World Trade Organization Director-General Roberto Azevedo has cautioned against blaming world trade for unemployment, saying a number of factors need to be taken into consideration when jobs begin to disappear.
Globalization and world trade have come under fire by President-elect Donald Trump as primary causes for people losing their jobs in the United States, especially in manufacturing.
Azevedo has a different view, however. He has acknowledged that trade in some communities can be a disruptive factor and may cost jobs in industries affected by competitive, cheap imports. But that is far from the whole story, he noted.
“The fact is that while it does that, there is no doubt that trade brings overall benefits to the economy, particularly the economies that are more open and that embrace trade more freely,” he said. “These are the ones that develop most, that are growing faster and that have better chances of sustainable growth.”
Studies conducted by the WTO have shown that trade was a very small component in the labor market.
Out of every 10 jobs that are lost in an advanced economy, no more than two jobs are lost to trade, while the other eight jobs are lost to innovation, new technologies and higher productivity, the studies found.
As a consequence, most countries today fight and strive to achieve higher productivity through new technologies and innovation at an accelerated pace, Azevedo said.
“But, of course, the immediate effect of higher productivity is producing more with less people. So, the sub-product of this constant effort in technologies, innovation to be more productive, means that there will be less people to produce more," he added.
The discontent that this has aroused often gives way to protectionist leanings, Azevedo told VOA. He added that protectionism that is inward looking is usually not beneficial for a country’s economy.
“A lot of the problems that we see today, even from a political nature, have to do with instabilities in the labor market, for example. And those instabilities are not caused by trade," he said. “So, the answer to that is not protectionism.
“It is a much bigger effort there, which has to do with education. It has to do with preparing the work force for the demands of the modern market. It has to do with the support of the transition for the unemployed," Azevedo said.
Critical of trade deals
President-elect Trump has been very critical of the North American Free Trade Agreement (NAFTA), calling it “the worst trade deal in history.”
Trump has referred to NAFTA as a job killer for Americans because of the many manufacturing jobs that have gone south to Mexico where labor was cheaper. He also has been critical of the Trans-Pacific Partnership, worked out by the U.S., Japan and other Asian-Pacific countries, saying that he wanted to stop it.
Azevedo has shied away from weighing in on that controversy. As a trade negotiator and head of the WTO, he said he was cautious about analyzing situations on the basis of headlines.
“I think we have to look at the details. We have to look at what is actually done,” he said. “I think all this is very early to decide what the implications are. We have to responsibly wait and see what the effect will be on any decision in the early days of any administration. And, see what the overall strategic policy for trade will be."
Azevedo dismissed reports that Trump would leave the WTO. He said he had no indication of this and that he was ready for a conversation with Trump when he was ready to talk.
“I myself, as director-general, am convinced that the WTO can continue to be a very important partner of the United States and of the other major trading partners in this task of seeking a more dynamic growth environment globally,” Azevedo said. “Trade is a very important component of that. I have no doubts about that at all.”
To prove that point, Azevedo pointed to the successful outcomes of the last two WTO Ministerial Conferences in Bali and Nairobi, which he said had “energized the membership.”
He cited some “big-ticket” items that have resulted from those conferences. One was the Trade Facilitation Agreement, which “would increase exports around the world by $1 trillion,” he said.
Then, there was “the information technology agreement expansion, which covers $1.3 trillion in trade, the elimination of export subsidies for agricultural products — and there are other things on the way,” he said.
Acevedo said he understood the concerns people have about globalization and the need to help those who are harmed by it. But, he warned against stoking indiscriminate anti-globalization feelings, which he said appeared to be growing, particularly in the advanced economies.
“They tend to bring together with them feelings of intolerance, fear against what is different, fear against what is foreign," Azevedo said. "And those feelings can lose control and escalate very fast.”