Globalization 2.0: Navigating the challenges of international trade

Background

The global economy is facing risks of experiencing increased fragmentation due to geopolitical tensions and changing trade strategies, at a time when trade could help achieve environmental and climate goals. Recent research indicates that this fragmentation could reduce global GDP by up to 7% in severe scenarios (IMF, 2023). The Asia-Pacific region’s interconnected supply chains and trade networks are particularly vulnerable to these disruptions, with regional trade accounting for a significant portion of economic activity. At the same time, the region faces an annual infrastructure financing gap of $1.7 trillion (ADB, 2023), and persistent trade barriers that have significantly increased the price of essential products.

The challenge of trade fragmentation is particularly acute in the context of complex frameworks such as emergence of Border Carbon Adjustment instruments, divergent carbon standards and associated carbon content methodologies, and various regional environmental goods lists have emerged, creating a challenging landscape for traders to navigate. The proliferation of different standards and requirements—including the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and regulations on deforestation (EUDR)—require significant diligence from governments and particularly for SMEs in developing economies.

This fragmentation extends environmental issues to affect various aspects of international trade, from supply chain resilience to digital trade governance.

Objectives

This conference aims to address the challenges of increased fragmentation in international trade and explore pathways toward re-globalization and the achievement of environmental and climate objectives. The specific objectives are to:

1. Examine the impact of trade fragmentation on global and regional economic growth, with particular attention to Asia and the Pacific region.
2. Explore opportunities for convergence to utilize trade policy instruments in support of environmental and climate objectives, including interoperability and coherence of regulations and environmental goods classifications.
3. Foster dialogue between policymakers, researchers, and practitioners on strategies to promote more inclusive and sustainable trade integration.

This event is organized by the Asian Development Bank (ADB), in collaboration with the World Trade Organization (WTO), the Institute for Macroeconomic and International Policies (i-MIP) and the World Bank Group.