Opening Remarks by Angel Gurría
10 October 2018 - Bali, Indonesia
(As prepared for delivery)
Dear Roberto [Azevêdo], Christine [Lagarde], Jim [Kim], Distinguished Guests, Ladies and Gentlemen:
I am delighted to join you in Bali for today’s high-level event on How Global Trade Can Promote Growth for All. I would like to thank our co-hosts – the WTO, IMF, and World Bank, as well as the Australian Government – for their support and commitment to addressing this important issue.
Our discussion comes at a critical moment for trade and the global economy. Ten years after the crisis, downside risks are again intensifying.
In 2017, global expansion was powered by healthy trade growth, but today trade policy uncertainty is contributing to a slowdown in trade growth, dampening global investment, and threatening jobs and living standards.
Trade tensions are largely the result of frustrations that have built up with the system over decades. Many are concerned that not everyone is competing on a level playing field. They fear that high levels of state support remain in key sectors, from agriculture to industrials, and that international rule making is not keeping pace with business realities.
But protectionism is not the answer! It does not bring long-term solutions. On the contrary, recent OECD analysis again confirms the harmful impacts of protectionism. Let me give you an example. If we were to increase tariffs on even as little as 7% of global trade, we would reduce that trade by 1.5%. But implementing even small tariff reductions would lead to an increase in global trade of twice that amount. We estimate that each dollar of new tariffs costs global households 40 cents, while each dollar of tariff reduction adds 90 cents to global household incomes. The way forward is clear – we must work together to open markets, not restrict them!
And today, open markets mean also looking “behind-the-border”, at regulatory measures that sometimes restrict trade unnecessarily and can be even more costly than tariffs. You’ll hear later today about the enormous gains that can come from freeing up the services sector that underpin global value chains.
Ladies and Gentlemen:
Now, more than ever, we need to work together as an international community to translate our evidence and our experience into policy approaches that make the whole system work better for more people, for all people!
We need a much more integrated policy approach: we need to update and address the gaps in the international rule-book, to ensure that domestic policies are in place to encourage innovation, opportunity, and to make sure that no one is left behind.
This means supporting those whose jobs are affected by trade with activation measures and adequate [temporary] income support. But we need to go beyond ex-post support, improving opportunities for disadvantaged groups to adjust to changes; for example, focusing more on low-skilled workers when investing in adult learning and on early interventions in education to give disadvantaged children greater opportunities for social mobility.
We need to draw on the full range of international economic co-operation tools at our disposal. At the OECD, our work supports the efforts of governments and complements the activities of the WTO, World Bank, and IMF. We are building the evidence to support better policies for better lives, including by expanding measurement of government interventions that tilt the playing field in global trade, advancing legally binding rules, voluntary guidelines and codes, and providing a forum for transparency and dialogue, for example the G20 Global Forum on Steel Excess Capacity.
OECD work on Trade