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Speaker 1: Whatever happened to the global trade war that was supposed

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Speaker 1: to threaten twenty seventeen, a conflict over global commerce was

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Speaker 1: near the top of most people's risk list following Donald

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Speaker 1: Trump's election. His America First inaugural address exacerbated those fears.

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Speaker 1: But far from drawbridges coming up, global trade volumes have

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Speaker 1: actually increased by quite a lot. The International Monetary Funders

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Speaker 1: projecting the volume of trade and goods and services will

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Speaker 1: have climbed four point two percent this year, almost twice

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Speaker 1: the rate of the previous year. What did the experts

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Speaker 1: miss and is it too soon to declare protectionism missing

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Speaker 1: in action? Welcome to Benchmark, a show about the global economy.

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Speaker 1: I'm Daniel Moss, economics writer at Bloomberg View in New York,

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Speaker 1: and I'm Scott Landman and economics editor with Bloomberg News

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Speaker 1: in Washington. In a year of surprises, a trade boom

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Speaker 1: is right up there. Here to explain what's driving the

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Speaker 1: surge is Andrew Maida, who reports on trade issues for

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Speaker 1: Bloomberg and Washington. In a few minutes, will be joined

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Speaker 1: by a ranch of Gonzalez, executive director of the International

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Speaker 1: Trade Center in Geneva. She'll give US some broader context.

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Speaker 1: Andrew You and Da Karen recently wrote about the unexpected

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Speaker 1: jump in trade. As he reported that story, what jumped

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Speaker 1: out at you? Well, the i m F is projecting

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Speaker 1: that trade volumes will grow globally by four point two

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Speaker 1: percent this year, and that's up from about two point

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Speaker 1: four percent last year, so almost double. And it's significant

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Speaker 1: because it's the first time since that trade growth has

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Speaker 1: actually outpaced global growth. And again that's significant because you're

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Speaker 1: now having trade actually lifting global growth as opposed to

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Speaker 1: be in a drag. So are you saying that protectionism

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Speaker 1: was this dog that was supposed to have a big

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Speaker 1: bark but didn't really have much of a bite. You know,

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Speaker 1: I think the jury is still out on that. I

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Speaker 1: think we'll have to see whether the protectionist threat truly fades.

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Speaker 1: You know, the Trump administration is still trying to renegotiate NAFTA.

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Speaker 1: They made a lot of noise about cracking down on

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Speaker 1: China in various ways. But it's certainly true that the

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Speaker 1: trade war that Dan referred to that everybody was worried

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Speaker 1: about when it was looking like Donald Trump would get

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Speaker 1: elected has not come to pass. The global training system

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Speaker 1: has not been dismantled, and uh, it looks, at least

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Speaker 1: for now, that we're returning to a period of that

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Speaker 1: virtual cycle we saw in the early two thousand's when

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Speaker 1: trade was reinforcing global growth. Now, how much of this

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Speaker 1: can be attributed to the global economic upswing? I mean,

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Speaker 1: is it protection ism hasn't happened at all? All that

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Speaker 1: the economy has accelerated, it's papered over those bumps. It's

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Speaker 1: probably more so the latter. If you look at the

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Speaker 1: w t o s analysis of the numbers, for example,

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Speaker 1: I mean, they point to some some pretty obvious engines

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Speaker 1: that are driving this. I mean, China grew uh faster

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Speaker 1: this year than than perhaps I'm expected. Growth in the

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Speaker 1: US was was fairly robust as well. Uh, so you

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Speaker 1: saw a rise in imports and that and that that

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Speaker 1: kind of lifted the trade boat. Uh. That said, the

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Speaker 1: w t O also recently put out a report where

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Speaker 1: they said that the amount of trade barriers that countries

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Speaker 1: are throwing up increased at a slower rate uh this

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Speaker 1: year than it had last year. So countries were throwing

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Speaker 1: up less trade barriers as well. It's really amazing to hear,

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Speaker 1: But is it, is it really correct? To call this

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Speaker 1: a trade boom when the amount of growth we're talking

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Speaker 1: about four percent kind of pales in comparison to it

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Speaker 1: we saw in true boom years ten or twenty years ago.

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Speaker 1: I mean, it's probably a fair point. I mean, there

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Speaker 1: were years where trade grew at at high single digits,

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Speaker 1: but I think it's fair at least to call it

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Speaker 1: a boom let. And if you look at how much

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Speaker 1: it increased this past year, and if you look at

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Speaker 1: what the expectations were in terms of the protectionist threat,

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Speaker 1: I mean, I think it's fair to say that the

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Speaker 1: trade growth exceeded expectations fairly significantly. Andrew, thanks for joining us.

