First IMF/WB/WTO Joint Trade Workshop
December 2, 2011
World Bank, MC 13-121
The first IMF/WB/WTO joint trade workshop was held at the head-quarters of WB on December 2, 2011. The goal was to exchange views on policy issues of common interest and discuss on-going research projects. The workshop was open to staff members of the three organizations and selected external participants. All together about 150 people attended the workshop.
The event started with welcoming remarks by the Chief Economist of the WB, Justin Lin. He also introduced the Director-General of WTO, Pascal Lamy, who gave an opening address via video conferencing from Accra, Ghana. Mr. Lamy emphasized the importance of inter-institutional coherence in trade related work, notably in the areas of monitoring, research, statistics, development, and capacity building. He welcomed the initiative of the joint workshop, which will help enhance coherence, and called for it to be held every year. He encouraged the participants to identify concrete steps to develop research co-operation among the three institutions.
Speaking after Mr. Lamy, the President of the WB, Robert Zoellick, highlighted the important role of research in these institutions in connecting theory with practice. He encouraged further research on value added trade, trade facilitation by addressing beyond-the-border barriers, better trade data collection, food and agriculture trade, Doha, and the structural reform agenda. He concurred that the workshop should be an annual event.
The first session was on “Trade policy in an era of high and volatile food prices.” Will Martin (WB) presented his paper, “Agricultural Trade Policies & Food Security,” in which he found that for individual countries, raising export barriers or lowering import barriers to insulate domestic prices from world prices may help avoid increases in poverty. If all countries do this, however, world prices will rise, reducing the effectiveness of insulation and increasing the problems of net food importers—suggesting that careful thought is needed to deal with this collective action problem.
Michele Ruta (WTO) presented his paper, “Food Prices and The Multiplier Effect of Export Policy,” joint with Giordani and Rochi. They found that export restrictions and subsidies in food markets magnify price shocks, creating a “multiplier effect”: high food prices trigger export restrictions that exacerbate the rise of the world price and feed into even more restrictive policies. The empirical analysis confirmed the existence of this multiplier effects for the 2008-10 food crisis.
The second session was on “Value Added Trade.” Nagwa Riad presented her joint paper with Errico, Henn, Saborowski, Saito, and Turunen (all IMF), “Changing Patterns of Global Trade,” which analyzed changes and increased interconnectedness in global trade over the past few decades. The paper highlighted the growing role of vertical integration through global supply chains. It also demonstrated the importance of value added analysis in examining trade inter-linkages and the implications of exchange rate changes for trade flows.
The second paper in this session, “Assessing Domestic Value Added in Chinese Exports,” was presented by Hiau Looi Kee (WB), jointly written with Tang (Tufts). The paper used a ground-up approach to calculate domestic value added of Chinese exports, based on customs transaction data and firm production data. She showed that domestic value added of Chinese exports has risen from 50% in 2000 to 63% in 2006. The increase was driven by firms substituting imported materials with domestic materials, which signaled that China is capturing a larger part of global production chain.
The panel discussion over lunch focused on the trade research portfolio of the three institutions. Patrick Low, Chief Economist of WTO indicated their research was often demand driven, such as the World Trade Report, dispute resolution, and collaborative activities with other institutions. Looking ahead, key research topics will include: non-tariff measures, value added trade and global supply chains, exchange rates and trade policy, economic analysis for dispute settlement, such as export restrictions, subsidies, and the effects of trade on labor, social protection and wages.
Ranil Salgado, division chief responsible for trade policy at the IMF, pointed to the Fund’s mandate of advising member countries on important global economic changes and on trade policy, particularly in the context of Fund-supported programs. Against this background, recent, ongoing, and planned trade research focuses on new trade patterns and macroeconomic implications; trade and protectionism in the 2008-09 global financial crisis and beyond; the links between trade, growth, and economic volatility; and trade policy and regional integration.
