Thinking Aloud: Volume V, Issue 3

This August 2018 issue of Thinking Aloud focuses on “Emerging challenges in the global trade regime”. The first article on “Can the world afford a full-scale trade war?” presents an analysis using the GTAP model, where a scenario of a large scale trade war between the USA and China would result in export losses for all major economies in the world. The largest loss in exports would be for China as its exports would decline by 2.7%, which is equivalent to US$ 61 billion. In the case of the USA, the export loss would be 2%, which is equivalent to US$ 31 billion. Four major economies in South Asia, i.e. Bangladesh, India, Pakistan and Sri Lanka, would also experience a decline in exports. The article highlights the necessity to reemphasize the importance of a rules-based global trade regime and re-energize the WTO. The second-page article titled “Is trade policy in South Asia in the right direction?” highlights the need for re-thinking in the trade policies in the South Asian countries in three major areas. First, the effort for further trade liberalization needs to be continued with the aim of effective integration with the regional and global value chains. Second, the trade policy needs to present an action plan to deal with the non-tariff barriers, trade facilitation and supply side issues both at home and in export destination countries. And, third, the trade policy needs to be pro-active to effectively engage with multilateral, regional and bilateral trading arrangements.  The third page contains two articles focusing on the trade scenario in Bangladesh and the global context. The article titled “Overwhelming concentration of the export basket in Bangladesh” argues that in the context of rising export concentration in Bangladesh, appropriate sector-specific policy support should be provided for the export-oriented sectors with potential for greater export diversification, specially ago-processing, leather and footwear, electronics, pharmaceuticals, and ICT sectors. The article titled “WTO in the new trade policy crisis” highlights that the escalation of trade tensions would have damaging knock-on effects in today’s interconnected economy which would reach every economy and it would not spare the LDCs. The final page draws attention to the events that took place in the month of July.