AG: Inequality is a complex phenomenon. It is the result of diverse and diverse economic forces. It is difficult to define, measure and compare between countries. However, it is important to distinguish two different dimensions of inequality. First, we have what we call global inequality. It is the inequality between people in the world, regardless of their country of residence. Second, there is inequality between people within the same country. Global inequality far exceeds inequality within a single country. A recent World Bank Group study by Lakner and Milanovic found that global inequality remains very high. However, global inequality has declined significantly since the 2000s. This is largely due to the growing wealth of developing countries, especially China, but to a lesser extent India and others.

Trade is fully at the root of the success of these developing countries. However, more trade is needed to eradicate poverty and reduce global inequality. Tarlea F (2018), "The Suspense of Trade Agreements," VoxEU.org, April 7. Note: "Abolish" panel: All unfairly unforeseen agreements (at any time) will be deleted. Panel "Falsely predicted implementation": All falsely predicted Chinese agreements (in each period) are applied. RCEP Panel: Negotiating members agree on the same RTA for each period. Any percentage change in the volume of total exports (or GDP) at the beginning of the reference period. Weighted average of changes at the country level using initial GDP as a weighting. Baldwin, R, and J Lopez-Gonzalez (2015), "Supply-chain trade: a portrait of global patterns and several testable hypothesisses," The World Economy 38(11): 1682-1721. The objection may be based on different grounds. Part of the opposition may relate to the content of the agreement – there are provisions in these agreements that are contentious; part of it may be related to a misunderstanding of the content of the agreements.

Resistance may also arise from the perceived effects of the agreement. While the agreement may benefit society as a whole, there are also concerns for groups or individuals who may be affected or who may not have the skills to seize opportunities. In domestic political debate, resistance to trade deals can also be used as a bargaining chip to achieve other goals, or sometimes it can also constitute an ideology. AG: At 3% in 2015, global trade is growing slowly for the fourth consecutive year, compared to the pre-crisis average of 7%. The evolution of world trade is also slightly lower than real GDP growth. In this rather negative context, we are witnessing a new energy in the trade negotiations. Comparing planned and actual RTAs yields four possible outcomes: true positives, true negatives, false negatives, and false positives. Of these, two cases are of particular interest: the false negative, if the model falsely predicts the absence of an existing agreement, and the false positive, if the model falsely predicts an actual missing agreement. We can now use the list of false negatives and false positives to quantify the trade and social effects of a change in the overall structure of trade costs by changing the vector of signed (or unsigned) agreements for each pair of countries. And the last element is to get involved. We must also realize that there is a lot of irrationality in public discourse. The fact is that trade agreements are necessary to cope with growing interdependencies and can lead to welfare gains.

Policymakers need to share evidence and educate the wider public as they grapple with some of the unfounded arguments that are being made. Tags: CVM, ACR, trade deals, China, Measurement AG: Throughout history, we have seen that it is sometimes easier for policymakers to blame domestic problems on foreigners. This is the trend behind protectionism or isolationism. But the reality is that any quick action to keep foreigners at bay – whether it`s goods or services, capital, ideas, or even people – is like trying to find a quick fix. And there is no silver bullet. There are difficult and important questions that need to be answered about how to manage the costs of waste and let everyone enjoy the benefits of trading. Although most of the measures are currently being implemented at the mega-regional level, such as the Trans-Pacific Partnership (TPP) or TTIP, it should not be forgotten that the WTO has achieved significant successes with the Trade Facilitation Agreement, the extension of the Information Technology Agreement and the decision to abolish agricultural export subsidies. Among the economic determinants of an RTA, the presence of global value chains (GCCs) should not be overlooked. Egger et al. (2008) were a first attempt to introduce the role of multinational and intra-industry trade as determinants of self-selection in RTAs.

Now that methods and data on the intensity of GMCs are available (Timmer et al.2013), new insights into this determinant can be shed. Therefore, the first finding is that CMGs (their actual intensity as measured by value-added income) help predict RTAs. The fragmentation of production processes by multinational companies creates a "demand" for reduced trade costs. Figure 1 provides preliminary evidence confirming that the majority of value-added trade takes place between countries that have concluded preferential trade agreements. How important is trade to the global economy? The key question now is whether these mega-regional trade agreements will facilitate the integration of developing countries into the global economy. What we have seen with the World Bank Group suggests that the TPP can make significant production gains in member countries. Developing countries, for example, such as Malaysia and Vietnam, are likely to reap the most benefits. However, in order to reap the potential benefits of PPPs, countries should complement their implementation with productivity-enhancing domestic reforms that, among other things, would address supply-side constraints, including by creating a healthy business climate, removing barriers to foreign direct investment, and enhancing competition. Pairs of countries choose themselves from regional trade agreements, and this endogeneity distorts the estimation of the impact of such agreements in a gravitational framework. This column uses a framework to predict which countries should conduct RTAs solely on the basis of economic determinants, including global value chains, and compares this "natural" geography of agreements with actual geography.

The results suggest that the endogenous geography of RTAs is shaped by the development of GMCs. According to Baier and Bergstrand (2004), our dependent variable takes the value of 1 if both countries in a pair are members of the same RTA that year, and if not zero. The occurrence of zeros and some is explained by the usual economic determinants of the existence of RTAs – market size, similarity in economic size, comparative advantage, proximity to countries, number of agreements signed elsewhere and bilateral value of CVM income in both countries (all time-dependent variables go back five years). Taking into account 159 countries and therefore 159x158/2 pairs of countries over the period 1994-2015, our estimate confirms the role of the usual determinants and the contribution of GMCs in predicting the occurrence of RTAs. However, care must be taken to ensure that the change in the bilateral structure of trade costs affects the entire matrix of global trade costs (Head and Mayer 2014). The concepts of multilateral resistance (Anderson and van Wincoop, 2003) can be seen as general equilibrium trade cost indices that will vary with the implementation of the new cost geography of bilateral trade. Here, structural gravity is necessary in general equilibrium. We follow the method developed by Yotov et al. (2017) to derive the general equilibrium effects of a structural gravitational estimate. The procedure consists of four steps: a) solving the basic gravity equation, b) defining the counterfactual scenario, c) solving the counterfactual gravity model, and d) creating the relevant general equilibrium indices. However, there are concerns that mega-regional agreements could undermine the relevance of the multilateral trading system.

We need to find creative ways to give a new energy boost to the system, including agreements under the aegis of the WTO, which could then be extended to other non-members. It also means strengthening the monitoring and evaluation of the main provisions of these agreements by the WTO and other international organisations, and then refocusing the WTO negotiations on reducing trade costs – a very relevant approach. AG: There are different actors and different stakeholders in the public debate in different countries, and they bring their views – their very important points of view – to the table, and the negotiations have to take their course. However, it is important to remember that for trade to continue to bring its economic benefits, it must be underpinned by strict rules and disciplines to support market integration. Globalization needs these rules in order to be able to deploy its economic benefits. Through multilateral cooperation and economic integration, through trade agreements, we will be better able to cope with globalisation. Alongside international cooperation, national policies in the areas of education, health, safety nets, improving the business environment and improving infrastructure are important for globalization to work for all. WASHINGTON, September 14, 2016 – In this interview with Anabel Gonzalez, executive director of the World Bank Group`s Global Practice Trade & Competitiveness, discusses mega-regional trade agreements, the role of trade in reducing inequality, and the importance of international cooperation and domestic policy to make globalization work for all. .