Can Free Trade Be Part of Green, Resilient, and Inclusive Development?

Trade has been a means to development by generating jobs, spurring economic growth, and reducing poverty. However, the gains from trade have shown to be less than equally distributed, hurting at times some localities and segments of countries’ populations. The COVID-19 pandemic has also shown that global value chains (GVCs) are susceptible to serious disruptions. The climate crisis has raised attention on carbon emissions from the transportation of merchandise exports and imports. If trade is to remain a driving force for growth, job creation, and poverty reduction and part of countries’ effort to set a new path towards green, resilient and inclusive development, understanding how the gains from trade are distributed and how the impacts of trade can be better managed is of critical importance. This paper reviews the evidence bearing on these concerns and considers policy responses that could enable trade, and particularly GVCs, to contribute more to a green, resilient, and inclusive recovery for developing countries. What is needed is the combination of old policies like trade facilitation, business environment, and skills with new and green policies including a new treatment of carbon, emphasis on diversification, social-protection measures, and improvements in the international trade order