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Speaker 1: Now let's bring in a ranch of Gonzales. She's executive

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Speaker 1: director of the International Trade Center in Geneva. The organization

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Speaker 1: has a joint mandate from the World Trade Organization, which

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Speaker 1: Andrew just mentioned, and the United Nations a ranch of

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Speaker 1: Thanks for joining us, fair pleasure. Now you're getting ready

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Speaker 1: to attend a w t O ministerial meeting in Argentina.

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Speaker 1: Is the jump in trade volumes, aside from good steak,

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Speaker 1: likely to be something that people take comfort in when

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Speaker 1: you meet them. Well, I think they will keep this

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Speaker 1: very high in their minds when they discussed cooperation in

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Speaker 1: international trade, because all of them are today benefiting from

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Speaker 1: the improvement in trade and the improvement in trade forecast

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Speaker 1: for next year, which which is looking good. And I'm

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Speaker 1: sure they will not want this trade growth engine to stall,

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Speaker 1: given the fact that they have to create millions of jobs,

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Speaker 1: they have to lift millions of people out of poverty,

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Speaker 1: and that trade is today providing them precisely this tool

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Speaker 1: that in the last years they had not been able

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Speaker 1: to use, which is also one of the reasons why

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Speaker 1: they had a motaf h we work in creating new jobs, Aroncha.

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Speaker 1: Of course they wouldn't want this trade engine to stall.

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Speaker 1: But is FO truly a sustainable pace that can be

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Speaker 1: matched in the coming year or is that something that's

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Speaker 1: too high or maybe even too low. We are still

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Speaker 1: below historical trends in the last compared to the last

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Speaker 1: and fifteen years, but it's a huge improvement over the

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Speaker 1: very meager one point six percent growth one point three

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Speaker 1: percent growth of last year, so it's a good signal.

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Speaker 1: It is certainly a tool that needs to be keep

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Speaker 1: alive and kicking. I don't think this very good news

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Speaker 1: that they are getting, which is a result of the

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Speaker 1: good news they are getting on overall economic growth, as

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Speaker 1: we just heard, is one that deserves to be killed

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Speaker 1: either by action or by inaction, which is precisely what

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Speaker 1: I hope Buenos Aires w TUM Steal meeting will look at.

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Speaker 1: So I think that gets to the nub of the

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Speaker 1: question we're discussing here. Did we dodge a protectionist bullet

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Speaker 1: or is it a bit like the torpedo five near

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Speaker 1: the end of the hunt for Red October, it's still

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Speaker 1: there searching for a target. Well certain the rhetoric the

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Speaker 1: protection is rhetoric is very high at the moment. And

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Speaker 1: next to this protection is rhetoric, what we also have

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Speaker 1: very highest geopolitical tensions and trade tensions. Now, maybe we

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Speaker 1: find a good way to channel these tensions, and I

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Speaker 1: think I do hope we find good ways, intelligent ways,

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Speaker 1: peaceful ways to channel these tensions and through that manage

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Speaker 1: the risks. But the risks are there. The w t

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Speaker 1: O has just issued a very important report in which

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Speaker 1: they give us the good news, but they also give

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Speaker 1: us a very clear warning signal that their risks to

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Speaker 1: protection is rhetoric. Granted, it's rhetoric for now it's the

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Speaker 1: dog that barks a lot but has not yet beaten Uh.

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Speaker 1: There is geopolitical tensions to straight tensions. There is trouble

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Speaker 1: on the natural disasters front. There is the risk of

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Speaker 1: tighter monetary policy. All these are serious risks that should

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Speaker 1: be taken seriously. So let's not declare victory. I think

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Speaker 1: let's just watch and let's encourage actors to behave in

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Speaker 1: a responsible manner over the next month. Ranch when it

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Speaker 1: comes to President Donald Trump, is the kind of rhetoric

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Speaker 1: and positions that his administration has taken that he advocated

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Speaker 1: during his campaign. Is that something that's going to be

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Speaker 1: you think, a permanent feature of the landscape for trade

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Speaker 1: policy or is this a passing phenomenon. I mean, I

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Speaker 1: think Donald Trump is right when he says that there

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Speaker 1: is a discontent in many parts of American society, and

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Speaker 1: I could probably argue that there is a lot of

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Speaker 1: discontent in many parts of other societies around the world,

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Speaker 1: in that the benefits of growth and the benefits of

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Speaker 1: trade are not equally shared and they are not going

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Speaker 1: to the They are accumulating on the one percent, whereas

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Speaker 1: is not seeing the same benefits. Now where I would

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Speaker 1: disagree with President Donald Trump is in what is the

