Free trade counteracts global shocks – ADB

The Asian Development Bank (ADB) called on economies to continue with free trade and free movement of capital and not resort to protectionism amid the world’s vulnerabilities to various shocks.

During the opening session of the multilateral lender’s 57th annual meeting held recently in Tbilisi, Georgia, ADB president Masatsugu Asakawa said people in the Asia Pacific region are facing challenges that demand close attention and coordination.

This is amid continued geopolitical tensions in many parts of the world that affect supply chains and the unrelenting impact of worsening climate change.

Asakawa maintained that globalization is not dead despite what happened during the pandemic and with current conflicts across economies.

“It is true that global trade and supply chains are vulnerable to shocks. But the answer cannot be protectionism and segmentation,” Asakawa said.

“Free trade and free movement of capital have benefited our region for decades, and this must be the way forward,” he said.

Many economies have been pushing for free trade agreements by maintaining little to no barriers via tariffs or quotas in order to benefit more from international trade.

The Philippines, for one, has been actively pushing for free trade deals with major economies such as the US, the European Union and the United Arab Emirates, among others.

Asakawa said it is necessary to deepen regional cooperation among countries in order to build resilience in supply chains, promote cross-border trade, bolster private sector investment and strengthen financial and tax cooperation.

The ADB likewise urged countries to find ways to decarbonize global supply chains as trade-related activities account for up to 30 percent of the world’s carbon emissions.

“The uncomfortable truth is that with Asia’s strong growth, our contribution to greenhouse gas emissions is rising. It is time to act to reduce global value chain-related emissions for a more sustainable future,” Asakawa said.

Further, the ADB reiterated that threats of climate change cannot be ignored and that response must not be delayed so as not to further impact food security, infrastructure, water resources, health, employment and equality.

Asakawa also noted that there is a need to harness digital technology and ensure its careful and equitable use, adding that developing countries will miss out if they are not able to adopt artificial intelligence (AI).

The ADB chief said AI offers tremendous potential to drive growth and help address development challenges especially in the areas of healthcare, agriculture and climate change.

Asakawa said ADB is moving to strengthen the capacity of its member countries to deploy responsible AI solutions that follow an ethical framework and drive inclusive growth.

“This is why development cannot stand still. It requires us to evolve to face the realities in front of us and prepare for the challenges on the horizon,” he said.

“Free trade and free movement of capital have benefited our region for decades, and this must be the way forward.”