Jason Furman, Practice of Economic Policy Professor at Harvard University, emphasized that globalization over the past 25 years has significantly improved human welfare. Despite a global population increase of two billion, more than one billion people have been lifted out of extreme poverty, leading to a 70% reduction in poverty worldwide. Key human development indicators like life expectancy, maternal mortality and literacy have also seen remarkable gains. Mr Furman attributed these improvements to economic globalization, including the movement of goods, services, capital, people and ideas across borders.
However, he noted the paradox that despite these achievements, globalization faces increasing scepticism and political resistance. Mr Furman pointed out that the growing backlash against globalization stems from widespread misconceptions about its effects, including that it only benefits a few while leaving the majority behind. This notion overlooks the role globalization has played in reducing global inequality, particularly between 2000 and 2020. Countries like China and India, which embraced global trade, have seen tremendous economic growth, while those that distanced themselves from globalization have largely missed out, he said.
Another misunderstanding is the belief that trade is fundamentally different from technological innovation. Mr Furman used an analogy to explain this: “Imagine we invented a machine that turns soybeans into cars. Trade operates similarly — you ship soybeans to one country, and in return, you receive cars.” This process mirrors the benefits of technological advancements, which people generally accept – yet trade is often viewed with suspicion, he added.
Mr Furman also addressed the misconception surrounding tariffs, which are often seen as a way to protect domestic industries from foreign competition. In reality, tariffs raise domestic prices and harm consumers. “Tariffs are paid by your own consumers,” Mr Furman emphasized, highlighting that protectionist policies can hurt the very industries they aim to protect.
So, why is the backlash against globalization so intense now? Professor Furman said this trend has intensified especially in developed countries. Factors such as rising inequality, concerns over immigration, and fears about supply chain vulnerabilities have fuelled protectionist sentiments. Additionally, he said, geopolitical shifts have also made countries more focused on self-sufficiency, further contributing to the anti-globalization narrative.
He also noted the remarkable resilience trade has shown in the most difficult times: “I have been hearing about the end of globalization for pretty much my entire career. Yet, I think globalization is a lot more like a dandelion than it is like an orchid; dandelions can thrive no matter what you throw at them. Orchids are incredibly sensitive and need to be nurtured with exactly the right conditions. Trade is a dandelion in part because the benefits of it are so large.”
Looking forward, Mr Furman underlined the need to defend global trade while taking proactive steps to ensure that its benefits are more widely shared. One potential solution is fostering greater plurilateralism, where agreements are made between groups of countries, encouraging others to join over time.
“We need to create agreements that encourage other countries to follow, creating a natural system of leaders and followers,” he suggested. Furthermore, addressing inequality through policies that complement trade — such as investing in education, workforce training and social safety nets — would help mitigate the adverse effects on those who feel left behind.
Mr Furman concluded by stressing that as the world navigates a period of geopolitical uncertainty, the challenge is to build a more inclusive and resilient global trade system. “The question is not whether we can afford to keep globalizing, but whether we can afford not to,” he said, urging policymakers to embrace trade while addressing its shortcomings through thoughtful reforms.
DG Okonjo-Iweala underscored that Mr Furman’s insights align with recent WTO reports that emphasize how globalization has delivered positive outcomes but has not benefited everyone equally. The World Trade Report 2024 titled “Trade and Inclusiveness: Making Trade Work for All, launched on the first day of the Public Forum, underlines the fact that some developing nations still have not fully reaped the gains of global trade, yet they remain positive about its benefits.
“It’s amazing that some of them who have not benefited still believe in it and are still looking for answers from the trading system to deliver for them,” DG Okonjo-Iweala said.
DG Okonjo-Iweala emphasized that trade is currently facing significant challenges due to recent shocks like the COVID-19 pandemic, the war in Ukraine and climate change. These crises have exposed vulnerabilities in supply chains, leading to product shortages, price spikes and inflation in advanced economies. While some developing countries face financial instability, trade has shown resilience, helping sustain the global economy, she said.