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Speaker 1: good recipe to address this an equal distribution of the

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Speaker 1: wealth and the benefits of growth. I think what history

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Speaker 1: has proven is that investing in people, investing in making

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Speaker 1: individuals more resilient, investing in education, investing in healthcare, investing

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Speaker 1: in infrastructures, including today digital infrastructures, including investing in social

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Speaker 1: safety nets, is probably going to be more effective in

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Speaker 1: empowering every man and every woman in America or around

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Speaker 1: the world for that purpose, to withstand the huge changes

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Speaker 1: that we're seeing in our economies. That is probably better

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Speaker 1: manage through this empowerment of the individual than through trade

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Speaker 1: isolationism or trade conflict, which again may end up killing

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Speaker 1: the growth that can lift all these people out of poverty. Ranger.

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Speaker 1: There's tremendous disappointment in Asia that the United States was

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Speaker 1: from the Transpacific Partnership. Now there's a lot of caveats

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Speaker 1: to that, it still had to get through the hill.

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Speaker 1: But how are folks that you're talking to, the officials

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Speaker 1: that you have a mandate from, how are they looking

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Speaker 1: at NAFTA renegotiations right now? Do they have a sinking feeling? Well?

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Speaker 1: What they are. They are watching very identively what's happening

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Speaker 1: uh in the United States, because what they see as

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Speaker 1: lots of different forces pulling in different directions. Those forces

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Speaker 1: are pulling and pushing with equal force, which probably makes

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Speaker 1: many believe that at the center of gravity is not

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Speaker 1: very far away from what we have from the table today.

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Speaker 1: And what they are watching is essentially whether this will

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Speaker 1: lead to greater costs or whether this will lead to

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Speaker 1: greater benefits. And they are looking not just at the

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Speaker 1: overroad n after membership, but they are also looking very

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Speaker 1: attentively at how the US acts the business community, the

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Speaker 1: farmers and ranchers that are relying on the nafter markets

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Speaker 1: also for their experts and for their jobs and for

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Speaker 1: their future growth, how they play their cards, because the

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Speaker 1: sentiment that they have is that the agreement has been beneficial,

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Speaker 1: that the benefits have been greater than what the cost

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Speaker 1: would be of a non naught situation. But again, we

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Speaker 1: are all watching these We're watching in particular these forces

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Speaker 1: that are fighting in the US to find this right's

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Speaker 1: point of equilibrium because we we in that we see

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Speaker 1: probably we tried to read what the behavior would be

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Speaker 1: in the US towards future trade romans. I think this

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Speaker 1: is a good time to come back to Andrew because

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Speaker 1: he recently spent a whole week in Mexico City following

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Speaker 1: the NAFTA negotiations there. He's been covering a very closely

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Speaker 1: for a number of months. Now, be good to get

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Speaker 1: his thoughts, Andrew. Is the result of all this, when

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Speaker 1: when this is all said and done, is this going

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Speaker 1: to result in a net boost for trade or really

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Speaker 1: talking about you know, things kind of maybe moving around

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Speaker 1: but not really changing that much. Well, I think NAFTA

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Speaker 1: is a really important test case for the global economy,

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Speaker 1: and I think the reason that is is that this

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Speaker 1: is probably the first time in decades, perhaps the modern

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Speaker 1: history of global trade, that you have a major economy

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Speaker 1: in the United States of America trying to renegotiate a

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Speaker 1: trade deal with the goal of actually increasing the amount

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Speaker 1: of barriers. So I think it remains to be seen

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Speaker 1: whether that can actually lead to some type of new

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Speaker 1: consensus with Canada and Mexico, or if eventually that just

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Speaker 1: leads to the collapse of the negotiations. So, in other words,

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Speaker 1: is it possible through trade agreements for developed countries to

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Speaker 1: address the type of distributional issues that are Rancher raised.

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Speaker 1: You know, some people might say, actually that it's probably

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Speaker 1: not trade agreements that are the right instrument for doing this.

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Speaker 1: It's probably more of an issue for domestic policy. But

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Speaker 1: I that's how I see NAFTA as a major test

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Speaker 1: case for how trade can sort of be retrenched in

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Speaker 1: the global economy. Ranchi, you play a key role in

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Speaker 1: the World Economic Forums Global Leadership counsel on Trade and Investment,

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Speaker 1: and I appreciate you letting me spend some time with

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Speaker 1: the group last month. Were you in Davos when President

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Speaker 1: she made his speech about China and the world trading system? Absolutely? Yes,

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Speaker 1: And this was a very interesting moment when the kind

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Speaker 1: of so some sort of role reverse uh, when listening

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Speaker 1: to the speech of the U S President and then

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Speaker 1: listening to the speech of the Chinese president. Yes, very interesting, Runch.

