decade after the 2008 financial crisis, with trade wars a symptom of a deeper
malaise, according to UNCTAD’s Trade and Development Report 2018: Power,
Platforms and the Free Trade Delusion.
2017, growth remains spasmodic, and many countries are operating below
potential, states the report. This year is unlikely to see a change of gear.
immediate pressures are building around escalating tariffs and volatile
financial flows but behind these threats to global stability is a wider failure
– since 2008 – to address the inequities and imbalances of our hyperglobalized
continues to be dominated by big firms through their organization and control
of global value chains with, on average, the top 1% of each country’s exporting
firms accounting for more than half its exports.
rapid growth of trade from the mid-1990s up to the financial crisis, with
developing countries posting the fastest growth, including by trading more with
to trade more intensely to generate the same growth of output as in the past
and that too much of this trade has been unequal, with gains skewed in favour
of lead firms through a mixture of increased market concentration and control
of intangible assets.
China an exception – in the share of value added from manufacturing activities
in these chains and a rise in the share of pre- and post-production activities.
The rents captured at these ends of the chain have had a pronounced effect on
the distribution of income in all countries.
hikes, whether they amount to a trade war, will disrupt a trading system drawn
increasingly around value chains, although trade growth in 2018 will likely be
similar to that of 2017.
escalation could, through heightened uncertainty and reduced investment, bring
more damaging consequences in the medium term, the report says. These could be
particularly serious for countries already facing financial distress.
the profitability of firms in the tradeable sectors, they carry distributional
consequences and affect demand in ways that require careful assessment.
be an ideological fig leaf that has curtailed policy space for developing
countries and cut away protections for working people and small businesses,
even as it protects the rent-seeking proclivities of big firms.
of a degraded economic system and multilateral architecture, the report says,
while the disease is a vicious circle of corporate political capture and rising
inequality where money is used to gain political power and political power is
used to make money.
UNCTAD suggests returning to the Havana Charter, which was the initial attempt
to establish a managed multilateral trading system.
actions: tie trade discussions to a commitment to full employment and rising
wages, regulate predatory corporate behaviour and guarantee sufficient policy
space to ensure that countries can manage their integration in line with the
Sustainable Development Goals, adopted by the international community in 2015.