WTO, others advocate trade as engine of growth

The World Trade Organisation (WTO), International Monetary Fund (IMF) and World Bank have advocated improved trade performance despite the lingering sluggish economic growth and weak investment activity.

According to the institutions, there is a need to make credible and balanced case for trade to ensure that economic challenges are properly addressed without necessarily opting for protectionist policies.

WTO Director-General Roberto Azevêdo, while speaking at a joint event entitled “Making Trade an Engine of Growth for All”, said: “While I believe that trade is essential for economic growth and development around the world, I also believe that trade is imperfect. Despite the overall gains it delivers, it can have negative effects in some parts of the economy and those effects can have a big impact on some people’s lives. We have a responsibility to reflect on this and to respond.

“We have to work harder to ensure that the benefits of trade are more widely shared. We also need a clearer analysis of the challenges before us so that we can tailor our response. The charge often levelled against trade is that it sends jobs overseas, particularly in manufacturing.

“Trade can indeed cause this kind of displacement, and we need to respond to it. But actually trade is a relatively minor cause of job losses. The evidence shows that well over 80% of job losses in advanced economies are not due to trade, but to increased productivity through technology and innovation.

“So we need to be clear-eyed about the problems in the job market. No-one could attack technology — trade is a much easier scapegoat. But the wrong diagnosis leads to the wrong medicine. And, when trade is considered the main issue, all too often the suggested prescription is protectionism. This medicine would harm the patient, rather than help him.”

Azevêdo emphasised the need for policies which are designed to respond to economic challenges by promoting a more inclusive trading system; boosting trade growth; and responding to the labour displacement effects of technological innovation.

“To properly address the real challenges before us we need comprehensive and crosscutting domestic policies that address education, re-skilling and support to the unemployed. We also need renewed leadership to keep delivering reforms at the global level. Finally, we need to work harder to make a credible, balanced, powerful argument for trade. We must join forces with partners like the IMF and World Bank to produce new research and new arguments to help make the case. Today’s seminar marks the start of this shared effort”, he added.