Excerpt from CalChamber article
Globally, trade is at a very interesting juncture, Ambassador Jamal Khokhar, president and CEO from the Institute of the Americas, said to the attendees.
For more than the last half century, the U.S. has led the world in breaking down barriers to trade and in creating a fairer and freer international trading system based on market economics and the rule of law. Increased market access achieved through trade agreements has played a major role in the nation’s success as the world’s leading exporter.
This trend is changing, however, to a more inward view because “large segments of the population have not necessarily benefitted from the gains of trade liberalization that were promised them in the trade agreements,” the Ambassador said.
Ambassador Khokhar explained that it is not the trade agreement’s fault for this predicament. “We are better off with a liberalized trade agenda,” he said. The challenge instead is how to make the trade adjustments in terms of education, job training, job creation, adjusting with new technologies, recognizing that some manufacturing jobs will be lost and new ones created and there’s a balance between the two sides.
Why are trade agreements so difficult to negotiate, the Ambassador asked rhetorically?
“Trade agreements are the only instrument that oblige countries to internalize, ratify into domestic law the agreements reached among countries. So, they are enforceable and there are dispute resolution systems in place,” he said.
It is this package deal that allows countries to load up a variety of topics and problems into a trade agreement. However, the biggest change in trade is new technology, and that is presenting a whole host of new problems.
Global value chains account for 80% of world trade today. Global value chains are companies selling to each other, within the company, or all the people and all of goods from around the world that go into the production of a product or a service.
“In a world where goods, or even cattle cross the border before they’re processed and delivered…how do you define a rule of origin?” Ambassador Khokhar asked. “So global value chains are extremely important and yet our trade agreements are not set up any longer to deal with sophisticated global value chains.”
The debate the world is having about trade and whether it benefits or hurts countries needs to refocus on how technology changes everything.
The Ambassador sympathized that there are people who are hurt, who have lost jobs and explained that we as a society, not necessarily just government, need to think of how to address that and we need to think about how to retrain and create new jobs in some of these new companies.
“Look backwards if you want to, but I think the rest of the world is moving on and I think countries like the U.S. and key states like California control a lot of global leadership,” Ambassador Khokhar said in closing.