Building back better needs to include getting back to basics
Global trade can and should be a driving force
The term “build back better” has become an oft-repeated refrain by politicians from around the world that want to ensure progressive policies become the dominant post-pandemic prescription.
While it has been used in a variety of contexts over the years, pre-Covid, Building Back Better referred to a 2015 plan endorsed by the UN General Assembly to help mitigate against natural disasters and other risks including climate change.
It was then adopted by the Joe Biden presidential campaign as a slogan and today its basically achieved full-blown catchphrase status to describe a post-pandemic world that is more inclusive and sustainable – with more prosperous sometimes thrown in for good measure.
Combatting climate change, making society fairer and creating jobs and growth sounds rather good to a world that has been in lockdown for over a year and is craving as much of a return to normalcy as is possible.
But can we really have it all? Politicians and businesses are certainly signing on and telling us we can reduce GHG emissions and grow our economy and create the jobs of the future.
For example, at the recent UK-hosted G7, the official communique, aptly titled “Our shared agenda for global action to build back better”, said all the right things about ending the pandemic, reinvigorating the economy, protecting the environment and embracing shared values.
However, the true nuts are bolts of a global plan for growth are largely absent.
For example, international trade can and should be front and centre to help global commerce roar back to life. As we have noted in previous commentaries, the WTO has predicted that global trade will continue to struggle and not reach pre-pandemic levels for the foreseeable future.
According to recent forecasts, the volume of world merchandise trade is expected to increase by 8.0% in 2021 after having fallen 5.3% in 2020 – one of the most abrupt collapses in global trade ever recorded.
However, after a healthy uptick this year, trade growth will slow to 4.0% next year which will still leave it below pre-pandemic levels. In other words, the positive outlook is only short-term.
The WTO identifies a few reasons for the bleak outlook beyond this year including the persistence of regional disparities, weakness in global services trade and slower vaccine uptake in much of the developing world.
This is precisely where the G7 needs to step up and move beyond catchphrases to concrete action.
Around the world, there is a demonstrable waning of ambition when it comes to embracing free and open trade. We must remember that trade liberalization and related policies fueled growth, poverty reduction and economic development around the world for over a generation.
Trade liberalization literally lifted people out of abject poverty and created a global middle-class that is one of the more remarkable economic turnarounds in history.
Now we go to great lengths to replace “free” for “fair” and talk about the virtues of self sufficiency as though trading with the world is somehow a discredited public policy option.
History has shown clearly the opposite is true. That is why we must play to our strengths, embrace global trade, and take a good look at what has worked for decades. The first step to building back better is to get back to basics.