Making Trade Work for All
Meeting of the National Focal Points for Policy Coherence for Development
26th October, 2017
Julia Nielson
Trade and Agriculture Directorate, OECD
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
In developed countries, many citizens view
globalisation as a threat rather than an
opportunity
Source: IpsosGlobal @dvisor: Power to the People? Part 2; January 2017.
18
19
20
20
20
22
22
25
26
26
28
29
29
29
31
32
33
38
51
50
54
49
50
35
27
50
37
40
34
46
32
37
33
39
26
28
SWE
POL
GBR
ESP
HUN
KOR
JPN
ISR
CAN
OECD
DEU
MEX
USA
BEL
AUS
TUR
FRA
ITAThreat
Opportunity
60 50 40 30 20 10 0 10 20 30 40 50 60
Percent of population viewing globalisation as a threat or opportunity
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
• 60% Chinese and 52% Indians think involvement in the
global economy is a good thing – New markets
– Opportunities for growth
• Support for trade and its role in job creation is also
strong in, e.g., – Viet Nam, Malaysia
– and Chile, Peru, Mexico
Why does this matter?
This is much less true among developing
countries
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
In global trade, what other countries do matters
Source: OECD METRO Model and OECD calculations.
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
Implementing Trade Facilitation
Measures
% of GDP
Imposing Trade Restrictions
in Major Economies
World Major economies imposing restrictions Spillovers to other economies
So what’s going on?
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
Lower and lowest incomes have increasingly
been left behind
Source: OECD (2015), In It Together: Why Less Inequality Benefits All
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1985 1990 1995 2000 2005 2010
Bottom 10% Bottom 40% middle 50-90% Top 10%
Trends in real household incomes at the bottom, the middle and the top, OECD average, 1985 = 1
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
Taxes and social benefits redistribute less
Source: T. Piketty (2013), Le Capital au XXIe siècle, Les Livres du Nouveau Monde.
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
Productivity gaps are widening and wages
stagnating at laggard firms
Source: OECD November 2016 Economic Outlook.
Real compensation per workerLabour productivity
Index, 2001 = 100 Index, 2001 = 100
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
Technology and digitalisation are also bringing
profound transformations…
Source: Acemoglu, D. and P. Restrepo (2017), “Robots and Jobs: Evidence from US Labor Markets”, NBER Working Paper No. 23285.
Industrial robots per thousand workers in the United States and Europe
What can we do?
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
• Trade barriers do not help low income households
• In a world of GVCs, imports mean exports and jobs
• Using trade barriers to save jobs is ineffective and
inefficient – Need to protect workers, not jobs
Cutting off trade is not the answer
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
• The reality is that trade alone did not cause all of the
problems that concern so many people today, and trade alone
will not solve them either.
• Governments need to act across many fronts simultaneously,
recognising that – the impact of global trade on people depends on the national
policy settings of the countries in which they live, and
– That the impact of trade also depends on a range of other
types of international economic co-operation. (rules of the
road)
So what can be done to address the legitimate
concerns of people?
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
1. Create the environments where the benefits from trade
can materialise through domestic policies that
encourage opportunity, innovation, and competition. – Cut unnecessary trade costs (facilitation, services)
– Invest in capacity • Physical (including digital)
• People (early childhood to lifelong learning)
Making trade work for all
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
2. Do more to bring everyone along
– Full range of investments in inclusive growth
– Target lagging regions
– Another look at the toolkit for the digital future
Making trade work for all
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
3. Make the international system work better,
harnessing full range of tools of international
economic cooperation
– From binding rules, to standards and guidelines, to
transparency and dialogue
– Fill the gaps in the rules and do more to ensure that
everyone plays by them
– Trade agreements can play a role, but depends what
you want to do
– And how trade agreements are done also matters • Making trade a more open conversation
Making trade work for all
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Trade and Agriculture Directorate | Organisation for Economic Co-operation and Development (OECD) | www.oecd.org/tad | [email protected]
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