Swedish EU Commissioner Cecilia Malmström gives a speech on the ‘Truths about Trade’
In a world of constant and instant communication it can be difficult to hold on to truths and facts. In her speech Cecilia Malmström highlights the many ways in which free trade can have a positive effect on the global economy and be a part of the solution to contemporary issues such as climate change and civil rights.
Outgoing Swedish Trade Commissioner Cecilia Malmström gave a speech on the ‘Truths about Trade’ and shared her thoughts on the importance to distinguish facts from arguments that feel intuitively true. There is a misconception among Brexit advocates and Trump voters that tariffs are good for the domestic economy, protecting the domestic industry and keeping jobs at home. This idea goes against basic principles of trade and the theory of comparative advantage where economic growth is created by country specialisation. In the modern world economy goods passes many boarders before they are finished creating complex global value chains and interconnected markets. Trade wars and higher tariffs poses a threat to global economic growth by creating barriers to trade that lowers consumer demand through higher prices.
The Swedish EU Trade Commissioner Cecilia Malmström will leave her post in November 2019. Cecilia Malmström has during her time as Trade Commissioner been a strong advocate for open borders and free trade. The continued rise in barriers encountered by European companies in foreign markets shows that protectionism is on the rise. The EU is the world’s largest economy with 40 trade agreements in place. In 2018, stakeholders reported 45 new barriers to trade in countries outside the EU. These obstacles has affected EU exports worth billions of Euros and led to an intensification of the Commissions work to bring down barriers to trade.
Great uncertainties surrounding Brexit and the US-China trade war have led to slower global economic growth. The consensus behind economic openness and free trade has been questioned, injecting uncertainty into global markets. The new geopolitical landscape with new tariffs and disruptions in supply chains makes business leaders and investors more and more focused on risk mitigation. The changing geopolitical environment is expected to negatively affect investment returns. A report from the European Strategy and Policy Analysis System (ESPAS) highlights some of the most important global trends that are forging a more complex and insecure world. One of these macro-trends is the rising interdependence of countries, not matched by strengthened global governance making the world more fragile and unpredictable. The report concludes that Europe needs a new platform for sustainable economic growth in a world of increasing complexity, uncertainty and rapid change.
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