The Organization for Economic Cooperation and Development (OECD) held its global trade forum on November 3 in Paris, convening representatives from government, business and the OECD for a discussion on the prospects of future trade flows and the impact of government policy on economic growth.
Rob Mulligan, USCIB’s senior vice president for policy and government affairs, spoke on a panel at the global trade forum about alternative approaches to trade policies. He and other panelists discussed which polices will ensure that trade and investment continue to lead to growth and jobs. Other speakers on Mulligan’s panel included Ambassador Jonathan Fried, Canada’s representative to the World Trade Organization and Joakim Reiter, deputy secretary general of the United Nations Conference on Trade and Development (UNCTAD).
The day-long trade forum sought to take stock of changing global trade patterns and determine what can be done about the recent slowdown in trade growth. At the multilateral level, WTO negotiations remain stalled, while countries focus on regional and plurilateral initiatives to open markets among a smaller number of interested economies. The advent of the major emerging economies, as well as global value chains which have fragmented production around the world, have also contributed to dramatic shifts in trade patterns in recent decades.
Speaking on behalf of the Business and Industry Advisory Committee (BIAC) to the OECD and of USCIB member companies, Mulligan gave a business perspective on the future of trade.
“It is critical for governments to keep in mind the need for businesses to be adjusting, and often very quickly, in order to stay competitive and grow,” Mulligan said. “Government policies can have a significant impact on the moves by business positively or negatively.”
He explained that international companies have built global value chains to establish a framework for accessing foreign markets in a flexible and cost-efficient way. When constructing these global networks, companies consider a range of factors such as the potential market for their products, rule of law, strong infrastructure, skilled workforce and localization rules, and it is important for governments to understand how these factors drive the way companies pursue global markets.
Mulligan suggested that the same principles that the business community has advocated in the past will still apply in the future. Government should avoid unnecessary regulation, and when it is necessary, it should be designed as the least trade-restrictive approach that accomplishes the policy objective. He also stressed that governments should coordinate with each other to ensure that regulations are consistent across countries, as coherent regulatory regimes make it easier for companies to grow and create jobs.