East-West Center Research Program Seminar

U.S. International Trade and the Global Economic Crisis
William E. James
Principal Economist
Macroeconomics and Finance Research Division
Economics and Research Department
Asian Development Bank
Friday, July 10, 2009 Noon - 1:00 pm
John A. Burns Hall Room 3012, 3rd floor
World trade volume is in retreat for the first time in more than two decades and the contraction is on a scale not seen since the global recession following the second oil shock of 1979 80. The United States is at the epicenter of the crisis and is a major source of external demand for developing Asia and Pacific economies. U.S. import and export data are examined in order to understand the repercussions of the crisis for international trade, particularly for export oriented economies in East and Southeast Asia. U.S. trade with preferential trade partners within the western hemisphere is found to be contracting significantly faster than with the rest of the world, and trade under preferential trade agreements is collapsing even more rapidly particularly within the North American Free Trade Agreement partners. The reasons underlying the pattern of decline are analyzed. The role of trade policies, protection and preferences in determining the outcomes are considered with a special case study of U.S. imports of textiles and apparel. The role of China and developing Asia is contrasted with preferential trade partners in the western hemisphere and sub Saharan Africa. The question is whether the multilateral trading system can ride to the rescue before protectionist forces strangle world trade? The failure of bilateral free trade agreements to act as a shock absorber suggests that a new global trade deal may be the way forward. The outcome is crucial as the U.S. will need to expand net exports in order to restore growth and unwind its global debt obligations. The special role of new technology and trade in environmental products and clean energy is likely to be a key in this process.
William E. James is a former Senior Fellow, East West Center and former Professor of Economics, University of Hawaii. He has worked on developing Asia for over three decades and has advised governments on international trade issues. He is currently Principal Economist at the Manila based Asian Development Bank.