CNBC Interview with WTO Director-General, Roberto Azevêdo, from the World Economic Forum 2019

Following are excerpts from a CNBC interview with Roberto Azevêdo, WTO Director-General, and CNBC's Karen Tso.

KT: Joining me is the man himself Roberto Azevêdo da director general of WTO. Japan is one of your friends are there any supporters left in the room?

RA: All of them, actually. Japan is a big supporter. What-, what the Prime Minister said is absolutely right. I mean I think the WTO can do better. Everybody is behind the curve, because the curve is today's world and of course international organizations have to catch up. We're not catching up fast enough and I think that's what the WTO reform is all about. And Japan has been very supportive of the reform and the need for that. And that's exactly what we're looking for; is-, ideas on how to reform and modernize the WTO so that it can be not so far behind the curve.

KT: There are a couple of factors here when you talk about reform. One is digital, which will get to. The other is countries taking matters into their own hands. We have two of the most powerful nations in the world the U.S. and China erecting tariffs, unable to make a breakthrough. Isn't that-, time to face reality. A time check moment-, a reality check moment for you - that the WTO has failed? If countries like China and U.S. are taking matters into their own hands.

RA: The WTO has been extremely successful. If we look at what happened after 2008 after the crisis exploded and we were talking about the last 10 years. None of the things of the chaotic and the catastrophic scenarios that people were talking about ever happen - and they didn't happen because the system was there. Now, President Trump-,

KT: But this is 2019, not 2008. This is a very different ballgame when we have a global coordination then, we don't know.

RA: We are in 2019 because we have the WTO otherwise we would have been in 1919. That's where we would be. So I'm very happy with the system that it exists. Now, President Trump is saying this system has to improve and China is not covered by-, by the rules and there are many gaps and grey areas and they want to fix that. He chose a bilateral path to deal with that. And that's absolutely, you know, fair I think it's something that they can do. My hope is that this will help the process to find solutions and those solutions may be found bilaterally-, as often happens. But it also happens in the WTO and in the multilateral setting. And I think both paths can be explored.

KT: It's clear at this point that Trump is no supporter WTO but he's actively hampering WTO reforms.

RA: They were very supportive of WTO reforms. If you'll recall in December in Buenos Aires the United States was very vocal asking for WTO reforms, they say the system helps create jobs, helps to improve-,

KT: I get that, messaging is one thing, but behind the scenes are they helping or hindering?

RA: Well I am talking about exactly what is happening. They were very supportive and they want to see the system delivering more and they are asking for reforms. Now are they happy with the system. I don't think they are at this point. They want changes and that's exactly what we're working on at this point in time but these changes have to be acceptable to everybody else. There-, there are many other players in this, in this game and I think that's what we have to do now is talk and find room for cooperation and move forward.

KT: Well, let's talk about digital because that's a big component. It's being pointed out that the rules were written before some of these big digital companies were in existence - prior to Amazon for instance - and at any given time Amazon is the most valuable company in the United States. How can a system be written that doesn't capture digital companies? What do you need to change on that front so that it captures the future effectively?

RA: Yeah, well it's-, think of a constitution, like the American Constitution. It was written in 1776 doesn't make it irrelevant. Major principles and major guidance comes from the Constitution itself. The WTO is a bit like that. You'll have the constitution the main principles are there. Now things have happened since 1995. Critical things have happened like the digital economy, the emergence of the digital economy. We need more specificity there to give more clarity, predictability to the operators, to the companies, to the investors, to the governments. And this is what we need to find, this is something that we need to develop. The WTO reform conversation is precisely trying to address this shortcoming. How do we evolve how does the system respond quicker and in a more specific manner to these changes that are happening outside-, you know, out there in the world.

KT: Is it just possible that some of the failings of WTO could be responsible for some of the protests from the middle class and for those who feel like they've not been part of the economic journey, take the yellow vests in France - what do you have? You have huge disruption by digital companies, where revenues not being shared by populations, by governments, to spend back on key services. But there's no ability through institutions to resolve this. Is the fact that you've not tackled the rules not made WTO relevant around digital-,

RA: No, I-,

KT: Causing the protests on the ground-,

RA: No-,

KT: - from the middle class?

RA: No I don't think so. I think this conversation is much deeper than that. We're talking about major structural changes in the economy. These new technologies are very disruptive, that's the reality. Out of ten jobs that are lost in today's labor market, eight are due to new technologies. It has nothing to do with trade-, maybe two are due to trade. But it's easy to blame trade. It's easy to blame something that is outside my domain-,

KT: Right-,

RA: - outside my country-,

KT: Right.

RA: - you know, finding an external problem is much easier when in fact a lot of it is homework. Is governments having to do their homework-, and by providing better education-,

KT: Right-,

RA: Preparing the workforce and that's exactly-,

KT: On that note and we've got-,

RA: - what we need to do-,

KT: thirty seconds left, Brexit. What do you make of what's playing out on the ground in the UK.

RA: Well, it's about answering the first question. The first question we need to have is, will there be a deal or not? I think that will be the first step and then the all-, all the other pieces will fall into place-,

KT: Is it crucial that a deal is struck, so there's not a hard Brexit?

RA: Well that's a choice of the two sides. We can't do that. What I can say is that the WTO will be there to provide the support that is necessary whatever the outcome.

KT: We will leave it on that steady note, thank-you so much for taking the questions. Roberta Aceveda with us, the Director General of WTO-, and a good sport as you can see.

ENDS