Sunday 27 September 2020

Yonov Frederick Agah

WTO calls for global effort to beat protectionism

DUBAI, April 11, 2018

The world needs to unite and revive global economic cooperation, liberalisation and growth, to defeat trade protectionism and rising threat of a trade war, said officials at the Annual Investment Meeting in Dubai, UAE.

 “No issue is more urgent today than reviving global economic cooperation, liberalization and growth,” said Yonov Frederick Agah, deputy director general, World Trade Organization, speaking to delegates at the Annual Investment Meeting (AIM) currently taking place at the Dubai World Trade Centre.

“Trade and investment are not the only drivers of global growth but they are necessary ones – indispensable to expanding development, fuelling innovation, generating jobs, and achieving the 2030 Sustainable Development Goals. Signs of rising trade tensions are not only a cause but a symptom of a global economy that has largely stopped opening and integrating in recent years – holding back growth when it is most needed to secure a prosperous and peaceful world,”

Addressing Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai and praising the UAE government for its pragmatic approach in trade and investment cooperation, he said: “The picture was very different just a decade ago. Between 1990 and 2008 – the high-water mark of globalisation—world trade expanded nearly three-fold—double the pace of economic growth—while FDI grew almost seven fold. It was not just new technologies that helped fuel this expansion, but the success of major new global and regional liberalization initiatives as well – the Uruguay Round; China's accession to the WTO; the creation of the European Single Market, NAFTA, Mercosur, and many others.

“The result was a virtuous circle: the expansion of FDI fuelled further trade growth—as multinational firms exchanged goods, services, and technologies within globe-spanning production networks—while trade growth in turn fuelled further FDI expansion. It is no coincidence that this unprecedented period of trade and investment-led globalization also coincided with an unprecedented period of global development, poverty reduction and economic expansion.”

Sultan bin Saeed Al Mansoori, UAE Minister of Economy, said: “I do not think that the current situation between two big economic powers will escalate to a trade war. Things are still developing and we have to wait to see where it reaches.

“The UAE firmly believes in cooperation and partnership and that’s how we have built our economy though cooperation and we will continue to do that. Currently, we have nothing to worry. However, a full-scale trade war will affect all of us.”

The UAE ranks 34th in the world in terms of Foreign Direct Investment (FDI) inflow and 2nd in the Middle East. However, as a source for FDI, the UAE ranks 23 in the world and the first in the Middle East – making it a net capital exporting country in the world.

Dimitry Kumsishvili, First Vice Prime Minister, Minister of Economy and Sustainable Development, Georgia, said: “We believe in growing together through liberalization, cooperation and openness. We are a small country and can’t afford protectionism. We have signed free trade agreements with countries with a population of 2.3 billion. Protectionism is not good for global growth.”

Jamal Al Jarwan, secretary-general of the UAE International Investors Council (UAEIIC), said the trade war will not affect investment. “It might affect the flow of goods and services, but not investment. The USA is still the best country to invest in and I do not see a problem in investment into the USA. The current escalation of talks on trade might affect the movement of goods, not investment.”

Since the 2008 financial crisis a slowdown in trade liberalisation, an uptick in protectionism, and the risk of further reversals have been a drag on trade, investment, and growth. Meanwhile, as the WTO's Monitoring Reports show, countries' trade restrictive measures continue to rise.

Although there are now signs of fragile recovery, trade volumes grew by an annual average of less than 3 per cent in the eight years after the financial crisis—barely the rate of GDP growth—while FDI flows have yet to return to their pre-crisis levels. This slow-down of global trade and investment should be deeply worrying for all economies, but especially for small and developing ones.  Trade now represents 34 per cent of developing countries' GDP on average – compared to less than 20 per cent for advanced countries.

Although world merchandise trade increased slightly in volume terms in 2016, it declined in value terms due to falling export and import prices. World merchandise exports were valued at $15.46 trillion in 2016, down 3.3 per cent from the previous year. The pace of contraction was slower than in 2015, when export values fell 13.5 per cent due to strong appreciation of the US dollar and a plunge in oil prices.

Yonov Frederick Agah said: “At the outset, the message is straightforward. A new global push to strengthen economic cooperation, to liberalise trade and investment, and to resist protectionism is indispensable to reinvigorating global growth, advancing development, and restoring confidence in the international economic system.”

Besides making progress on traditional 20th century issues – such as agriculture the world also needs to make progress on 21 century issues – such as services, investment and digital trade. And while regional agreements can play an important supporting role in opening trade, they are no substitute for a strong WTO – particularly since many of the trade and investment challenges we face today are inherently global in nature and require global solutions, he said.  

“What's more, the WTO has proven that it can deliver results when its Members work together. In 2013, we negotiated the Trade Facilitation Agreement which, when fully implemented, will increase global trade flows by $1 trillion annually,” he said.

“This was followed in 2015 by the Information Technology Agreement expansion deal - which covers 201 products with an annual export value of $1.3 trillion – and by the agreement to ban all forms of agricultural export subsidies. And at the WTO's Ministerial Conference in Buenos Aires last December, a significant numbers of WTO Members agreed to launch discussions on electronic commerce, investment facilitation, and enhancing the participation of small and medium sized companies in global trade.

But progress like this is possible only when we recognize that the world economy has never been more interdependent; that no country, even the most powerful, can solve its trade and investment challenges on its own; and that the answers lies in more, not less, global cooperation,” he added.

The three-day Annual Investment Meeting (AIM) congregation of high-profile officials that include 25 federal ministers, 19 mayors, eight organisation heads, one head of parliament and investors will see the signing of a number of agreements and announcements that will help countries boost the flow of Foreign Direct Investment (FDI).

This will make the AIM the largest such gathering of government leaders and private sector business leaders and investors, organised by Ministry of Economy. Last year, more than 19,000 visitors including VIPs, dignitaries and government delegations participated at the three-day conference. This year More than 20,000 investors and business visitors are expected to participate at the eventful three-day-long activities that will address issues related to global follow of Foreign Direct Investment (FDI).

More than 143 countries participate in the eighth session of the Forum and about 20 thousand investors and visitors from around the world.

A number of global ministers, inspiring business and thought leaders will lead discussions on investment trends, public-private partnerships, sustainability, investment promotion, cryptocurrencies, and sovereign wealth fund at the forthcoming Annual Investment Meeting (AIM) to be held at the Dubai World Trade Centre from April 9 to 11. – TradeArabia News Service

Tags: WTO | FDI | AIM | Annual Investment Meeting |

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