The global trade system is at a critical inflection point. The rules-based order embodied by the WTO is being challenged by concerns about national economic security and protectionist reflexes around the world, putting the transatlantic consensus in favour of trade liberalisation, and the global institutions that underpin it, at risk. That challenge comes amid China’s increasingly dominant role in regional and global trade patterns, fragile economic growth and continued concerns about inequality. Taken together, the existing model for global trade is facing stern headwinds.
Global trade patterns are shifting in response to China’s growing influence, but also due to technological developments. Digitisation and blockchain technologies will change our understanding of traditional supply chains, while the Fourth Industrial Revolution and the common challenge of sustainable energy promise to be disruptive to those sectors that make up the backbone of global trade manufacturing, logistics and shipping. Understanding the risks and identifying new opportunities will be essential.
Geopolitical volatility will impact all three regional hubs of global trade: the United States, Europe and East Asia. In Europe, Brexit risks fragmenting the world’s largest single market, sending political and economic shockwaves through the continent. In East Asia, the increasing economic expansion of China, seen in the hugely ambitious Belt and Road initiative, is giving a new importance to Eurasia as a trading arena. Meanwhile, the U.S. Administration’s approach to global trade raises the question whether the existing institutional landscape, such as the WTO, can survive without meaningful reform.
The changes to the institutional, technological and political frameworks which have underpinned global trade in recent decades merit careful reflection and point to alternative futures for the entire system. And those futures are viewed differently in the US, Europe and Asia.
The AIG Global Trade series will bring together policy-makers, business leaders, and experts from thinktanks and academia to debate the complex interplay of factors shaping the global trade system. The aim is to address the challenges and opportunities which these developments present to government and business, and to articulate approaches and solutions which strengthen the commitment to global trade.