by Liu Tian, Andrew Wong
SINGAPORE, Nov. 7 (Xinhua) -- As globalization and free trade are struggling with the protectionism and unilateralism, participants of the first ever New Economy Forum (NEF) reiterated the importance of the multilateral trade system and said that zero tariffs and barriers is the "proven formula for success" for world trade.
Free trade and globalization are among the focal points of the forum. Around 400 world business and political leaders gathered here for the two-day event and discussed current economic challenges in a world in transition in order to find solutions to the global issues.
Speaking at the panel of "remaking world trade" on Tuesday, Canadian Chief Trade Commissioner Ailish Campbell called for world business and political leaders to "recommit to multilateral trade system" to save the global trade and the World Trade Organization at a time when protectionism is rising.
Frederick Smith, chairman and chief executive officer (CEO) of FedEx Corporation, said that his company is moving "millions and millions and millions" of shipments daily under the current global trade system, adding that the general consensus among mainstream economists is that zero tariffs and barriers is a "good thing" and is the "proven formula for success" for world trade.
Also, Darren Woods, chairman and CEO of ExxonMobil, said during the forum that his company's business "much depends on free trade" and "we are a big believer that economy is the best by having free and fair trade," adding that any restrictions will affect the business.
In a reflection of the trade tensions initiated by the United States, the International Monetary Fund in last month downgraded its earlier economic growth forecast for the year of 2018 and 2019 from 3.9 percent to a read of 3.7.
According to a special report by Bloomberg during the NEF, intensified trade tensions will hurt growth. On the real economy level, "higher import costs drive up inflation, squeezing the purchasing power of households and dragging down consumption. Business responds to a weaker demand by lowering investment spending, exacerbating a downturn."
In the finance market, trade tension "would be a significant drag on corporation earnings. A slump in equity prices deals a blow to household wealth and confidence, which hits consumer spending," said the report.
As an export-oriented economy, Singapore may need to review its growth projections for 2019 due to the current trade tension, according to Singaporean Finance Minister Heng Swee Keat. The minister said in an interview with Bloomberg ahead of the NEF that "any trade tension that sets back globalization will affect everyone, including the countries that are directly involved, but also collateral damage right across all economies."
FedEx stock price lost about 11 percent this year due to Trump's trade decision in this year. The FedEx chairman said that automation, rather than trade, is the main reason for U.S. job lost.
Campbell pointed out that U.S. investment in retraining for its labor forces is much lower than the average in developed countries and suggested the country to build a sustainable society in which workers could get more retraining so as to keep their jobs in an evolving economy.
Peter Mandelson, a former Europe trade commissioner, said that globalization and free trade made the pie of world economy bigger but it is also important to distribute the pie fairly. He said that at the global governance level, currently the international politics failed to fairly distribute the benefits and it therefore frayed the confidence of free trade and globalization supporters.
Although a disappointing sentiment has risen amid the current trade tension, a recent released survey brought a hope that the majority of the global businessmen are optimistic over the restoration of multilateral trade system in a long run and those from emerging economies are even more brilliant as they think the free trade will continue to grow in the next five years.
The survey conducted by Bloomberg covering 2000 business professionals from 20 markets also suggested that "with the rise of new economies, half of global business professionals believe a globalization model centered on multilateral free trade and open borders can be effective," but the system should be adjusted so as to allocate the benefits more evenly.