Framing changes in trade
By Rosángel Hernández
Editorial Coordinator of TradeTankMx and Moderator of the WTO Public Forum Session “Framing Change: Labor & Technology in trade’s future”
Trade is changing. Or at least, many appear to assume this as a reality of our times. The U.S.-China trade tensions together with the disruptive effects of the pandemic in supply chains –and now the invasion of Ukraine– have fueled the narrative that global value chains should become more regional to be secure and reliable. Supporting this narrative is, among others, the generalized perception that economic globalization is going into reverse. Newsletters report that talk about reshoring and nearshoring among companies is mounting1, and searches for the word ‘deglobalization’ in Google2 are now rising again, after reaching their highest level in the decade, in April 2020.
Under the deglobalization narrative, it is often envisioned that trade flows will shift from global toward more regionalized patterns. Consequently, a large part of trade will end up encapsulated by highly integrated trading blocs –such as those of the USMCA, CPTPP, and RCEP– but decoupled from each other.
In TradeTankMx, we consider that the deglobalization narrative provides an inadequate framing to think about the future of trade. Not only because current analysis5 of merchandise trade data provides no support for it, but also because, as Richard Baldwin has argued regarding the ‘peak globalisation,’ a narrative “needs a lot more nuance than it is usually afforded.”6 We think that this is particularly true when it comes to international trade.
To better look at the future of trade –and prepare for it– we should start by reviewing the developments brought about by technology and labor issues into trade. We consider those two aspects are the ‘common thread’ running through a large part of trade and trade policy transformations taking place today: (a) technology, because it is bringing new issues, new challenges, and new actors into trade, and (b) labor issues, because workers’ rights and the enforcement of labor provisions are both becoming priorities in trade policy and supply chain regulations. Trade changes related with both aspects have far-reaching implications for the future of trade.
This is one of the discussions that TradeTankMx will open in this year’s Public Forum at the World Trade Organization (WTO). Within the margins of this global event, we will host a panel discussion entitled ‘Framing Change: Labor & Technology in trade’s future’. The panel will take place on September 30, and it will include four distinguished speakers: Kathleen Claussen, Professor of Law at the University of Miami and expert on trade disputes, Javier López-González, Senior Economist at the Trade and Agriculture Directorate of the OECD and expert on digital trade, Michelle Kristy, Project Manager at the International Trade Centre and expert in SMEs, and Jorge Armijo, President of TradeTankMx and expert in international trade.
Join us to envision, with the guidance of these experts, how the future of trade will look like. See more details of our session in here.
1 Kaye Wiggins et al., “Business leaders warn that three-decade era of globalisation is ending”, Financial Times, May 22, 2022, available at https://www.ft.com/content/0599878e-a820-4657-8e52-f069bb10d512.
2 Google Trends, worldwide searches for the word ‘deglobalization’ since 2004, available at https://trends.google.com/trends/explore?date=all&q=%2Fm%2F02p7w61.
3 See, for example, Peter Enderwick and Peter Buckley, Rising regionalization: will the post-COVID-19 world see a retreat from globalization?, Transnational Corporations, Volume 27, Issue 2, Sep 2020, p. 99-112, available at https://doi.org/10.18356/8008753a-en and Geoffrey Jones and Valeria Giacomin, “Deglobalization and Alternative Futures”, Harvard Business School Technical Note 322-088, January 2022 (Revised March 2022), available at https://www.hbs.edu/faculty/Pages/item.aspx?num=61645.
4 See, for example, Pierre-Olivier Gourinchas, “A more fragmented world will need the IMF more, not less”, Finance & Development, June 2022, available at https://www.imf.org/en/Publications/fandd/issues/2022/06/shifting-geopolitical-tectonic-plates-straight-talk, Cora Jungbluth and Thieß Petersen, “How the War Against Ukraine can Change the Global Economy”, Global Europe blog, March 22, 2022, available at https://globaleurope.eu/globalization/how-the-ukraine-war-can-change-the-global-economy/ and Rabah Arezki, “Economics in the New Age of National Security”, Project Syndicate, August 26, 2022, available at https://www.project-syndicate.org/commentary/will-global-fragmentation-produce-new-economic-thinking-by-rabah-arezki-2022-08.
5 Stefan Legge and Piotr Lukaszuk, “Regionalization vs globalization: what is the future direction of trade?”, World Economic Forum, June 2021, available at: https://www.weforum.org/agenda/2021/07/regionalization-globalization-future-direction-trade/.
6 “The peak globalisation myth: Part 1”, Centre for Economic Policy Research, August 31, 2022, available at: https://cepr.org/voxeu/columns/peak-globalisation-myth-part-1.