Review of the Role of Trade in the Work of the Fund

Abstract

IMF staff regularly produces papers proposing new IMF policies, exploring options for reform, or reviewing existing IMF policies and operations. The following documents have been released and are included in this package: The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information. This review follows the Board-endorsed recommendation by the IEO in 2009 to have an assessment of the Fund's work on trade every five years. In addition to reviewing past work, this paper discusses key issues going forward towards a future trade agenda for the next five years. This reflects the need to operationalize the implications of the changing trade landscape, including the changing drivers of trade—such as global value chains (GVCs)—and the movement of the fulcrum of trade policy from multilateral rounds to regional and plurilateral deals. Growth in global trade has slowed as the benefits of past reforms and integration trends have matured and new reforms have languished. Trade grew more rapidly than global growth in the last few decades, contributing to higher growth and productivity by allowing countries to integrate and specialize in what they do best. But over the last few years global trade has slowed down as momentum has faded and GVCs in several regions have matured. Trade is an essential component of the global policy agenda to bolster growth. A new momentum is needed in policies amid heightened risks to global growth and concerns over a " new mediocre. " At a country and global level, trade reforms can complement and augment the benefits of other structural reforms, are an important element of infrastructure investment, and support the strengthening of policy and institutional frameworks. These reforms would enable countries to participate in GVCs. There are potentially important gains to be made from further trade integration and expansion of global supply chains. These gains come from traditional liberalization in many countries (in particular low-income countries and many emerging market economies, for which applied and bound tariffs remain about five times higher than advanced economies on average) and sectors (e.g., agriculture) including via unilateral efforts; from lowering barriers in new trade policy frontiers (services, regulations, investment); and from additional expansion of global supply chains, particularly to regions and countries that have missed out on these opportunities in the past. efforts. The finalization of the Bali agreement is welcome, but earlier impasses as well as the longstanding difficulties to …