Making Trade Work for All Meeting of the National Focal Points for Policy Coherence for Development 26 th October, 2017 Julia Nielson Trade and Agriculture Directorate, OECD
In developed countries, many citizens view globalisation as a threat rather than an opportunity Percent of population viewing globalisation as a threat or opportunity ITA FRA TUR AUS BEL USA MEX DEU OECD CAN ISR JPN KOR HUN ESP GBR POL SWE Threat Opportunity 38 33 32 31 29 29 29 28 26 26 25 22 22 20 20 20 19 18 28 26 27 39 33 37 32 34 40 37 35 46 50 50 49 50 51 54 60 50 40 30 20 10 0 10 20 30 40 50 60 Source: IpsosGlobal @dvisor: Power to the People? Part 2; January 2017. 2
This is much less true among developing countries 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? 3
In global trade, what other countries do matters % of GDP 2 World Major economies imposing restrictions Spillovers to other economies 1.5 1 0.5 Imposing Trade Restrictions in Major Economies 0-0.5-1 -1.5 Implementing Trade Facilitation Measures -2-2.5 Source: OECD METRO Model and OECD calculations. 4
So what s going on? 5
Lower and lowest incomes have increasingly been left behind Trends in real household incomes at the bottom, the middle and the top, OECD average, 1985 = 1 1.60 Bottom 10% Bottom 40% middle 50-90% Top 10% 1.50 1.40 1.30 1.20 1.10 1.00 1985 1990 1995 2000 2005 2010 Source: OECD (2015), In It Together: Why Less Inequality Benefits All 6
Taxes and social benefits redistribute less Source: T. Piketty (2013), Le Capital au XXIe siècle, Les Livres du Nouveau Monde. 7
Productivity gaps are widening and wages stagnating at laggard firms Labour productivity Real compensation per worker Index, 2001 = 100 Index, 2001 = 100 Source: OECD November 2016 Economic Outlook. 8
Technology and digitalisation are also bringing profound transformations Industrial robots per thousand workers in the United States and Europe Source: Acemoglu, D. and P. Restrepo (2017), Robots and Jobs: Evidence from US Labor Markets, NBER Working Paper No. 23285. 9
What can we do? 10
Cutting off trade is not the answer 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 11
So what can be done to address the legitimate concerns of people? 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) 12
Making trade work for all 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) 13
Making trade work for all 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 14
Making trade work for all 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 15
Thank you and contact us We look forward to hearing from you! Subscribe to our newsletters at:: www.oecd.org/tad You can reach us via e-mail by sending your message to the following address: tad.contact@oecd.org We invite you to connect with us on Twitter by following: @OECDtrade 16 16