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Prof. Justin Yifu Lin: De-Fragment Global Trade

Apr 17-2024   



Now that the world cannot bring itself to agree on trade rules with unanimity, regional cooperation has become the second-best arrangement to reduce trade fragmentation, said Prof. Justin Yifu Lin in an event of Boao Forum for Asia Annual Conference 2024. He is Honorary Dean of the NSD and Dean of both PKU Institute of New Structural Economics and Institute of South-South Cooperation and Development.

 

De-globalization and trade fragmentation have reared their ugly heads, despite theoretical and empirical evidence of the win-win nature of trade, chiefly because some countries use international trade as a scapegoat for internal issues such as high unemployment rate, weak economic growth, and declining proportion of the middle class, said Prof. Lin. Attributing the problems to the impact of foreign-made products on domestic ones is misguided, he pointed out. He called on the academic circle and the media to elucidate such issues and identify the real causes so that efficacious solutions can be found.

 

He also drew attention to the plight of the World Trade Organization (WTO) as some developed countries start to erect barriers at a time when their domestic manufacturing sectors become less competitive internationally. Some countries drag feet on cross-border free trade for the same protectionist reason. This has thrown a spanner into the machinery of the WTO. As such, he stressed that regional cooperation has become the second-best setup which can benefit its member countries as well as be opened up to non-members.

 

If trade were to dwindle or cease, large countries would suffer fewer losses than small countries when losses are measured as a proportion of their respective GDP, said Prof. Lin. In one-on-one negotiations, the developing countries, which are mostly small countries, are at a disadvantaged position. However, unlike in 2000 when the G7’s economies amounted to half of the global total, nowadays their combined size is 30% and that of the developing countries 70%. Therefore, Prof. Lin urges the developing countries to work in concert and unity to advance the international trade regime under WTO rules, for they have benefits to reap and the combined capability to pull it off.

 

Prof. Justin Yifu Lin: De-Fragment Global Trade

Apr 17-2024   



Now that the world cannot bring itself to agree on trade rules with unanimity, regional cooperation has become the second-best arrangement to reduce trade fragmentation, said Prof. Justin Yifu Lin in an event of Boao Forum for Asia Annual Conference 2024. He is Honorary Dean of the NSD and Dean of both PKU Institute of New Structural Economics and Institute of South-South Cooperation and Development.

 

De-globalization and trade fragmentation have reared their ugly heads, despite theoretical and empirical evidence of the win-win nature of trade, chiefly because some countries use international trade as a scapegoat for internal issues such as high unemployment rate, weak economic growth, and declining proportion of the middle class, said Prof. Lin. Attributing the problems to the impact of foreign-made products on domestic ones is misguided, he pointed out. He called on the academic circle and the media to elucidate such issues and identify the real causes so that efficacious solutions can be found.

 

He also drew attention to the plight of the World Trade Organization (WTO) as some developed countries start to erect barriers at a time when their domestic manufacturing sectors become less competitive internationally. Some countries drag feet on cross-border free trade for the same protectionist reason. This has thrown a spanner into the machinery of the WTO. As such, he stressed that regional cooperation has become the second-best setup which can benefit its member countries as well as be opened up to non-members.

 

If trade were to dwindle or cease, large countries would suffer fewer losses than small countries when losses are measured as a proportion of their respective GDP, said Prof. Lin. In one-on-one negotiations, the developing countries, which are mostly small countries, are at a disadvantaged position. However, unlike in 2000 when the G7’s economies amounted to half of the global total, nowadays their combined size is 30% and that of the developing countries 70%. Therefore, Prof. Lin urges the developing countries to work in concert and unity to advance the international trade regime under WTO rules, for they have benefits to reap and the combined capability to pull it off.