Trade and the global economic crisis Richard Baldwin Graduate Institute, Geneva 18 December 2008...
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Transcript of Trade and the global economic crisis Richard Baldwin Graduate Institute, Geneva 18 December 2008...
Trade and the global economic Trade and the global economic crisiscrisis
Richard BaldwinGraduate Institute, Geneva
18 December 2008BERR, London
EbookBaldwin&Evenett (eds)• Started 24 Nov (17 scholars
from around G20, 1 Dec deadline); posted 4 Dec; 10 Dec WTO launch.
• Three points of consensus in Ebook:
1) Use macro not trade measures
2) Wrap up Doha “Modalities”3) Establish WTO/IMF
surveillance mechanism.
=> World has changed already
Trade system stress• Your anxiety level.• Crisis coming to EMs via trade acc’t (manuf); to
the developing via commodity prices.• Fact: Not EM Keynesian trade shock; Manuf.
sector; stimulus limited effectiveness due to unbundling.
• Fact: Riding the tiger; EMs must react.– Many new ways boost jobs.
• Fact: Protectionist US Congress.• Fact: Anger at US causing recession.• My nightmare: “Echo Chamber”.
Trade system stress• Even without nightmare …
• Ruined atmospherics for trade talks & climate talks.
• “Temporary protection” turns permanent?
• G20 is largely about confidence building.– G20 failed on Doha Modalities, so they need to do
something else on trade. – It’s time for “Plan B”
Our “Plan B”• Last week’s Vox column stressing:
1) Early harvest (trade facilitation).Something for rich, EMs and developing.
2) Monitoring/Surveillance.WTO/IMF/ITC?
3) Modern BOP clauseCrisis Safeguard.
World has changed already
• This crisis: impossible & improbable.
Lamy & Plan B• 17 December 2008, Trade Negotiations
Committee, WTO press release.• Director-General Pascal Lamy told the Trade
Negotiations Committee on 17 December 2008 that “concluding the Round should remain our focus in 2009 but this endeavour takes place within a more global portfolio of WTO activities”.
• He proposed action “on the wider WTO front” like monitoring trade measures taken in relation to the financial crisis, trade finance and Aid for Trade.
Concluding• G20 gov’ts needs to boost confidence of
consumers and investors that governments can get their arms around the crisis.
• On trade … – G20 should support Lamy’s Plan B.– Help develop “early harvest”. – Support monitoring/surveillance of new trade
measures.– Provide leadership in Doha talks.
Falling Trade flows
Japan
US
China
Euro area
0
50
100
150
200
250
Jan-2007
Feb-2007
Mar-2007
Apr-2007
May-2007
Jun-2007
Jul-2007
Aug-2007
Sep-2007
Oct-2007
Nov-2007
Dec-2007
Jan-2008
Feb-2008
Mar-2008
Apr-2008
May-2008
Jun-2008
Jul-2008
Aug-2008
Sep-2008
$ b
ill
5
Falling Trade flows
0
5
10
15
20
25
30
35
40
45
50
Jan-
2007
Feb-2
007
Mar-
2007
Apr-2
007
May
-200
7
Jun-
2007
Jul-2
007
Aug-2
007
Sep-2
007
Oct-20
07
Nov-2
007
Dec-2
007
Jan-
2008
Feb-2
008
Mar-
2008
Apr-2
008
May
-200
8
Jun-
2008
Jul-2
008
Aug-2
008
Sep-2
008
South AfricaIndonesiaBrazilRussiaKorea
Rising tariff protection
Developed Developing
Less Developed
0%1%2%3%4%5%6%7%8%9%
Developed nation exportsfacing higher tariffs into:
Developing Nations Less Developed Nations
ITC data
Share of trade in HS6 categories with higher average tariffs in 2008 vs 2007
Francois numbers
Manufactured imports, bound & unbound
intra-EEA trade
intra-NAFTA trade
other OECD imports
"At risk"
Hong Kong, Singapore