Growth in the volume of world trade is expected to remain sluggish in 2016 at 2.8%. This will be the fifth consecutive year of trade growth below 3%. World Trade Organization estimates suggest that global trade growth should pick up to 3.6% in 2017—a welcome improvement but still well below growth rates seen prior to the financial crisis.
Meanwhile, a growing revolt against global trade integration is underway in many of the world’s largest economies. In the United States, the leading presidential candidates are united in their opposition to trade deals. In Europe, there is growing public opposition to the proposed Transatlantic Trade and Investment Partnership, or “TTIP”. Research indicates that global press coverage of trade liberalization shows a growing negative bias.
Some campaign groups suggest that new trade agreements are simply tools to support big business at the expense of society as a whole. Others point to the “secretive” nature of government negotiations as a cause for public concern.
Rules governing global trade and investment are written by US corporations for US corporations.
Trade agreements aren’t designed to support or help individual businesses, but rather to support growth and development of economies as a whole. They are, simply put, an exchange of market access between governments: a levelling of the playing field in one market in exchange for a levelling in another.
Early multilateral trade agreements reduced trade barriers from high levels in the early post-war years and established global trading rules that allowed trade to flourish in the age of globalization. These broad, multilateral agreements—now overseen by the World Trade Organization—also played a central role in keeping protectionist responses to economic shocks broadly in check. More recent bilateral and regional agreements have played, by contrast, a more minimal part in global trade growth.
In recent years a growing focus has been placed by policymakers on enabling trade for sustainable development. In 2001, governments launched the WTO’s Doha Development Agenda—talks which in 2013 yielded the landmark Trade Facilitation Agreement which it estimated could create more than 18 million jobs in developing and least-developed countries. Recent bilateral agreements—such as the Trans-Pacific Partnership—also contain important provisions to uphold labour standards and promote environmental protection.
It’s important to remember trade agreements are not just about economics: they can be an important component of a country’s broader foreign policy too. The creation of the first multilateral trade framework played a critical part in restoring peaceful international relations following World War II. Today, bilateral and regional agreements give developed countries a tool to support political and economic reforms in emerging markets.
In response to concerns from civil society, governments have also taken steps to enhance the transparency of trade negotiations. To take just one example: the European Commission last year outlined new steps to increase public access to documents from its on-going trade talks with third-countries.
Urgent action is needed to restore the growth of global trade—particularly given that its slowdown comes at a time when the international community has identified trade as an important component for achieving the United Nation’s Sustainable Development Goals.
There are also worrying signs that anti-trade sentiment in some economies is already translating into a resurgence of protectionist policies. According to the Global Trade Alert initiative, 2015 saw the biggest rise in protectionist activity since the onset of the financial crisis—with an estimated 40% rise in trade barriers introduced compared to 2014.
There remains, however, significant opportunities to boost trade for the benefit of all—particularly through new global initiatives under the WTO. The International Chamber of Commerce is supporting global efforts for instance to streamline customs and border procedures, liberalize trade in green technologies and enhance the supply of finance for small businesses looking to trade internationally.