The Doha Round of trade is dead or at least it has been pronounced dead once again. While this does not seem to be on the radar screen of many traders, trade is a very relevant issue if we are going into a global recession. The current breakdown is related to agricultural subsidies. The only bright spot in the US economy has been exports. The EU is much more export driven than the US. Emerging markets have been driven by their ability to export to the G10. Trade is the basis for much of the gains in growth.
However, the first guilty party for lost jobs in most countries is trade and global competition. Restrictions on trade may seem to have a positive effects for saving some jobs but the impact of lost trade is real and substantive.
A movement toward multilateralism or bilateral trade agreements only makes the world more complex and reduces trade flexibility across regions. The threat of tariffs or other restrictions like the 1930's debacle is real.
An additional trade issue is the announcement that Russia plans to control their grain export business through a state grain trading company. Russia is the fifth largest exporter of grain and the current price spike is causing a new level of mercantilism around the world. We have moved from talk of grain OPEC to action by some countries. State control of grain trade will only slow to movement from those who have grain to those that may need it. State considerations may be more important than price.
We are already seeing the terms of trade for grain exporters improve relative to those who are importers. This movement in terms of trade will continue if grain prices remain at current levels.
However, the first guilty party for lost jobs in most countries is trade and global competition. Restrictions on trade may seem to have a positive effects for saving some jobs but the impact of lost trade is real and substantive.
A movement toward multilateralism or bilateral trade agreements only makes the world more complex and reduces trade flexibility across regions. The threat of tariffs or other restrictions like the 1930's debacle is real.
An additional trade issue is the announcement that Russia plans to control their grain export business through a state grain trading company. Russia is the fifth largest exporter of grain and the current price spike is causing a new level of mercantilism around the world. We have moved from talk of grain OPEC to action by some countries. State control of grain trade will only slow to movement from those who have grain to those that may need it. State considerations may be more important than price.
We are already seeing the terms of trade for grain exporters improve relative to those who are importers. This movement in terms of trade will continue if grain prices remain at current levels.
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