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Thursday, October 1, 2020
Mia Mikic is Director, Trade, Investment and Innovation Division in ESCAP & James Gregory Gallagher is an Intern, Trade, Investment and Innovation Division
BANGKOK, Thailand, Jan 7 2020 (IPS) - Imagine going through the day without consuming or using some product, service, data, technology, personal contact, or payment which has not – at least in some part – crossed one or more national borders before reaching you.
We live in a globalized world where connections across borders are no longer just between governments or businesses but increasingly person to person. Many of us would have a hard time to adjust to life without these benefits from globalization.
Globalization, described as the spread of products, services, technology, information, and jobs across national borders, is often understood as the deepened interdependence of economies, cultures, and people.
The pace of globalization has been primarily driven by technological progress intertwined with the steady reduction of costs in international transactions coming from the policy side.Fragmentation enabled the spread of production through global value chains integrating many developing countries into the global economy. Millions of new trade-related jobs were created in countries such as China, Viet Nam, and other South-East Asian economies with increased productivity, incomes, and reduced poverty [APTIR, 2015]. Women have especially benefited from the expansion of global value chains (GVCs) into developing countries.
But there is the other side to this story. The benefits of globalization have not been shared widely or equitably. While workers producing smartphones, cars, or other GVC products in a few developing countries were gaining, their gains were relatively less than high-skilled or capital owners locally and overseas.
Offshoring production has meant a loss of mostly lower-skilled jobs in the advanced economies. These changes gave rise to a denouncement of globalization in both developed and developing countries. The high-speed growth of GVCs in the late 1990s and early 2000s, might have contributed to a degradation of the environment and overuse of resources.
The spread of resentment against globalization was recognized in several economies through populist policies focusing on short-term gains for those assumed to be hurt by globalization. Such policies go directly against the rationale for having a global governance of trade.Unilateralism advances national interest at the expense of other countries and invites similar retaliatory policies and ultimately trade wars. ESCAP has estimated that the imposed tariffs could cause GDP losses of at least $400 billion worldwide (almost a loss of Thailand’s GDP) and $117 billion in Asia and the Pacific (100 million workers being paid a minimum monthly wage of $100 for a year).
Yet the loss is potentially much more significant. Trade tensions have spread from bilateral tit-for-tat tariffs, into the multilateral arena threatening the functioning of the global trade governance under the WTO. This system is not flawless and the calls for reform are justified. But that should not mean destruction before fixing it.
The global trade regime functions as a public good which is necessary to enable trade for delivering sustainable development. As demonstrated by ESCAP work, there are direct and indirect links between trade and the attainment of sustainable development. The channels are the following.
For these channels to remain open, there must be a functioning system of rules based on transparency, stability, predictability, and fairness. By working together, governments can improve the current WTO regime.
The opportunity comes up with the 12th Ministerial Conference in 2020 in Kazakhstan, and the ESCAP secretariat is already working with the Governments and other stakeholders towards ensuring that trade remains an effective means of implementation for sustainable development.
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