Re-globalization presents a more promising avenue for establishing a global economy that benefits everyone by integrating more economies and communities into mainstream trade, thereby attracting trade-oriented investments.
In contrast, protectionism proves to be an ineffective strategy for promoting inclusivity. Limiting trade is often a costly method for safeguarding jobs for particular segments of society and tends to increase production costs, which can lead to retaliatory measures from dissatisfied trading partners, according to World Trade Organization (WTO) Director-General Dr. Ngozi Okonjo-Iweala.
Dr. Okonjo-Iweala emphasized that the WTO remains a fundamental pillar for international trade cooperation. She noted that proposed regulations in areas such as investment facilitation, services, domestic regulations, and digital trade can significantly further the re-globalization initiative. However, a key takeaway from the recently launched World Trade Report 2024, titled “Trade and Inclusiveness: How to make trade work for all,” is that simply having rules for open and streamlined trade is insufficient for ensuring inclusivity in and among economies.
“They must be paired with additional policies at both domestic and international levels,” she added.
In an interview, Dr. Kishti Sen, a senior economist for the Pacific at ANZ, discussed the idea of re-globalization, questioning its definition and the feasibility of achieving completely open trade without barriers. He noted a growing trend towards protectionism, where nations prioritize the bolstering of local industries and manufacturing.
Dr. Sen pointed out that production doesn’t have to adhere to the lowest labor cost, emphasizing the importance of fair wages in maintaining competitiveness. He explained that one factor contributing to certain countries losing their competitive edge was the inability to sustain manufacturing due to higher labor costs.
However, the recent disruptions in supply chains and the potential for increased conflict have led nations to reevaluate their supply chains and consider relocating manufacturing closer to home, including high-paying manufacturing roles. He suggested that the current focus is shifting toward strengthening local industries rather than purely pursuing free trade.
Re-globalization will be the central theme of the WTO’s 2024 Public Forum.