International trade rules should play a central role as the global economy rebuilds supply chains in the wake of the Covid-19 pandemic and the war in Ukraine, a World Bank official said.
US and China cannot dominate discussions on the appropriate use of subsidies and trade restrictions, Mari Elka Pangestu, World Bank managing director for development policy and partnerships, said at the Bloomberg New Economy Forum in Singapore on Tuesday. It should involve the World Trade Organization, which has its own list of exceptions in matters of security.
Pangestu pointed to comments made earlier in the forum by US Trade Representative Katherine Tai, who was reserved on the potential for any removal of tariffs on Chinese goods. According to the trade chief, Washington wanted to ensure China would not use “non-market policies.”
“The same thing could be said – what about the CHIPS Act?” Pangestu said. She noted that Europe and Japan have expressed concerns the curbs could come in conflict with international trade rules.
While geopolitics and security will always be a consideration for countries, the WTO can make sure friend-shoring isn’t done in a discriminatory or distortionary way, she said at the forum organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.
“We have to manage it in a way that builds trust and provides predictability. Otherwise it can lead to higher costs, and who pays for higher costs? Consumers and developing countries who can be shut out of these global value chains.”
(With assistance from Haslinda Amin and Manus Cranny)
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