“There is absolutely no doubt that trade is facing challenging times, and we look forward to hearing how trade can continue to pull the global economy along, continue to make a difference in people’s lives, continue to be a source of solutions for today’s global challenges.”
The WTO at 30: Evolution or Revolution?
The morning session of Day 2 of the Public Forum also featured a discussion on the successes and shortcomings of the multilateral system as it turns 30 years old and what comes next. The discussion highlighted the many challenges the system faces, including reforming the dispute settlement system, giving new momentum to trade negotiations and addressing geopolitical tensions.
Indonesia’s former Minister of Trade Mari Pangestu emphasized the WTO’s role in empowering developing countries, citing the formation of cohesive groups like the G20 and G33. She noted: “Trade is a means to development … you need complementary policies to enable the distribution of benefits.”
Scott Lincicome, Vice President of General Economics at the Cato Institute, countered pessimism about the trading system, noting that global trade has grown significantly despite geopolitical challenges, with 75% of world trade being conducted under WTO rules. Also, governments are continuing to show their support for the WTO system, whether it is through multilateral or plurilateral agreements. “These things are still happening, and they are still happening at the WTO, so declaring the death of the WTO is not just premature, it is pretty much misguided.”
Robert Howse, Professor of International Law at New York University, acknowledged the decline of neoliberalism and the need for the WTO to adapt to new power dynamics and geopolitical realities.
He stressed the need to use “the institutional human capital in the WTO to make trade improve the lives of people and make it possible for marginalized or relatively disempowered groups to benefit from the opportunities provided by the trading system.”
Federico Banos-Lindner, Senior Vice-President of Government Relations and Public Affairs at DP World, provided the perspective of a company operating in 80 countries and managing 11% of global trade. He noted the growing disparity between public and private sector perceptions of globalization and stressed the crucial role of effective governance. Without it, “we will have tariffs, we’ll have quotas, we’ll have trade barriers, all of which can fluctuate quite unpredictably,” he said.
Dr Bright Okogu, WTO Chief of Staff, emphasized the outcomes achieved at the 13th Ministerial Conference (MC13) in Abu Dhabi in February 2024, including progress on addressing the needs of developing and least developed countries (LDCs), the extension of the e-commerce moratorium and the accession of two new members: Comoros and Timor-Leste. He also noted that the dispute settlement system remains active, with 36 new cases since 2019 and six active panels. “The system needs some rejuvenation, but it remains functional,” he said.
Agriculture and inclusivity
A high-level session in the afternoon addressed how trade in agriculture can be improved to ensure more people benefit from it. The session, moderated by former European Union Trade Commissioner Cecilia Malmström, discussed policies that are needed to build a progressive, inclusive and sustainable global agricultural sector and whether agricultural policy in general requires a fundamental rethink.
Beth Bechdol, Deputy Director-General of the UN Food and Agriculture Organization, Inu Manak, a fellow for trade policy with the US-based Council on Foreign Relations, Diana Mondino, Minister of Foreign Affairs of Argentina, and Andrea Porro, Secretary General of the World Farmers Organisation all participated in the dialogue, offering their different perspectives.
The need to keep agricultural markets open, the impact of conflicts and the climate crises on food security and the importance of including farmers in discussions on agricultural trade were among the issues discussed during the session.
Digital trade and disability inclusion
A Forum session dedicated to digital trade and disability inclusiveness marked the first joint activity between the WTO, UN Trade and Development, the International Trade Centre (ITC) and the International Labour Organization (ILO) under a new informal staff-level Inter-Agency Technical Working Group on Trade and Disability Inclusion. The initiative aims to assist governments seeking to integrate and enhance disability inclusion within trade and development agendas and advocate for disability inclusion in trade agreements, policies and regulations.
The impact of international trade on persons with disabilities has been given little consideration in discussions on ensuring inclusive trade, speakers at the session said. Moderated by WTO Deputy Director-General Angela Ellard, speakers noted that trade has the potential to influence national governments’ ability to address barriers faced by persons with disabilities in areas such as infrastructure and social services. They also examined how digital technologies can be leveraged to foster inclusive employment practices and help realize decent working conditions and adequate skills for all.
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