Dan O’brien: the pace of globalization picks up, despite the rise of its opponents

  • Dan O’brien: the pace of globalization picks up, despite the rise of its opponents
    Independent.t. E.
    Global trade has reached the highest growth rate over the past six years, in 2017, both in natural and value terms.” It was a happy opening of the world trade organization (WTO) an analysis of recent trends in cross-border trade in its flagship annual trade publication, launched last week.
    https://www.independent.ie/business/world/dan-obrien-pace-of-globalisation-picks-up-despite-the-rise-of-its-opponents-37185483.html
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Global trade has reached the highest growth rate over the past six years, in 2017, both in natural and value terms.” It was a happy opening of the world trade organization (WTO) an analysis of recent trends in cross-border trade in its flagship annual trade publication, launched last week.

In Geneva to the organization show that last year, world merchandise exports grew by almost 11pc 17.7 trillion.

Excluding price effects, the growth was somewhat more modest 4.7 PC. Cross-border sales of services increased by 7pc, to 5.25 trillion.

Trade growth between the countries last year, may be a sign that the growing political uncertainty has less impact on international economic activity than could be expected.

Some economists measure used to test how globalization is the comparison between trade growth and GDP growth. As the Diagram shows, global trade grew twice faster than world GDP in recent decades. The exceptions were periods of recession and a decade and a half until 2016, a period that raised the issue that the pace of globalization slowed down.

But last year, the acceleration of world trade growth gives some reason to believe that the previous five-year period of unusually low growth of trade may be declining, but not as a result of structural changes, policy shifts or a reaction to political changes.

The main engine of trade is, as a rule, economic growth. While there is a liberal international trading system, enterprises can access opportunities for growth in foreign markets, and the increase of prosperity in the house encourages the acquisition of goods and services abroad.

The WTO said last week, as the components of economic growth affects the structure of trade. In General, investment spending on plant, machinery, buildings and infrastructure is the most import-intensive activity in most countries, because many materials have to be obtained abroad. Consumer spending is lower with non-investment government spending, the least import-intensive component of domestic economic growth.

The report stresses that investments were particularly strong last year. This was especially so in Asia, which accounts for 60pc of the global increase in imports, proving that the East is so much opportunity for the West, as it is a competitive threat.

Countries and companies involved in natural resources have benefited from higher commodity prices, which in turn will lead to increased investment in the extraction of raw materials.

In value terms last year, high growth of world exports was recorded for fuel and mining products (28pc), while agricultural exports rose more modestly (9pc). Industrial goods, which accounted for over two thirds of the total volume of merchandise trade grew by 8. There was an increase for most categories of services, including maintenance of computers (+7units), tourism and travel (+8) and transport (+9pc).

The report of the WTO and its statistical database will enable cross-country comparisons to be easily made. Here in Ireland often acts surprisingly well, considering the small size of the country. Of the 163 members, Ireland is the 33rd largest exporters of goods in absolute terms. Even more striking Ireland’s position in international trade in services.

Thanks to technology and multinational corporations using Ireland as an international centre for the provision of services in the country is the 7th largest exporter of services in the world. For every$ 100 spent on cross-border services worldwide, 3.5 $is charged to Ireland Inc.

In addition, the service account for 58pc of the total exports of Ireland, according to the latest data of the WTO. Among developed countries, only Cyprus, Luxembourg and Malta provide export services from the sale of export goods, to a greater extent. (In the context of a British exit from the EU, it is worth noting that the UK also has a relatively high share of services in international trade, 44pc.) And the dominance of services in the Irish export structure is growing. Ireland recorded the highest growth of commercial service exports among the “top traders” in 2017, with another increase 20pcs. There is also good news for the wider continent. The growth of European trade after several years of less than stellar performance. The EU is the largest regional trading bloc in the world, accounting for one third of global trade.

In the past year, the pace of export growth in the EU and with non-members hit 10pcs. Any analysis of global trade patterns to mention China. Since joining the WTO in 2001, Chinese trade flourished. Now the world’s largest exporter and second largest importer after the United States.

Trade superpower in Asia has increased for all categories of goods and services, but one trend may be of interest in Ireland. In 2000, the share of China accounted for only 3pc of the world’s food imports. That has more than tripled, to 10pc last year.

Chinese consumers have long been a target for Irish agriculture companies and marketeers. When British exit from the EU inevitable, and a large decline in sales in the UK a real prospect, finding new markets is imperative. Recently in Beijing to lift the ban on Irish beef-it’s a positive sign.

Of course, the rise of China has created tensions. The most populous country in the world was one of the main goals of the US President Donald trump and his advisers, who blamed him for American jobs. Although the recent tariff measures against China, the administration trump dangerously provocative, many of his complaints were handed over by previous administrations, and are common to other countries. China has not liberalized its economy as expected. There is a strong protest over the subsidies to state owned or parastatal companies, violations of intellectual property rights and forced technology transfer to companies located there.

Concerns about the safety of Chinese FDI in Europe (and USA) is also fast rise on the agenda.

However, the White house against globalization has changed the dynamics of world trade policy. Along with China, America’s allies in Asia, Europe and North America were targeted with tariffs.

Trade Advisor to trump, Peter Navarro, said of the 16 countries with the trade deficit “problem” with the United States, of which Ireland is one. Trading cease-fire in talks 10 days ago between the President trump and President of the European Commission Jean-Claude Juncker was positive, but it remains to be seen whether this is temporary or whether the American side will return to bellicose rhetoric on transatlantic trade.

The WTO occupies a Central place in resolving disputes among its members for decades. But the judicial system in Geneva more and more clogged. This is compounded by the failure of trump Administration, to fill the vacancy by the court. 2019 may be less than of judges to hear an increasing number of cases.

The US might even withdraw from the organization – trump has threatened to completely withdraw us during his election campaign.

While last week the WTO, the survey predicts stronger growth in trade than GDP in 2018, he also notes that there was a sudden drop in global export orders in the beginning of this year, which he describes as “anti-trade rhetoric.”

The future of world trade depends on how much of the rhetoric the White house is transformed into further action. If this happens, the liberalization of the postwar global trading system will be threatened.

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