{
  "title": "Point of View: A Way Forward for Global Trade",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2023/06/pov-a-way-forward-for-global-trade-michael-froman",
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  "summary": "It's time to reenvision the global trade framework for a sustainable future",
  "sections": [
    {
      "heading": "Overview and context",
      "content": "- Author: MICHAEL FROMAN; published in June 2023 in F&D Magazine.\n- Author background stated: incoming president of the Council on Foreign Relations; former US trade representative and vice chairman and president, Strategic Growth, at Mastercard.\n- Key framing:\n  - Global trade has experienced a sharp backlash amid concerns that trade liberalization and offshoring hollowed out industry in developed nations.\n  - Responses include more nationalistic policies, yet global trade continues to grow with onshoring, nearshoring, and friend-shoring occurring.\n  - The global trading system is at an inflection point, with convergence of climate and trade policies and questions about the limits of multilateralism and the need for a new political consensus."
    },
    {
      "heading": "Convergence of climate and trade",
      "content": "- Recent unilateral climate-related trade actions highlighted:\n  - Inflation Reduction Act (IRA) in the US:\n    - \"The IRA became law last August\"\n    - Includes \"$400 billion in climate-related spending over a decade.\"\n    - Incentivizes electric vehicle purchases with a \"$7,500 consumer tax credit.\"\n    - Subsidizes US-based manufacturers to produce clean tech and green energy.\n  - Carbon Border Adjustment Mechanism (CBAM) in the European Union (EU):\n    - \"CBAM, which goes into effect in October,\"\n    - Will impose a fee on imported products from manufacturers in countries that do not have comparable carbon pricing mechanisms.\n- Tensions and concerns:\n  - The IRA has faced criticism from US non-free-trade-agreement partners as potentially discriminatory and leading to outflow of clean-energy-related investments.\n  - The EU has proposed an additional package of clean energy subsidies in response.\n  - The CBAM raises concerns about complexity in measuring emissions and comparing carbon pricing mechanisms, and potential exploitation for protectionist purposes, including against developing economies.\n- Central point: Climate and trade policies are converging and sometimes conflicting; whether major economies collaborate or act unilaterally remains undetermined."
    },
    {
      "heading": "Trend toward open plurilateralism",
      "content": "- Assessment of the WTO and multilateralism:\n  - Since its founding in 1995, the WTO \"has been slow or unable to fully reach multilateral agreements,\" with two notable exceptions: the Trade Facilitation and the Fisheries Subsidies agreements.\n  - There is \"no political consensus around what major economies want from the global trading system and what role the WTO should play.\"\n  - Institutional reform of the WTO is difficult without an underlying political consensus.\n- Questions requiring substantive leader-level conversation:\n  - Degree of focus on economic efficiency vs. national industrial agendas vs. economic development.\n  - Role in addressing labor and environmental issues.\n  - Role in leveling the playing field, disciplining state-owned enterprises, and weighing subsidies.\n  - Whether the goal should be creating a rules-based system with mechanisms for enforcing those rules.\n- Political realities to acknowledge: Populism, nationalism, nativism, and protectionism are real and cannot be ignored in designing trade policy.\n- Recommendation and observed practice:\n  - In absence of multilateral consensus, \"open plurilateralism\"—agreements among willing countries that go above the lowest common denominator—may be the most promising way to advance important trade issues.\n  - Examples cited as models: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the United States-Mexico-Canada Agreement.\n  - Emphasis on public–private collaboration on issues like the digital economy (digital services, data, privacy, cybersecurity), while warning of risks from unilateral actions increasing trade friction."
    },
    {
      "heading": "Importance of getting it right",
      "content": "- Core warning: The challenges facing the global trading system have grown more complex, and success in addressing them is more important than ever.\n- Final admonition: \"There is too much at stake to be complacent.\"\n\nPoint of View: A Way Forward for Global Trade — MICHAEL FROMAN; June 2023.\n\n---\n\n Content in this bundle\n\n- A Way Forward for Global Trade\n  - A Way Forward for Global Trade (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - A Way Forward for Global Trade (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2023/06/pov-a-way-forward-for-global-trade-michael-froman"
    }
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    "Authors: MICHAEL FROMAN",
    "Published: June 1, 2023",
    "Author: MICHAEL FROMAN; published in June 2023 in F&D Magazine.",
    "Author background stated: incoming president of the Council on Foreign Relations; former US trade representative and vice chairman and president, Strategic Growth, at Mastercard.",
    "Key framing:",
    "Recent unilateral climate-related trade actions highlighted:",
    "Tensions and concerns:",
    "Central point: Climate and trade policies are converging and sometimes conflicting; whether major economies collaborate or act unilaterally remains undetermined.",
    "Assessment of the WTO and multilateralism:",
    "Questions requiring substantive leader-level conversation:",
    "Political realities to acknowledge: Populism, nationalism, nativism, and protectionism are real and cannot be ignored in designing trade policy.",
    "Recommendation and observed practice:",
    "Core warning: The challenges facing the global trading system have grown more complex, and success in addressing them is more important than ever.",
    "Final admonition: \"There is too much at stake to be complacent.\"",
    "**A Way Forward for Global Trade**"
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