Fears that Donald Trump’s arrival in the White House is threatening a new era of protectionism have prompted a joint defence of trade from the International Monetary Fund, the World Bank and the World Trade Organisation.
Warning that the role of trade in the global economy was at a critical juncture, the three multilateral bodies said the opening up of markets had been good for growth but admitted that action was needed to help “left behind” individuals and communities.
Their report said technological change rather than trade was mainly responsible for the job losses in certain sectors in the west but accepted that the surge in protectionist sentiment in hard-hit communities was justified.
It noted that “adjustment to trade can bring a human and economic downside that is frequently concentrated, sometimes harsh, and has too often become prolonged. It need not be that way. With the right policies, countries can benefit from the great opportunities that trade brings and lift up those who have been left behind.”
Trump campaigned on an overtly protectionist manifesto, pledging to withdraw the US from a regional trade deal – the Trans-Pacific Partnership – and serving notice on Mexico and China that they could face swingeing tariffs.
The IMF, the World Bank and the WTO said in their joint report that the anti-trade mood had been evident long before last year’s US presidential election but said this had followed a long period when trade had brought benefits to both developed and developing countries.
“The opening of trade over the past several decades has helped to drive global economic growth, lifting incomes across advanced, emerging and developing countries. However, a prolonged period of disappointing economic growth and inadequate attention to those left behind by forces such as trade, globalisation and technology has spurred increased scepticism over open trade in some quarters.
“Countering this by better communicating the benefits of trade, and better sharing these benefits with those affected by trade-related dislocations, are critical to restoring strong, inclusive global growth.”