WTO, IMF, World Bank Chiefs Call for Backing Trade, Domestic Adjustment Policies
Domestic steps such as providing more worker training and supporting housing, credit, and infrastructure policies can play a valuable role in addressing some of the labour market changes that result from trade, according to the heads of the World Trade Organization (WTO), International Monetary Fund (IMF), and the World Bank Group.
The report, entitled “Making Trade an Engine of Growth for All,” was released on 10 April during a meeting in Berlin, Germany, at the Association of German Chambers of Commerce and Industry. It was launched jointly by WTO Director-General Roberto Azevêdo, IMF Managing Director Christine Lagarde, and World Bank President Jim Kim.
The document notes that it was prepared by the staff of the three organisations for the meeting of G20 “sherpas,” which was held from 23-24 March in Frankfurt, Germany. In diplomatic parlance, the term “sherpas” refers to those senior officials who aid in the preparation for leaders’ summits.
“The challenge before us is to support the workers of today and train the workers of tomorrow, while also ensuring that the trading system is more inclusive,” said Azevêdo upon the report’s release. “I recognise that there are very real concerns, but the answer is not to turn against trade, which would harm us all.”
In related news, the WTO indicated this week that the volume of global merchandise trade is set to see improved growth this year and the following. According to the WTO, this will increase by 2.4 percent this year, though growth could end up somewhere between 1.8 to 3.6 percent depending on changes in the policy environment. Trade growth next year could land anywhere between 2.1 and 4 percent.
International system, domestic support policies
The WTO-IMF-World Bank report argues for the benefits for open trade and a strong multilateral trading framework, as underpinned by the WTO. It includes a warning that shirking trade has had severe consequences in the past, ranging from “economic malaise” to increased conflict on the international stage.
“Sustaining the dispute settlement system, further recognising the value of transparency and other key functions, as well as continuing to build on recent successes to revive the WTO’s negotiating function – including through the use of more flexible approaches to attain multilateral outcomes or through plurilateral agreements, as appropriate – is more important than ever,” the report says.
Along with supporting trade integration and the international trading system, the report also calls upon domestic governments to make a better case for trade to their respective constituencies, along with adopting policies that can lessen the burden of some of the “adjustments” that come from trade, such as the increased competition from foreign-made goods faced by the manufacturing sector.
While it does caution against using a blanket approach to solve all trade-related problems, the report’s authors note that these so-called adjustments can have a powerful impact on public opinion.
“While there is no one-size-fits all strategy for mitigating the adjustment costs that can arise from trade, there is room for active labour market policies, social protection, and complementary policies in the areas of education, housing, and credit,” the report suggests.
“People more vulnerable to possible employment and wage impacts have been more sceptical of trade,” the report says. It also notes that taking on further trade reforms in areas such as services and digital can help boost economic growth.
Merkel meets with IGO chiefs
The release of the report came the same day that these officials, together with International Labour Organization (ILO) Director-General Guy Ryder and Organisation for Economic Co-operation and Development (OECD) Secretary-General Ángel Gurría, met with German Chancellor Angela Merkel in Berlin.
The German chancellor meets annually with the heads of these international organisations to discuss various topics related to the global economy.
“The cooperation of multilateral organisations is of highest importance for good economic growth. Under the circumstances of globalisation and digitalisation we need to work together for development of all parts of the world,” said the German leader afterward.
The group also put out a joint press release which referred to the benefits of cooperation between the five agencies on topics such as digitisation; labour market and employment policy; trade policy; climate change and natural resources; global initiatives such as the 2030 Agenda for Sustainable Development; and migration and refugees.
“Our common approach of international economic policy cooperation has turned out to be successful and remains necessary to take up global challenges, set new standards, and improve growth prospects,” said the group. They also referred specifically to the potential benefits that can be derived from the G20 process, which this year is being held under the German presidency.
“The German G20 Presidency in 2017 offers an important opportunity to address urgent issues in economic, financial, climate, trade, health, employment, social, and development policy, as well as other current global challenges, and to work together in such a way that the benefits of globalisation and technological change are both enhanced and more widely shared,” said the press release.
The report and Berlin events come just ahead of the IMF-World Bank Group Spring Meetings, which will be held in Washington from 21-23 April and will tackle various topics related to the global economy and development opportunities and challenges.
Other major dates on the international calendar include the meeting of G7 leaders in Taormina, Sicily, on 26-27 May; the OECD Forum and Ministerial Council Meeting in early June; and the G20 leaders’ summit in Hamburg, Germany, on 7-8 July.