Re-globalization is viewed as a more optimistic approach to establishing a global economy that benefits everyone, as it aims to integrate more marginalized economies and communities into the mainstream by attracting trade-focused investments. In contrast, protectionism is seen as an ineffective method for enhancing inclusiveness. According to Dr. Ngozi Okonjo-Iweala, Director-General of the World Trade Organization (WTO), trade restrictions often result in higher production costs and can provoke retaliatory measures from dissatisfied trading partners.
Dr. Okonjo-Iweala emphasized the WTO’s crucial role in fostering international trade cooperation, adding that new regulations related to investment facilitation for development, services, domestic regulation, and digital trade could further support the re-globalization effort. However, she noted a significant conclusion from the recently launched World Trade Report 2024, titled “Trade and Inclusiveness: How to make trade work for all.” The report states that simply having rules for open and simplified trade is insufficient for fostering inclusiveness among economies.
She highlighted the need for these trade rules to be complemented by additional policies on both domestic and international fronts. Dr. Kishti Sen, an ANZ senior economist focusing on the Pacific, raised questions about the true meaning of re-globalization, suggesting it does not equate to completely barrier-free trade. He pointed out the current trend of countries leaning towards protectionism to safeguard local industries and manufacturing.
Dr. Sen argued that the emphasis should not solely be on producing goods at the lowest labor costs and that fair wages play a significant role. He noted that many countries lost their competitive edge due to higher manufacturing costs but are now reconsidering their supply chains in light of recent disruptions and the potential for future conflicts. This reevaluation may lead to a resurgence in domestic manufacturing, including high-paying jobs. He believes that the focus is shifting toward supporting local industries rather than simply advocating for free trade. The theme of re-globalization will be central to the WTO 2024 Public Forum.