How Global Trade Can Promote Growth for All

IMF News, October 10, 2018

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Quotation used to frame talk: “Commerce, which ought naturally to be among nations, as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity.” (Adam Smith, The Wealth of Nations)
Central charge: today’s generation of policymakers will be measured by their ability to create “a trade system that works for all.”

First: De-escalate current trade disputes and enter into constructive discussion.
- Use momentum from recent discussions and proposals to strengthen the WTO, and from new trade deals such as TPP-11, the African agreement, and progress on the U.S.-Mexico-Canada deal, to “turn tension into rapprochement.”
Second: Fix and modernize the global trade system, not destroy it.
- Address distortionary effects of state subsidies.
- Improve enforcement of intellectual property rights.
- Take steps to ensure effective competition to avoid excesses of market-dominant positions.
- Unlock the full potential of e-commerce and other tradeable services.
- Use more flexible negotiating approaches within the WTO, including “plurilateral” agreements among subsets of the WTO membership that are ready to move ahead in certain areas.
Third: Implement domestic policies so global trade delivers for “all people.”
- Scale up investment in training and social safety nets so workers can upgrade skills, transition to higher-quality jobs, and earn more.

Trade’s benefits:
- Boosts productivity.
- Spreads new technologies.
- Makes products more affordable.
- In Asia, trade has been instrumental in creating the world’s largest middle-classes.
- Economic integration has boosted per capita incomes while creating millions of new jobs with higher wages.
Acknowledged costs:
- Some workers and some communities are “heavily affected by the human cost of disruption—whether from technology, or trade, or a combination of both.”

The IMF supports members through analysis and policy advice, including:
- The most recent World Economic Outlook (as of speech).
- A new study jointly produced by the IMF, WTO, and World Bank: “Reinvigorating Trade and Inclusive Growth.” [2]
- Annual assessments of individual economies advising on country-specific aspects of trade regimes.
- Providing a platform for sharing best practices and fresh ideas.
The conference is presented as an example of the IMF’s role in sharing ideas and fostering cooperation to build a better global trade system.

Source: IMF speech text, October 10, 2018.