Aaditya Mattoo, Trade Research Manager of WB, laid out three main areas for the Bank’s trade research: (i) the impact of trade and trade policy on the firm, the worker and the household; (ii) rigorous impact evaluations of trade assistance and policy interventions designed to reduce trade costs and promote exports, as well as a better understanding of non-tariff barriers in goods and services; (iii) the most pressing challenges for international cooperation on trade, including: food and energy security, climate change and environmental security, and how to beneficially anchor rising powers like China in the multilateral trading system.
Doug Irwin (Dartmouth College) gave the keynote address on “Trade Policy and Exchange Rates.” Previous research has found that overvalued exchange rates lead to domestic protectionism, but not international friction because few would object to a country taxing its exports and subsidizing its imports. However, an undervalued currency promotes a country's exports and discourages imports and may lead to friction between countries. He argued that the IMF and the WTO in principle disallow exchange rate manipulation to gain unfair competitive advantage, but enforcement has not yet been tested. Because of this gap in the international architecture, countries may seek unilateral solutions to the problem of misaligned exchange rates.
The last session of the workshop was on “Protectionism.” Christian Henn presented his joint paper with McDonald (both IMF), “Protectionist Responses to the Crisis: Damage Observed in Product-Level Trade.” They found that protectionist action in the wake of the global crisis was not widespread and had a limited impact on trade overall—despite a strong impact on trade in the products affected. Consequently, policy makers need to continue to resist protectionist pressures to safeguard trade’s contribution to global recovery.
Chad Bown (WB) presented his joint paper with Crowley (Chicago Fed), “Import Protection, Business Cycles, and Exchange Rates: Evidence from the Great Recession.” He highlighted that trade policy in the US and elsewhere became less responsive to exchange rate appreciations and, perhaps in support of the November G20 declaration, they “switched” from their historical behavior of implementing new import protection on those trading partners that were contracting and instead imposed such barriers more often toward those trading partners that were experiencing economic growth.
Ingo Borchert presented the last paper of the workshop, jointly written with Gootiiz, Grover and Mattoo (all WB), “Landlocked or Policy Locked? How Services Trade Protection Deepens Economic Isolation.” Focusing on services sectors, the paper finds that trade in services tends to be more restricted in landlocked countries. These policies lead to more concentrated market structures and more limited access to services. Thus, services trade policy reform constitutes an under-appreciated part of aid-for-trade initiatives.
Closing the workshop, the First Deputy Managing Director of IMF, David Lipton, stressed the crucial role of free trade in the global recovery. Despite some rising protectionist pressures recently, he was cautiously optimistic on the global trade agenda. The G20 summit in Cannes signaled openness to fresh, new approaches that include elements of the Doha Development Agenda. Progress towards a pan-Pacific trade deal, especially Japan’s interest in such a deal, and growing attention to trade integration in the Middle-East, following the events of the Arab spring, were also encouraging developments.
|First IMF/WB/WTO Joint Trade Workshop
December 2, 2011, World Bank, MC 13-121
Sign-in / Breakfast
Introductory Remarks Watch video
|9:30–11:00 am||Session 1: Trade Policy in an Era of High and Volatile Food Prices Watch video
Agricultural Trade Reform and Food Security
Food Prices and The Multiplier Effect of Export Policy
|11:30–1:00 pm||Session 2: Value Added Trade Watch video
Changing Patterns of Global Trade
Domestic Value Added in Chinese Exports
|1:00–2:15 pm||Lunch and Panel Discussion Watch video
IMF/WB/WTO trade research, looking ahead
|2:15–3:15 pm||Keynote lecture Watch video
Trade Policy and Exchange Rates
|3:45–6:00 pm||Session 3: Protectionism Watch video
Protectionist Responses to the Crisis: Damage Observed in Product-Level Trade
Import Protection, Business Cycles, and Exchange Rates: Evidence from the Great Recession
Landlocked or Policy Locked? How Services Trade Protection Deepens Economic Isolation
|6:00–6:15 pm||Concluding Remarks Watch video