Recalibrating global trade: It's time to bring developed and emerging economies closer together
July-September 2012
By: Gita Wirjawan
Indonesian Trade Minister Gita Wirjawan (second from left) at the Word Economic Forum in Davos.

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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