Trade: Into Uncharted Waters

The pace of global trade has slowed. “For the past three decades, trade has regularly grown at twice the rate of world gross domestic product,” writes Shawn Donnan for the Financial Times. “This year, trade is expected to grow just 2.5 per cent, compared with GDP growth of 2.9 per cent.” Economists debate whether the dip is temporary or signals structural change in global trade and supply chains. Targets for blame include the eurozone debt crisis, rising labor costs in China, environmental and other regulations that mask protectionism, technological innovations that reduce manufacturing costs and jobs, and increasing representation of services in the global economy. More bilateral and regional agreements, as well as 160 WTO members giving a go-ahead to the Doha Round in December, could allow trade growth to resume, Donnan notes. Ongoing support for globalization, according to one research study, requires China to do more to open markets and advanced economies like the US to sustain support by resisting wage stagnation and inequality. – YaleGlobal