A dinner on the subject of the the future of the global trading system was held featuring Pascal Lamy as the guest of honour. Lamy is currently Chair of the French Pacific Territories Committee for Pacific Economic Cooperation Council. He was formerly Director-General of the World Trade Organisation (WTO) and Trade Commissioner for the European Commission. The dinner was jointly hosted by the ECCT together with the French Office, the Foreign Trade Advisors of France in Taiwan (CCEF) and the Chamber of Commerce and Industry France Taiwan (CCIFT). At the dinner Pascal Lamy gave a short speech after which he engaged in a panel discussion hosted by Michael Boyden, the General Manager of Taiwan Asia Strategy Consulting in Taiwan and Lin Liang-jong, Chairwoman of the Coordination Council for North American Affairs.

In his speech Lamy said that Taiwan is vulnerable to changes in the global trading system since its economy is highly dependent on trade, it has very few bilateral trade deals and it is therefore reliant on the WTO, which he described as an insurance policy against protectionism.

The global trading system is now under strain following a shift in US engagement under the administration of US President Donald Trump. Rules in place since the 1947 General Agreement on Tariffs and Trade (GATT) have not only kept global trade open but also provided mechanisms to enforce the rules.

Lamy acknowledged that the system was imperfect for various reasons, such as the ability of WTO members to subsidise specific industry sectors and the fact that rules in place are inadequate to deal with this. However, he remarked that overall it had created a lot more benefits than harm.

Things have changed since Donald Trump took office. Trump has called the WTO a "catastrophe". According to Lamy, while one should not take Trump literally, he should be taken seriously because his policies could potentially disrupt the global trading system.

According to Lamy [and other commentators] Trump has a fundamental misunderstanding of global trade. In particular, he views the US trade deficit as a trade issue when it is really a result of US consumers saving too little and consuming too much, in contrast to most Asian consumers who tend to have high savings. Trump has also claimed that the WTO has been bad for the US, which is clearly not the case.

Trump's latest move to impose blanket tariffs on all steel and aluminium imports may be an attempt to undermine the WTO's multilateral system by forcing the US's trading partners to seek bilateral deals with the US. The US administration's subsequent actions to grant tariff exemptions  to various trading partners seems to back up the view that the Trump administration believes it has more to gain from bilateralism than multilateralism.

Given the current status, Lamy put forward both a plan A and a plan B for the way forward. Under plan A, global leaders should make a determined effort to bring the US back to the negotiating table to discuss and try to resolve problems through multilateral negotiations. Plan B, if the US does not engage, is to continue along the multilateral path without the US.

In the panel discussion that followed, Lamy agreed with panellists that the global economy is now in quite good shape given synchronised growth on all continents. However, Lamy said that there is a risk of a protectionism cascade. So far, the Chinese response to US trade tariffs has been measured. If Trump could be given a symbolic victory from his tariff action, then further damage could be limited.

Trump's decision to use the reason of "national security" for imposing the tariffs has never been tested before but now it is likely that the case will be taken to the WTO.

Lamy made the point that while the global trading system had undoubtedly led to greater global prosperity, it had produced both winners and losers. The rise in global production and consumption that has been enabled by global economic prosperity has also caused huge damage to the environment. To deal with these challenges, world leaders will have to find better ways to help those people left out or displaced by globalisation and to step up efforts to protect the environment, something that will require a global effort.

Lamy said that Donald Trump was able to take advantage of displaced workers and others left behind by globalisation because of the very weak social safety net in the US. He said that the same thing could not happen in Europe because social welfare systems there are much stronger.

On the subject of Brexit, Lamy compared the process of the UK exiting the EU as trying to remove UK eggs from an EU omelette. He expressed the view that the UK will eventually opt for Brexit in name only, since it will be forced to abide by EU rules if it wants to maintain access to the common market. He made the point that there is no going back from globalisation since supply chains are already so integrated, and the UK is no exception to this rule. Citing the example of Switzerland, he said that even though that country is not a member of the EU, it has to abide by all EU rules in order to be able to trade with the EU. However, it has no say in devising the rules. In the same way, when the UK leaves the EU, it will become a rule taker rather than a rule maker, placing it at a disadvantage to other EU member states.