{
  "title": "\"Reinvigorate Trade to Boost Global Economic Growth,\" By Christine Lagarde, Managing Director, IMF",
  "publication": "IMF News, April 23, 2015",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp042315",
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  "summary": "Speech delivered at the U.S. Ex-Im Bank Conference, Washington, DC, April 23, 2015. As Prepared for Delivery.",
  "authors": [
    "Christine Lagarde"
  ],
  "publishDate": "2015-04-23",
  "sections": [
    {
      "heading": "Overview / Key argument",
      "content": "- Speech delivered at the U.S. Ex-Im Bank Conference, Washington, DC, April 23, 2015. As Prepared for Delivery.\n- Central claim: expanding global trade is essential to boost growth, innovation, jobs, middle-class real incomes, poverty reduction, and economic fairness.\n- The IMF’s mandate (Article 1 of the Articles of Agreement) includes facilitating \"the expansion and balanced growth of international trade\" to promote high levels of employment and real income."
    },
    {
      "heading": "Why do we need a more powerful trade engine?",
      "content": "- Trade contributes to growth by enabling countries to specialize according to comparative advantage, increasing world production and consumption.\n- Direct and indirect channels through which trade raises growth:\n  - Reforms and new trade agreements encourage specialization and lower prices, raising real incomes and variety of goods and services.\n  - Trade reforms can increase external competition in product and services markets.\n  - Trade reforms can encourage key infrastructure investments (e.g., new ports and new roads).\n  - Trade can spur innovation through R&D and “learning by exporting”.\n  - Trade can strengthen institutions by encouraging better governance and a better business environment.\n- Trade helps reverse declining productivity growth:\n  - Recent IMF research shows lower productivity is a key driver of declining potential growth rates in advanced economies and emerging market economies.\n  - Potential annual growth in advanced economies \"fell to 1.5 percent in the past two years, down from 2.2 percent in 2001-07.\"\n- Trade and jobs / poverty reduction:\n  - Exports of goods and services directly and indirectly supported an estimated \"11.7 million U.S. jobs\" in 2014.\n  - Hundreds of millions of people have been lifted out of poverty over the past three decades via trade-led growth."
    },
    {
      "heading": "How can global trade be shifted into a higher gear?",
      "content": "- Recent trend: post-2008 slowdown — \"2015 is likely to mark the fourth consecutive year of below-average trade growth, with at least one more year of disappointing growth to come,\" per WTO predictions cited.\n- Two structural changes holding back trade growth:\n  - Maturing of existing global value chains in North America, Europe, and Southeast Asia while new value chains are not being formed.\n    - Policy implication: unlock trade potential of South America, South Asia, Sub-Saharan Africa, and the Middle East and North Africa to better integrate them into global value chains.\n  - Slowdown in trade liberalization: multilateral negotiations stalled; regional initiatives have not matched transformative effects of past agreements.\n    - Policy implication: press ahead with negotiations on the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).\n- Quantified potential gains from trade agreements cited:\n  - Peterson Institute research: \"the TPP could boost world income by $295 billion per year over the next decade.\"\n  - Same research: \"the TTP would raise U.S. incomes by 0.4 percent, or $77 billion, per year.\"\n  - European Union estimates: \"The U.S. could gain a comparable amount from TTIP.\"\n  - Bali WTO deal (end of 2013): if fully implemented, would cut trade costs and \"deliver an economic boost of US$1 trillion annually.\"\n- Political dynamics:\n  - Recent developments in the U.S. Senate suggest potential cooperation between Congress and the President on trade deals.\n  - Japan views the TPP as a tool to inject competition into its low-growth economy.\n  - Political leadership is needed to finalize major trade deals.\n- Role of trade facilitation:\n  - Bali deal’s focus on trade facilitation (reducing red tape, streamlining customs) is \"particularly important for developing economies.\""
    },
    {
      "heading": "Which trade policies should economies pursue?",
      "content": "- IMF reviewed its policy advice to keep trade central in operational work, technical assistance, and annual assessments.\n- Country-specific advice, but three broad categories:\n  - Advanced economies:\n    - Focus on \"21st century trade issues\": opening services markets, making regulatory systems more coherent, intellectual property protection, treatment of state-owned enterprises (examples addressed by TPP).\n  - Emerging market economies (especially South Asia and Latin America):\n    - Can still benefit from traditional trade liberalization, unilateral opening, attracting foreign direct investment, and infrastructure investment.\n    - Quantified infrastructure need in Asia: \"In this decade alone, overall national infrastructure investment needs are estimated to be $8 trillion.\"\n  - Developing economies:\n    - Make trade and integration into global value chains a central plank of development strategies.\n    - Emphasize trade facilitation.\n    - IMF stands ready to support transitions to less protected environments, advise on fiscal implications of lower tariffs, and assist with sequencing reforms and hands-on training."
