Davos 2023: The state of global trade and investment – The European Sting – Critical News & Insights on European Politics, Economy, Foreign Affairs, Business & Technology

This article was produced in collaboration with The European Sting and the World Economic Forum.

Author: Joachim Monkelbaan, Lead, Climate Trade, World Economic Forum, Soumyajit Kar, Specialist, Sustainable Trade, World Economic Forum

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• Trade and investment emerged as an overarching theme at this year’s Annual Meeting in Davos.
• Geopolitical shocks, globalization, climate action, and technology are some of the factors likely to have a significant impact on trade and investment in the coming months and years.
• The role of indigenous peoples in the global trade and investment agenda was also an important issue.

Trade and investment emerged as an overarching theme at this year’s Annual Meeting in Davos. Over the past 12 months, despite widespread inflation. Since the COVID-19 pandemic, problems with his supply chain have lingered. Geopolitical shocks, including Russia’s invasion of Ukraine. And with talk of deglobalization and geo-economic fragmentation, world trade has reached a record $32 trillion.

However, there are concerns that various headwinds will lead to a significant decline in the global economy. Nevertheless, participants at the 2023 Annual Meeting, such as International Monetary Fund Managing Director Kristalina Georgieva, urged governments and the private sector to be continue to integrate the global economy for the sake of

But what lies ahead? Here are the main highlights from the hot week of Davos 2023.

Growth, trade and investment resume

“There are many problems in the global commons that we face today, but we cannot solve them without multilateralism, cooperation and trade. Babies should not be thrown out with the bath water,” Iweala said.

Similarly, some speakers Polycrisis We find global trade fragmentation threatening, but multilateralism and cooperation remain effective tools for prosperity. Even if the world were divided into her two blocs, it would still cost him 5% of the actual global GDP.Segmentation of the global economy, including friend shoring, No doubt it is costly as it leads to inefficiency and duplication, leading to inflation.

Trade and investment facilitation to promote development has resulted in significant real cost reductions and revenue increases. The Global Alliance for Trade Facilitation has received renewed support in her sixth year of work, as USAID Administrator Samantha Power announced.

Trading as a green tool in Europe

European Commission President Ursula von der Leyen has identified trade as one of the four pillars of the European Commission’s Green Deal. As countries implement net-zero industries and energy transformation plans, resilient supply chains and open markets will be critical to ensuring access to raw materials and inputs central to decarbonisation. . The EU also sees trade as a key factor in reducing its dependence on proprietary supply chains for critical materials such as lithium and rare earths. “Competition and trade are key to accelerating clean technology and climate neutrality,” said von der Leyen.

As the EU’s own Carbon Boundary Adjustment Mechanism (CBAM) continues to fuel debate in some circles over its protectionist nature, in order to level the playing field on the way to the net, It will be interesting to see how carbon competitiveness measures evolve around the world. zero.

Globalization: where to go

As globalization increases in the face of changing geopolitical, demographic and environmental realities, we need to become more sensitive to labor issues and inequalities. Focusing solely on a least-cost model of globalization must give way to a model that also accommodates environmental and social constraints. A better integration and implementation of the process requires deeper stakeholder engagement.

“In the new version of globalization, let’s not lose sight of our vision and who wants to benefit from the economic opportunities we want to create. Let’s not lose sight of the people who make up our economy, who are part of society,” said U.S. Trade Representative Catherine Tai.

A revised model of globalization recognizes the land, culture and property rights of indigenous peoples, invests in businesses and communities, and promotes innovation by indigenous peoples, mindful of the climate risks they face and the knowledge and sustainability opportunities they bring. It should work fine now. Ecuador’s Minister of Production, Foreign Trade, Investment and Fisheries, Julio José Prado, summarized:

Coalition of Trade Ministers on Climate

Trade Ministers from Ecuador, the European Union, Kenya and New Zealand led the launch of the Coalition of Trade Ministers on Climate with more than 50 Trade Ministers as members. This coalition provides high-level political direction and guidance to strengthen inclusive international cooperation in climate, trade and sustainable development relationships.

In response to the need for climate action and trade policies to work in concert with each other, the Coalition will strengthen cooperation among ministers working on climate, development, environment and finance, both at the national and international levels. increase. The coalition’s current membership reflects countries from all regions with varying degrees of development and varying degrees of climate vulnerability.

“If we want a truly global response to climate change, we need to engage nationally and internationally with fellow ministers working on climate, environment, finance, development and more. We need to do a better job of connecting the dots,” explained Valdis Dombrovskis, Executive Vice President of Economy Working for People. European Commission Trade Commissioner.

Germany and South Korea on Sustainable Digital Trade and Investment

Chancellor Olaf Scholz has announced Germany’s intention to become carbon neutral by 2045, while still maintaining a strong industrial sector. He welcomed ambitious new members to join the International Climate Club, launched last year by Germany as host country of the G7. The prime minister expressed his support for the environmental underpinnings of the U.S. Inflation Reduction Act, but said local content requirements could discriminate against non-U.S. businesses and impede innovation, competition and climate action. said.

Discussing the fragmentation of global supply chains, President Yoon Seok-yeol of the Republic of Korea argued that trade is a global public good and that international trade frameworks should be based on multilateralism and global norms. He noted the importance of supply chain resilience in ensuring sustainable prosperity, low-carbon transition, climate crisis response, energy security and new digital order. President Yoon also confirmed South Korea’s commitment to supporting the diffusion of digital technology in developing countries.

Expanding role of investment

More than 50 WTO members reaffirmed their high-level support for the latest negotiating text of the WTO’s Draft Investment Facilitation for Development (IFD) Agreement. The IFD Agreement aims to create a transparent, efficient and investor-friendly business environment, making it easier for host and home governments to attract and retain sustainable investments better suited to development. increase. The initiative includes 112 of his WTO members, including 77 developing members, of which 20 are LDCs. South Korea’s Trade Minister Ahn Deok Geun confirmed strong support for the deal from the private sector.

Experts working at the confluence of climate and finance agree that Investment Promotion Agencies (IPAs) can play a unique role in promoting climate foreign direct investment (FDI) to help meet climate goals. bottom. The experts then called on the Forum to hold consultations with governments and businesses on the possible creation of a Coalition of Climate Investment Promotion Agencies (CIPAC).

Pakistan and Rwanda were announced as the first countries to receive support to make their investment climates “digital friendly” under the Digital FDI Initiative, in which the Forum is working with the Digital Cooperation Organization. These will be followed by strong pipelines in other countries soon.

technology for trade

The United Arab Emirates announces a Memorandum of Understanding on TradeTech with the World Economic Forum to pilot the application of new Fourth Industrial Revolution technologies to help facilitate trade. “Going forward, technology will play a key role in improving the efficiency of how we operate,” said Tani Ahmed Al Zeyoudi, UAE’s Minister of State for Foreign Trade. expressed.

Global trade and finance leaders will leverage technology to improve global trade and restore trade while eliminating barriers such as the digital divide, poor access to finance, and lack of regulation and standards. Agreed that power and access can be increased. Building trust, sharing data, encouraging risk-taking, innovation, and capacity building to ensure everyone has access to the technology they need have emerged as key priorities.

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