An open trading system and job-rich growth in the area of services started to gain traction among policymakers around the world against the backdrop of an impasse on multilateral efforts in agriculture and global challenges that have shifted the drivers of economic growth to emerging economies. In particular, the emergence of regional and global value chains that are both efficient and sustainable suggests an increasingly complex relationship between trade, jobs and the environment. In this changing landscape, the equation of global trade must be recalibrated to proportionately reflect the interests of both developed and developing countries. This emphasis should guide discussions at the G20 leaders’ summit in Los Cabos, Mexico and the Rio+20 United Nations Conference on Sustainable Development in Rio de Janeiro, both of which take place in June of this year (but after this is written).
While it varies depending on local conditions, trade is generally correlated with increased real incomes and enhanced productivity. Carefully orchestrated policies can offset the relatively fixed conditions of geography and optimize the effects of trade. Good governance helps to shape important components of market openness such as the supply of qualified labor, the ability of the labor market to adjust to new economic opportunities, the availability of a social “safety net” to facilitate adjustment and redistribute gains, and the adequacy of physical infrastructure. Given differing levels of capacity among developing countries, as well as each nation’s unique natural resources and political system, optimization and recalibration of global trade is an ambitious yet necessary objective.
The first-ever meeting of G20 trade ministers - on April 19 and 20 in Puerto Vallarta, Mexico - addressed the impetus for and first steps toward an open trading system and job-rich growth in services, recognizing the dissimilar economic, socio-political and human capacity conditions of G20 members. This gathering featured the first public statement made in tandem by the World Trade Organization (WTO) and the Organization for Economic Cooperation and Development (OECD) on how to apply “global value chains” towards a new trade narrative.
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