?We have just left the old world of trade and entering the new world of trade,? said Former Director General of World Trade Organization (WTO), Pascal Lamy
Pascal Lamy, former Director General of the WTO, greeted by James Riady, CEO of Lippo Group & Jonathan Parapak, Rector of Universitas Pelita Harapan
Rector of Universitas Pelita Harapan, Jonathan Parapak thanks former Director General of WTO, Pascal Lamy
The New World of Trade has begun, marked by reduction of tariff barrier and replaced by non-tariff barriers. To relish the growth of global market, each country is required to increase their production standard. “We have just left the old world of trade and entering the new world of trade. There are some changes that have to be observed and considered by all countries.” said Former Director General of World Trade Organization (WTO), Pascal Lamy at Jakarta, Wednesday (10/9).
Pascal Lamy gave his speech at a public lecture held by Universitas Pelita Harapan (UPH), in cooperation with Lippo Group and supported by Foreign Policy Community of Indonesia (FPCI). Dr. Mari Elka Pangestu, the Minister of Tourism and Creative Economy and Dr. Dino Patti Djalal, Vice Minister of Foreign Affairs, and Dr. James Riady, CEO of Lippo Group also participated in the public lecture.
Based on Pascal Lamy’s opinion, the old world of trade is indicated by polarization of production in one country. Then, the country will protect respective industry with high import tax. This kind of thing became the barrier in the old world of trade.
“To overcome this challenge, bilateral and multilateral agreement has been made. Some import taxes are increased or decreased in order to create an equilibrium point of tariff between countries,” said Pascal.
Deputy Foreign Minister, Dino Patti Djalal giving remarks
Minister of Tourism and Creative Economy, Mari Elka Pangestu giving remarks
The world, according to Pascal, is starting to leave the old system and move on to the new system of trade, which promote global production system. Meaning, every stake holders create a production base in a country that is considered as a competitive country to reduce the cost caused by distance.
This trend, reflected at the high number of trade in component and semi finished product which construct two third of world trade volume. This happens in several sectors of manufacture such as automotive, components, and processed food and beverages.
“Asia becomes one of the favorite destinations for global production system. At this time, around 40 percents of import in Asia consist of raw materials that will be exported. In 20 years from now, the number will reach 50 percents,” added by Pascal.
In the new world of trade, barrier that might rise is problem of product standardization. For example, standard of safety for vehicles in USA and Europe is different, which means if an automotive company from Europe wants to enter the USA market, they have to meet the safety requirements in respective country. “Trade negotiators have to be fully aware of this condition. This is no longer about tariff, but about policy made by an institution who deal with safety measures in one country.” said Pascal.
In light of those facts, Pascal explained that the challenge of current world trade is a problem of product standardization. The solution is to raise up the capacity to meet the international standard. This is the key to relish the growth of global market.
