International institutions argue for open trade

GLOBAL trade has brought benefits from increased productivity to lower prices but governments have not adequately helped workers and communities hit hard by imports, the world’s top multilateral economic institutions said yesterday.

In a report that serves as their answer to the more protectionist trade stance of US President Donald Trump’s administration, the International Monetary Fund, World Trade Organisation and World Bank said an open trading system based on well enforced rules was critical to world prosperity.

The institutions, which have promoted free trade for decades, cited research showing that manufacturing regions more exposed to imports from China since about 2000 saw “significant and persistent losses in jobs and earnings, falling most heavily on low-skilled workers”.

It described what Trump has called the “forgotten Americans” who he wants to serve with his “America First” trade policies.

The report recommended more active government policies to retrain and redeploy workers idled by imports, including programmes to encourage more worker mobility.

But it argued in favour of maintaining an open trading system bound by enforceable rules, saying trade liberalisation had boosted productivity and improved living standards.

It also cited research showing that open trade was estimated to have reduced by two-thirds the price of a basket of goods consumed by a typical advanced-economy low-income household. – Reuters