and the spirit of partnership.”

FIGHTING PROTECTIONISM

As a result of global mistrust, trade protectionism is making a comeback. Discussions at the forum voiced concerns about the trend’s impact on global economic activities and growth.

Nobody wins in a trade war, International Monetary Fund (IMF) chief Christine Lagarde said, noting that trade can lead to higher productivity, lower prices and improved living standards.

“It would be a grave mistake to resort to protectionism and to unilateralism. This would be a self-inflicted wound,” she said.

Putin also expressed the concern that the system of multilateral cooperation built over decades is being “crudely” destroyed while violating rules is becoming a rule.

“Open markets and fair competition are gradually replaced by all kinds of exemptions, restrictions and sanctions… The spiral of sanctions and restrictions is only widening, harming more and more countries and companies,” he said.

In this regard, Chinese vice president Wang called for global unity in resisting protectionism and safeguarding a stable international economic order.

In addition, Wang reaffirmed China’s commitment to its opening-up and welcomed countries to share in the opportunities, including taking part in the Belt and Road Initiative, a new platform for international cooperation.

Speaking of the U.S. trade deficit with China, Lagarde said, “One country should not look at one single deficit with another country but its overall position vis-a-vis the rest of the world. That’s how trade works. It’s a strange complaint (by Washington).” She said major trade disputes between the United States and China should be settled at the World Trade Organization (WTO).

Russian experts praised China’s efforts to promote free trade.

“China is a consistent supporter of an open economy and broad international economic cooperation … China defends free trade and compliance with WTO rules,” said Sergei Uyanayev, deputy director of the Institute of Far Eastern Studies at the Russian Academy of Sciences. “The country considers it unacceptable to build unjustified protectionist barriers.”

UPHOLDING MULTILATERALISM

Opportunities along side challenges stemming from globalization have made it a priority to improve global economic governance. To this end, it is wise to adhere to the multilateral system and develop mutually beneficial cooperation, leaders said at the St. Petersburg forum.

Lagarde listed major global economic problems, including high levels of debt, financial fragility, unfair distribution of the rewards of globalization, threats to the trade system and climate change, urging countries to work together to find solutions.

“All that calls in our view for a renewed multilateralism…It is through those institutions and through no other means, particularly unilateral ones, that things will actually improve,” she said.

In particular, the WTO remains a key multilateral institution and universal venue for resolving disputes.

Putin said that the WTO is not ideal, but abandoning it without replacement means destroying the existing order, including institutions and rules.

“It is very important for us to draft and introduce together a legitimate mechanism of change, which will allow the international community to get rid of obsolete and sometimes inefficient and archaic norms, preserving all the best practices and creating new instruments that meet the requirements of the time,” he said.

While praising Russia as a constructive player in global economic governance, Wang reiterated China’s support for reforms in particular intended to promote the role of emerging markets and developing countries.

In this regard, Yaroslav Lissovolik, chief economist of the Eurasian Development Bank, said China has made important initiatives in recent years, citing “BRICS Plus” and the Belt and Road Initiative.

“China is channeling huge funds for the development of infrastructure in developing countries. So from this perspective, China has done a lot of work that serves to support multilateral trade, openness and liberalization in the world economy,” Lissovolik said.

 The St. Petersburg International Economic Forum is an annual event, held in St. Petersburg. This year, the even featured over 15,000 participants from over 100 countries.

The theme was about upholding multilateral agreements and nations cooperating with each other to achieve common goals with mutual interests and benefits.

That theme runs in diametrical opposition to the position that America has assumed since the accession of Donald J. Trump to its presidency, as his theme of protectionist policies, named “America First” has been advocated and implemented incessantly At the Davos Economic forum, Trump made it clear to the world’s economic leaders that he was moving forward with such policy.

During Trump’s tenure, he has withdrawn American from the TPP, the Paris Climate Accord, the JCPOA Iran nuclear agreement, threatened NAFTA, and has imposed sanctions and levied tariffs on many nations, often over trumped up pretexts.

The SPIEF aims to coordinate nations in economically cooperating with each other to counter this perspective, and to help improve the prosperity of all nations involved, forming a global ‘economy of trust’.