    },
    {
      "heading": "Policy recommendations and priorities",
      "content": "- Strongly support smart efforts to reduce and dismantle both:\n  - Old-style, in-your-face protectionism.\n  - New protectionism based on non-tariff measures.\n- Support preferential trade deals (e.g., TPP) but encourage eventual openness: TPP \"should eventually be open to other countries that meet its requirements.\"\n- Pursue coherence between preferential deals and multilateral efforts to avoid trade fragmentation (\"the 'spaghetti bowl' of competing regimes and preferences\").\n- Aim for multilateralization preferably in the context of the World Trade Organization; global deals are preferred because they allow new trading relationships to be formed.\n- Political leadership and cooperation are required to conclude transformative trade agreements and reverse the slowdown in trade-led growth."
    },
    {
      "heading": "Conclusion / Closing message",
      "content": "- Quoting Montesquieu: \"Trade is the best cure for prejudice.\"\n- Reinvigorating trade is \"essential-to-have\" to prevent prolonged low growth (\"the 'new mediocre'\") and to lift global growth.\n- Final call: \"If you care about growth, you need to be serious about global trade. It is now time to get serious about trade.\"\n\nSource: \"Reinvigorate Trade to Boost Global Economic Growth,\" By Christine Lagarde, Managing Director, IMF, April 23, 2015.\n\n---\n\n\n References\n\n- The IMF and the World Trade Organization -- A Factsheet\n- Speeches\n- Christine Lagarde\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp042315"
    }
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    "Authors: Christine Lagarde",
    "Published: April 23, 2015",
    "Speech delivered at the U.S. Ex-Im Bank Conference, Washington, DC, April 23, 2015. As Prepared for Delivery.",
    "Central claim: expanding global trade is essential to boost growth, innovation, jobs, middle-class real incomes, poverty reduction, and economic fairness.",
    "The IMF’s mandate (Article 1 of the Articles of Agreement) includes facilitating \"the expansion and balanced growth of international trade\" to promote high levels of employment and real income.",
    "Trade contributes to growth by enabling countries to specialize according to comparative advantage, increasing world production and consumption.",
    "Direct and indirect channels through which trade raises growth:",
    "Trade helps reverse declining productivity growth:",
    "Trade and jobs / poverty reduction:",
    "Recent trend: post-2008 slowdown — \"2015 is likely to mark the fourth consecutive year of below-average trade growth, with at least one more year of disappointing growth to come,\" per WTO predictions cited.",
    "Two structural changes holding back trade growth:",
    "Quantified potential gains from trade agreements cited:",
    "Political dynamics:",
    "Role of trade facilitation:",
    "IMF reviewed its policy advice to keep trade central in operational work, technical assistance, and annual assessments.",
    "Country-specific advice, but three broad categories:",
    "Strongly support smart efforts to reduce and dismantle both:",
    "Support preferential trade deals (e.g., TPP) but encourage eventual openness: TPP \"should eventually be open to other countries that meet its requirements.\"",
    "Pursue coherence between preferential deals and multilateral efforts to avoid trade fragmentation (\"the 'spaghetti bowl' of competing regimes and preferences\").",
    "Aim for multilateralization preferably in the context of the World Trade Organization; global deals are preferred because they allow new trading relationships to be formed.",
    "Political leadership and cooperation are required to conclude transformative trade agreements and reverse the slowdown in trade-led growth.",
    "Quoting Montesquieu: \"Trade is the best cure for prejudice.\"",
    "Reinvigorating trade is \"essential-to-have\" to prevent prolonged low growth (\"the 'new mediocre'\") and to lift global growth.",
    "Final call: \"If you care about growth, you need to be serious about global trade. It is now time to get serious about trade.\"",
    "[The IMF and the World Trade Organization -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2022/imf-and-the-world-trade-organization)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
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