Mukhisa Kituyi, secretary-general of the United Nations Conference on Trade and Development (UNCTAD), made the comment yesterday as he expressed concerns over protectionist forces that have weakened global multilateral trade system under the World Trade Organisation (WTO). 

Alongside his call for a more active stance from East Asia, a conference in Bangkok also heard a call from a World Bank economist for more investment in human capital.

Kituyi, in making his call for a stand against protectionism, he referred to the United States’ actions in unilaterally imposing tariffs on imported goods and the retaliatory measures that followed from the affected trade partners. Unilateral actions will not benefit anyone, he said.

“The US consumers and the US economy are not going to win,” he warned at the Trade and Development Regional Forum 2018, an event in Bangkok co-hosted by the International Institute for Trade and Development (ITD) and UNCTAD.

He was optimistic that East Asia and Southeast Asia could play leading roles in driving the global economy and championing the rules for free trade.

Kituyi cited the significantly increased foreign direct investment (FDI) that came into China and the Asean economies, despite declining flows in other parts of the world.

The region gained FDI from outside and within the bloc. Thailand has also become a source of FDI, he said, as more Thai investors spent up overseas.

Kituyi said East Asia and Asean could play a diplomatic role in promoting South-South cooperation, in reference to trade and investment between developing countries.

Such trade flows account for more than 50 per cent of global trade and most are concentrated in the Asia-Pacific region.

 The region makes up 60 per cent of the world’s gross domestic product (GDP), according to ITD.

Supachai Panitchpakdi, a former secretary-general of UNCTAD, said that he did not think a trade war would be fully played out.

 The US is unlikely to be successful in disrupting production chains in Asia, which accounts for 60-70 per cent of global production chains, said Supachai, who was also a former director of the WTO.

Benefits of liberalisation

“The production chains have been driven by trade and investment liberalisation as many countries lower tariffs and other trade and investment barriers, so that we have a computer now that can be produced in 10 countries,” he said.

He predicted that steel production in the US would not be revitalised by President Donald Trump’s imposition of tariffs on steel imports due to the higher production costs in the US. 

Trump’s tariffs on steel and aluminium imports had already hurt the car market in the US. Retaliation from China in the form of a 25 per cent tariff on US soybeans, from July 6, has depressed prices of the beans in the US, said Supachai.

World Bank economist Quentin Wodon, one of the authors of The Changing Wealth of Nations 2018: Building a Sustainable Future report, called for leaders of middle- and lower-income countries to invest more in human capital development.

He said that, as indicated in a World Bank study conducted between 1995 and 2014 in 141 countries, human capital has contributed significantly to global wealth.

Global wealth rose by 66 per cent over the 20 years, while wealth per capita increased 30 per cent.

Middle-income countries’ share of global wealth has risen from 19 per cent to 28 per cent over the period, in large part because of gains in East Asia and the Pacific, Wodon said.

Human capital is the largest component of total wealth, except|in low-income countries where|natural capital remains the largest part.

In the high-income countries of the OECD, human capital accounts for 70 per cent of the total.

The share of human capital in wealth is also high among upper-middle-countries, with an estimated 58 per cent, compared with the shares from produced capital and natural capital at 25 per cent and 17 per cent, respectively. Thailand is in the upper middle income group.

To develop human capital, countries in the region could start with children at a very young age by avoiding malnutrition and ensuring they are sent to school, Wodon said.

Source: http://www.nationmultimedia.com/detail/Economy/30349163