IMF Economic Forum: Trade Liberalization Increasingly Seen as Crucial Ingredient for Sustained Growth
| Author | Gita Bhat |
| Position | IMF External Relations Department |
| Pages | 73-74 |
Page 73
While there is a broad agreement on the economic benefits of free trade, trade reform has not always engendered broad-based support. A February 19 IMF Economic Forum on "Trade Liberalization: How Should the Agenda Read?" explored unilateral, regional, and multilateral approaches to trade reform and the economic benefits, as well as the social consequences, of liberalization. The panel, moderated by Jack Boorman, Director of the IMF's Policy Development and Review Department, included Robert Sharer, Chief of the Trade Policy Division in the IMF's Policy Development and Review Department; Arvind Panagariya, Professor of Economics and Co-Director, Center for International Economics, University of Maryland; Clemens Boonekamp, Counsellor in the Trade Policies Review Division of the World Trade Organization (WTO), Geneva; and Bill Brett, General Secretary of the U.K. Institution of Professionals, Managers and Specialists, and Vice-Chair of the Governing Body of the International Labor Organization (ILO).
Why should countries pursue unilateral trade liberalization? A broadening and deepening of unilateral trade liberalization is increasingly being seen as a crucial ingredient for sustained high-quality growth, said Robert Sharer, reflecting the findings of a recent IMF study, Trade Liberalization in IMF-Supported Programs. Countries that unilaterally reduced trade restrictions and adopted open, outward-looking trade policies have reaped substantial rewards. By steadily reducing nontar-iff barriers on imports and eliminating controls on exports and lowering and unifying tariff rates-and sustaining this process over the medium term-countries such as Chile, Colombia, New Zealand, and Singapore have dramatically improved their trade and growth performance. Benefits are also being seen for countries, such as Uganda and Ghana, that have started down this road.
An open trade regime expands trade and investment opportunities and allows countries to specialize in, and export, products in which they have a comparative advantage. Resource allocation improves and growth prospects are enhanced. Governance and transparency can also be strengthened by creating a level playing field. But if the benefits of liberalization and the experience of countries with open trade regimes are so clear, why do many countries...
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