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Speaker 1: I actually worked in China for three years when when

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Speaker 1: Dan was our boss, and just thinking about that, the

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Speaker 1: idea that China can be the savior of free trade

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Speaker 1: would strike many people, many China watchers as probably a

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Speaker 1: bit unlikely. How did it get to this point? Well, I,

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Speaker 1: at first I don't think the question is free trade.

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Speaker 1: The question is one of open markets and international cooperation,

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Speaker 1: and it goes beyond a simply free trade. And by

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Speaker 1: the way, I never speak about free trade. I like

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Speaker 1: to speak about open trade because free making the impression

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Speaker 1: to those that are listening that we are advocating trade

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Speaker 1: without any obstacles, which is not true. I don't want

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Speaker 1: trading toxic products, and I don't want trading weapons. On

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Speaker 1: the rest of it, it's open economies that is at

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Speaker 1: the heart of this discussion, and it's the value of

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Speaker 1: international operation to manage issues that have spillovers beyond our borders.

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Speaker 1: And what we're seeing is two different ways of looking

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Speaker 1: at these two dimensions. We are seeing some saying it's

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Speaker 1: better that we retrench beyond our borders, behind our borders,

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Speaker 1: that we look at boosting the prospects for our countries,

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Speaker 1: understanding that doing that requires disengagement from the rest of

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Speaker 1: the world. And there is another view out there that says,

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Speaker 1: the strength of my country can only happen if there

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Speaker 1: is a stronger world and a better managed world. So

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Speaker 1: these are the two confronting views that that I see

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Speaker 1: playing today the different characters around the world. The jury

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Speaker 1: is out, but what I certainly have observed in my

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Speaker 1: over thirty years of working on matters that spill beyond

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Speaker 1: the domestic borders, is that there is a huge value

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Speaker 1: in international cooperation to manage climate change, to manage spread

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Speaker 1: of the ceases, to manage war and conflict, to manage

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Speaker 1: reduction of poverty, and obviously to manage the insertion of

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Speaker 1: our economies in international trade. Have people's perceptions about China's

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Speaker 1: willingness to lead changed or is it simply that that

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Speaker 1: was a terrible week for United States pr Well, I

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Speaker 1: think the China, China's the style of leadership, and you

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Speaker 1: will maybe tell me because you've lived in China and

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Speaker 1: I haven't, But what I have observed is that Chinese

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Speaker 1: the style of leadership has always been very different from

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Speaker 1: say American or European style of leadership. Small discreets is small,

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Speaker 1: pushing and pulling behind the scenes is not necessarily shouting

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Speaker 1: is not a megaphone diplomacy. It's always been quieter. And

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Speaker 1: what I have observed, at least what I saw for

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Speaker 1: the first time in Divorced this year, is a bit

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Speaker 1: more allowed a voice and a bigger voice in China

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Speaker 1: and by China on the international stage, by the way

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Speaker 1: that the speech in divorce was sexceeded by another speech

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Speaker 1: that normally followed another speech by President Ji Jimping at

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Speaker 1: the United Nations in Geneva, also indicating very clearly that

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Speaker 1: China would engage more in supporting U N operations on

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Speaker 1: the ground on please keeping on support for development of

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Speaker 1: the poorer countries around the world. So and it sent

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Speaker 1: two signals in in Davors. It was about the open

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Speaker 1: economy in Geneva. It was about the value of international cooperation,

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Speaker 1: and it did so again in a different way than

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Speaker 1: it had done so in the past. A Rancher and Andrew,

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Speaker 1: thank you so much for your perspective. Benchmark will be

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Speaker 1: back next week. Until then, you can find us on

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Speaker 1: the Bloomberg terminal, Bloomberg dot com, Bloomberg app, as well

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Speaker 1: as Apple Podcasts, pocket Casts, and Stitcher. While you're there,

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Speaker 1: take a minute to rate and review the show so

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Speaker 1: more listeners can find us and let us know what

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Speaker 1: you thought. You can follow me on Twitter at Moss Underscore,

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Speaker 1: Eco Scott at start landman l A n M A

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Speaker 1: N Rancher You're at a ranch A r A n

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Speaker 1: g A d z n n y N so be

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Speaker 1: too long Andrew at A M A y E d A.

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Speaker 1: I think Moss Echo was the easiest of those. Benchmark

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Speaker 1: is produced by Sarah Patterson. The head of Bloomberg Podcast

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Speaker 1: is Francesco Levie. Thanks for listening, to see you next

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Speaker 1: week