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ASIA-PACIFIC RESEARCH AND TRAINING NETWORK ON TRADE
ARTNeT CONFERENCE
ARTNeT Trade Economists’ Conference
Trade in the Asian century - delivering on the promise of economic prosperity
22-23rd September 2014
Round table discussion on What do trade
policymakers need to know about trade
and what can ARTNeT do about it?
www.artnetontrade.org
Missing Links in Trade Policy and
ARTNeT’s role in bridging the gap
Ajitava Raychaudhuri
Department of Economics
Jadavpur University
Kolkata 700032
 Main challenge is to understand the link between
the real sector and the monetary sector so that
shocks originating in the real sector could be
traced through its transmission to exchange rate
movement and monetary policy and vice versa.
The classical neutrality does not hold for
developing countries even in medium to long run
since they have unemployed resources. Thus
although one mentions regional integration in
terms of more parts and components import, one
hardly relates it with its link to credit availability
or interest rate or inflation. One finds very few
references to this by trade policy making.
 A similar point arises in the case of requirements for
better trade facilitation to reduce trade costs. This
brings the complementary question whether financing
trade facilitation should be part of trade itself so that
countries requiring massive investments in this field
could substantially benefit leading to higher global
efficiency in the long run. Trade policy and trade
facilitation policy are viewed separately as if they are
necessarily separable functions. This might be suboptimal in many cases.
 It is difficult to understand government policies to
promote synergy between large and small enterprises
in terms of inbound FDIs. One finds mention of supply
chain but no clear signal as to the types of optimal
government interventions which might promote this.
 Trade data on services still require more
transparency. One may mention the fuzzy nature
of the head travel in case of mode 2
(consumption abroad) as well as commercial
presence data (mode 3) which are available for
only few countries.
 Efforts to identify barriers to service trade are
few and trade policy makers hardly highlight
these. One needs more studies and policy
discussions on this. Examples may be cited for
perceptions as barriers in case of service trade in
case of health and education
 The present shooting up of exchange
rates for many currencies indicates
need for optimal intervention so that it
stays within a band.
 Standards have become more relevant
after substantial liberal trade regimes
have ushered in. Unfortunately, in
many cases, these are discussed more
in public economics models rather than
trade models. This limits the policy
space so that standards appear to be
public policy issues in closed economy
more.
Debates are quite rich in terms of impact of trade on
growth, poverty and inequality. What is not clear always
is the role of trade policy in this context. Trade creates
inequality due to skill differences in the tradable goods
content is a well known argument. Liberal trade policy
aggravates this in the short run is also acceptable. What is
not clear is the role of trade policy in reducing this
inequality. The problem is how to distinguish and
measure the impact of trade policy in reducing this since
other public policy also works on this. One may use
econometric techniques to isolate the effect of trade
policy, but that does not very clearly establish always the
channels through which this works. One needs to focus
on this issue more in the coming days, especially if trade
and investment are to be connected