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Global finance leaders on Oct. 6 publicly confronted the rising unpopularity of trade liberalization, saying world economies needed to strive for more inclusive growth.
With Republican presidential candidate Donald Trump leading a surge of anti-free trade sentiment in the United States, and Britain voting to secede from the European Union, top central bankers and finance ministers were pressed to defend long-standing ideology at the World Bank and International Monetary Fund annual meetings.
โWe shouldnโt apologize for what has happened and hundreds of millions of people being lifted out of poverty and opportunity being created,โ Mark Carney, governor of the Bank of England, told a panel on the global economy.
โBut there are challenges with distribution,โ he said. โHow do we work with people to share those fruits more effectively and how do we make trade tangible?โ
German Finance Minister Wolfgang Schaeuble expressed alarm at the rise of anti-trade populism across the developed world.
โIf you look at what we have achieved in reducing the number of very poor people all over the world,โ he said.
โWe must have in mind that we must not increase the gap between elites -political leaders, economic leaders, media leaders- and the people. Otherwise we will risk increasing populism and thatโs one of the major risks.โ
At the same time, IMF Managing Director Christine Lagarde, whose organization has long advocated lowering trade and investment barriers around the world, warned that now was not the time to close the door on globalization, which she said had benefitted so many.
โWe donโt think itโs time to push against it,โ she said.
Long promoted by the major international development institutions and leading economies, the message of trade liberalization faces an increasingly unreceptive audience.
In the United States, Trump has rallied supporters by promising a trade war with China and retaliatory import duties on Mexico.
Across the Atlantic, the British vote to leave the European Union threatens to spur other countries to roll back European economic integration. The free-trade pact currently under negotiation with the United States, the Transatlantic Trade and Investment Partnership (TTIP), faces stiff resistance in Europe.
Globalization finds itself accused of depressing wages, causing industrial decline and keeping low-skilled workers unemployed.
โBeliever of free tradeโ
โIโm a believer of free trade. I think free trade will promote the welfare of mankind,โ said Yi Gang, deputy governor of the Peopleโs Bank of China.
โBut we have to deal with the inclusive growth seriously. I think now the problem, the challenge weโre facing is real,โ he said.
โWe gain a lot of efficiency from globalization, from free trade, but also we have to see the problem of the growth is not even, income distribution is not even.โ
Speaking elsewhere in Washington on Oct. 6, U.S. Treasury Secretary Jacob Lew steadfastly defended his administrationโs two big trade projects, TTIP and the Trans-Pacific Partnership.
But he also tried his hand at the growth-equality balancing act.
โIf you win the argument that a trade agreement grows the economy, youโre most of the way there,โ he said at the Peterson Institute for International Economics.
โThereโs a broad sense of anxiety that growing economies donโt necessarily get to people where they live,โ he added.
The IMF and World Bank now more openly concede that global growth benefits too few and globalizationโs losers should receive dedicated support.
Oxfam International on Oct. 5 said the IMF and World Bank were acknowledging the reality of social injustice in the current globalized economic regime.
โBy saying that globalization needs to work for all, Lagarde has recognized that it currently works predominantly for an elite minority. This has to change,โ said Max Lawson, head of inequality policy at Oxfam International.
