Introduction

The triumph of global trade and investment is a key milestone of the latter part of the twentieth century. As the pace of growth for world trade accelerated, at times by more than double the rate of global GDP, new jobs were created and incomes improved. Around 120 million people rose out of poverty between 1993 and 1998, partly due to these trends.¹ By the year 2000, global GDP had multiplied by seven times in five decades. Study after study has outlined the benefits of trade. For example, the International Monetary Fund estimates the value of liberalization at more than ten times the costs of deregulation and has tracked the faster growth enjoyed by developing countries with lower tariffs.² Meanwhile, FDI in many cases has contributed to the improvement of skills, technology, labor rights, and environmental standards.

Today, the trust that has bound and upheld the global system for trade and investment is, at best, tenuous. Not only are trade partners increasingly skeptical of one another—and the notion that potential allies may be mutually supportive of their interests—but there is increasing distrust in trade itself. Governments issue regulations that are wary of foreign investment even as they make welcoming announcements. More parties view economic integration and globalization as a source of ills, be they loss of jobs, competitiveness, or market power. Confidence is waning in vehicles for global integration, such as the World Trade Organization (WTO).

This shifting mindset is concerning because collective, cross-sectoral global action is needed to effectively address the critical challenges of our time: the climate crisis and growing inequality. In this Asia Policy roundtable, four essays examine the connection of trade, investment, and sustainability in terms of both climate adaptation and social welfare.

The roundtable opens with Gary Sampson's examination of sustainable trade in the context of the WTO and the Sustainable Development Goals (SDGs). Focusing on the interface between trade rules and the goals of sustainable development, Sampson describes some of the transformative effects of trade liberalization in Asia he has seen firsthand under the WTO, where he was director from 1995 to 2005. He argues that the WTO can play a critical role in fostering sustainability if the execution of the multilateral trading system is an interdisciplinary task. As an example, Sampson highlights the WTO's negotiations over fisheries subsidies, presented as a policy deliberation centered on "the nexus of trade policy, natural resources economics, and environmental conservation." If this deadlock can be unwound—and that is not assured given years of stalled negotiations—the breakthrough could create more opportunities for the global trading system to better reflect the SDGs.

Sampson presents another opportunity for the WTO to play a critical role in climate adaptation. By exploring the tools available to accommodate efforts at carbon border adjustment mechanisms—currently proposed by the European Union and under consideration in other countries—the WTO could offer solutions that defy expectations. The key issue is trust or the lack thereof. After more than a decade of criticism of the global agency, can the WTO regain public trust?

Trust is also explored in Ellen Frost's essay on the geopolitics of trade and investment in Asia. This topic, keenly debated in academic discourse and around the proverbial water cooler, has received no shortage of analysis. Frost's question is simple, however: In Asia's changing landscape for trade and investment, whom do countries trust?

Predictably, the answer is multifaceted. Japan, the benign benefactor and Southeast Asia's top investor as of 2019, wields less influence than the world's two largest economies. But overall, with superpower leadership absent, nations in Asia are first and foremost putting trust in themselves. They prefer to retain their new agency and exercise what Frost describes as "selective multilateralism, regionalism, and protectionism." If or when the United States reverses course, removes trade barriers, and takes a seat at the table to listen rather than to lead, more meaningful conversation may ensue.

Asia has forced itself to accept this reality. As the African proverb reminds, when elephants fight, it is the grass that suffers. The ten nations that make up the...