International trade in a different kind of globalisation. Challenges and future trends
Lucian Cernat, Carmen Díaz-Mora, Javier Pérez, Christian Volpe and Enrique Feás.
The Rafael del Pino Foundation and the Spanish Association of International Economics and Finance organised, on 14 June 2023, the face-to-face dialogue entitled "International trade in a different globalisation. Challenges and future trends", in which the following speakers took part Lucian Cernat, Carmen Díaz-Mora, Javier Pérez, Christian Volpe y Enrique Feás.
Carmen Díaz-MoraProfessor of Applied Economics at the University of Castilla-La Mancha. I teach at the Faculty of Law and Social Sciences in Toledo. Master in European Economics by the Instituto Universitario Ortega y Gasset (attached to the Complutense University of Madrid) and PhD in Economics and Business Administration by the University of Castilla-La Mancha. He was a visiting researcher at the School of Economics of the University of Nottingham (UK) in 2000 and at the Scuolad di Economia e Management (Universita Degli Studi Firenze) in 2016. His research activity focuses on the field of European economic integration, international trade and international production fragmentation and outsourcing strategies, resulting in several publications in national and international journals and participations in national and international conferences. She is a member of the IsPEC research group https://blog.uclm.es/grupo-eei/ She has recently been appointed Delegate of the Rector for Equality Policies at the University of Castilla-La Mancha (June 2022). From 2014 to 2019 she has been the President of the Board of Directors of the Free Economic Association (www.alde.es) and since 2015 I co-direct the Master in International Business at UCLM. In 2021, I have beenPresident of Advisory Committee 8 (Economics and Business Studies) of the National Commission on Research Activity (CNEAI) of the Spanish National Research Council (CNEAI). National Agency for Quality Assessment and Accreditation (ANECA).
Lucian Cernat is Chief Trade Economist at the European Commission. With almost 20 years of experience in the field of trade policy, he provides economic advice on EU trade policy, influencing over €4.5 trillion of EU trade flows per year. He is a regular speaker at high-level events alongside award-winning economists and his publications are quoted in leading international journals (Financial Times, Wall Street Journal) and other media. He is also a regular columnist for VoxEU, where he writes on a variety of trade-related topics. His latest article on "Trade Policy Analysis 2.0" was among the top 10 most read economic articles at the end of 2014. Until 2008, Dr. Cernat held various positions at the United Nations in Geneva related to trade and development issues. He has written extensively on the development impact of trade policies, WTO negotiations, preferential access to the EU market, regional trade agreements, competition policy and corporate governance. Prior to his UN experience, he was a trade negotiator at the Romanian Ministry of Foreign Affairs. Lucian Cernat obtained his PhD from the University of Manchester and a postgraduate degree from the University of Oxford.
Javier PérezDirector of the International and Euro Area Economics Department of the Banco de España and member of the Eurosystem's International Relations Committee. International Relations Committee of the Eurosystem. Before joining the Banco de España in 2008, he worked at the European Central Bank, the Universidad Pablo de Olavide in Seville (Spain), the Fundación para la Investigación centrA (within the Spanish regional public administration), and the Universidad Complutense de Madrid. He holds a PhD in Economics (with honours) from the latter university. He has also been a member of the Eurosystem's Monetary Policy Committee and its public finance sub-structure, the Working Group on Public Finances. Public Finance. He is a regular contributor to academic and policy conferences and publications. His main fields of interest are macroeconomics (with a focus on fiscal policies and European integration and institutions), and data analysis (forecasting; textual analysis; geopolitics and socio-economic tensions; computational economics).
Christian Volpe Martincus is a Senior Economist in the Integration and Trade Sector (INT) of the Inter-American Development Bank (IDB). He previously worked for the Ministry of Economy of the Province of Buenos Aires and was an advisor to the MERCOSUR Commission of the Argentine Chamber of Deputies. He manages and leads the IDB's research on trade and investment policies associated with operational interventions, including impact evaluations of these interventions and INT's academic networks and initiatives ELSNIT, TIGN and INT's Trade Policy Research Seminar Series. He has also advised several governments, both in Latin America and the Caribbean and OECD countries, on trade and investment facilitation and promotion and the evaluation of the respective programmes. Christian holds a PhD in Economics from the University of Bonn (Germany) and a Master in Economics from the National University of La Plata (Argentina). He has presented papers at numerous international academic and policy workshops and conferences and has published on international trade and economic geography in several international professional journals. Christian is a research fellow at CESifo and associate editor of the Review of International Economics.
Enrique Feás is Senior Research Fellow at the Elcano Royal Institute, independent consultant and Associate Professor at IE University and IE School of Global and Public Affairs. He is a Commercial Technician and State Economist on leave of absence. Previously, he has been Economic and Commercial Counsellor at the Spanish Embassies in Egypt and the Philippines, Deputy Director of Trade Policy with Mediterranean Countries, Africa and the Middle East and Advisor for International Affairs to the Vice President and Minister of Economy, Deputy Assistant Director of the Deputy Directorate of Studies of the Ministry of Trade and Deputy Director of the Spanish Commercial Information magazines. He is founder and co-editor of the economic policy blog NewDeal Blogcolumnist for the daily Vozpópuli and co-author of the book "La Unión hace la fuerza: Europa ante los desafíos del siglo XXI", published by Deusto. He is a regular contributor to various media.
