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Other Publications G7 Magazine: Global Briefing Report Year : 2019

Globalization Requires an Ambitious Reform of International Taxation

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The multilateral trading system is now under attack by the country which has been its main inspirer, the United States. The current view of the US administration of trade as a zero sum game where some countries (with trade surpluses) gain at the expense of others (with trade deficits) marks a stark departure from previous administrations as well as from the consensus of economists. It is therefore important to have in mind the losses that a trade war would entail. A simulation of a trade war (see Jean, Martin and Sapir, 2018 and Vicard 2018) shows large permanent losses (around 3% to 4% of GDP for the EU, US and China and much larger for smaller countries) that are similar to the estimated permanent effect of the Great Recession. Benefits of trade (and losses of a trade war) should not be overestimated (there are also decreasing returns to trade liberalization) but they do exist. This is not to say that benefits of trade liberalisation are evenly distributed. In fact, it has been known for a long time that international trade can not only increase inequalities but also create losers (be they individuals or regions inside countries). [First paragraph]
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hal-02298111 , version 1 (26-09-2019)



Philippe Martin. Globalization Requires an Ambitious Reform of International Taxation. 2019. ⟨hal-02298111⟩
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