Summary:
The Rafael del Pino Foundation and the Spanish Association of International Economics and Finance organised on 14 June 2023 the dialogue entitled "International trade in a different globalisation. Challenges and future trends". Speakers at the event included Carmen Díaz-Mora, Professor of Applied Economics at the University of Castilla-La Mancha; Lucian Cernat, Chief Trade Economist at the European Commission; Javier Pérez, Director of the International and Euro Area Economics Department at the Bank of Spain and member of the Eurosystem's International Relations Committee; and Christian Volpe Martincus, Senior Economist in the Integration and Trade Sector (INT) at the Inter-American Development Bank (IDB).
Carmen Díaz-Mora: Since the great recession, trade as a percentage of GDP has been stagnating, and there has been a certain slowdown in the globalisation process. In the EU it has not fallen, but rather stagnated. The ratio of services to GDP has continued to grow. Globalisation is changing, becoming less material and more linked to services. Hyperglobalisation was more linked to global value chains and now global value chains are slowing down. Services are increasing and digital services are increasing the most.
Lucian Cernat: I am an optimist because globalisation is part of our DNA. We need exchanges of goods and services, and much more in the future, especially those that are part of the product, such as design. Spain is very well positioned in this type of services. There are economic policies that can increase this phenomenon.
Javier Pérez: The globalisation narrative was a winning narrative in many dimensions, not just trade. But when thinking about the geopolitical conditioning factor, part of that becomes a certain vulnerability. In the European case, the dependence is very large in goods and services; in capital movements the EU is a giant. The question is if what I buy or sell to others is very concentrated and I cannot substitute it, such as gas from Russia, this is a problem. This dependence is very multidimensional, but it is another side of the winning narrative, which is that of openness.
Christian Volpe Martincus: We are going to see a change in the form of globalisation and in its specific modalities. We continue to see new foreign direct investment. There are countries and sectors where it is decreasing and others where it is increasing, but overall it is growing. The reconfiguration is going to come from cross-sectoral changes. There are certain sectors that, after the pandemic, have benefited. Others will be shaped by digitalisation and corporate social responsibility, by demand, by shareholder demand and by business needs.
Javier Pérez: Industrial policy is a bad idea. If we agree with the winning narrative of comparative advantage, specialisation, if we are facing these risks of fragmentation, how do you respond to them? Reaction policies are about fragmentation, about ending up in a bad scenario. Fragmentation scenarios act as a brake on this. In what direction should industrial policy be made? It can be done to reduce vulnerability, for example in gas. When you want to get out of it, you think of solar panels, which depend on rare shops, thus changing the dependency. Globalisation is not solved with public money because the problems go deeper. There must be proper regulation and a reduction of vulnerabilities.
Christian Volpe Martincus: Latin America can play a central role in services. The region is very ready to become a provider of intermediate services, especially if it prepares for the changes that new technologies, such as artificial intelligence, will bring. It needs to generate human capital that is capable of working with these new technologies. The region can also play a central role in food supply. It occupies and is in a position to occupy an even more important role as a global food supplier in ensuring food security in a number of countries.
Lucian Cernat: The role of SMEs in the new framework is more important than we think because most exporting companies are SMEs. They are agile, flexible, not dependent on customers or products. Their adaptation is easier than that of large companies. We need policies to make it easier for SMEs to trade. Some trade policies put more barriers to SMEs than to large companies.
Carmen Díaz-Mora: The shift to more customised production needs an SME that is able to respond to changes in demand.
Christian Volpe Martincus: When you look at the picture, you see the big companies, but the picture changes dramatically when you look at the film. After two and a half decades, small companies are responsible for more than two thirds of the economy's new export products. They are companies in a position to innovate, to meet emerging demands. Policies are needed to remove information barriers, such as export promotion policy, or to reduce policy biases, such as trade facilitation policy.
Lucian Cernat: SMEs are the ants, which can survive in an apocalypse. Dinosaurs, which are the big companies, are not. We can get unicorns from ants, not dinosaurs.
Carmen Díaz-Mora: All companies that export linked to value chains are more stable, so we need to promote linkages with these chains. We also need to dedicate more resources to human capital for the internationalisation of companies.
Christian Volpe Martincus: Companies that are suppliers of foreign companies established in the country are more likely to become exporters. Therefore, linking with value chains can play a central role in boosting SME exports.
Javier Pérez: In certain parts of the world there is a need to look for alternative payment systems because of sanctions. But we are not in the transition from the dollar world to the renmimbi world because the renmimbi financial market is very small. There is a vulnerability in payments in the sense of concentration in certain countries or suppliers, which makes geopolitics very multifaceted.
Carmen Díaz-Mora: These are delayed effects. Russia is holding out longer than we think and the question is whether Europe is willing to wait that long.
Christian Volpe Martincus: There is a role for the WTO in this scenario. A world without rules is the law of the jungle. A lot of work is being done in the WTO despite the international context. An investment facilitation agreement is being negotiated that will be very important. There are also negotiations on e-commerce, which is moving fast and whose dimension and potential we do not know because statistics are lacking.
Lucian Cernat: Can the WTO be reformed? We should because the WTO has several pillars, tariffs, dispute settlement and the third and most important pillar: transparency and regulatory cooperation. This pillar is not in crisis. We should strengthen it for the benefit of developing countries.
Carmen Díaz-Mora: I don't think we can return in the short term to the multilateralism of the WTO because the United States is not in that line, but rather it is in the line of making bilateral agreements.
Javier Pérez: This reform also involves rethinking the governance of multilateral organisations, which are governed by dinosaurs when the ants have changed.
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