Countries need to cooperate to overcome their differences instead of resorting to retaliatory measures that hurt global growth, an international trade expert told CNBC on Friday.
“The system is not perfect, but (having) no system is worse; chaos is worse and this is what we are facing today,” said Arancha Gonzalez, executive director of the International Trade Center. “It’s not between China and the U.S. Everyone needs China and everybody needs the U.S. It’s between order and chaos. “
Speaking to CNBC at the International Finance Corporation spring meeting in Tokyo, Gonzalez urged nations to work together to overcome the challenges in the current economic climate – just like what they did 10 years ago during the Global Financial Crisis, when they kept the market open to stimulate demand.
The International Trade Center is a joint venture between the World Trade Organization and the United Nations, which supports the internationalization of small- and medium-sized enterprises.
“In chaos, everybody is going to find it very difficult to promote growth and create jobs,” said Gonzalez.
“What we are seeing is an erosion of basic principles on which our economy is based – international cooperation, open markets, rules of the game, transparency and predictability,” she said.
She urged world leaders to work together.
“Let’s do this in a cooperative manner rather than through a tit-for-tat which we’ve already seen is having damaging effects on global growth,” said Gonzalez, in reference to the trade escalation between the U.S. and China which has seen both sides slap tariffs on each other’s goods.
Instead of moving away from multilateralism, Gonzalez said, there needs to be greater integration to navigate the digital economy.
She said that both countries were looking at the trade dispute “from a very national point of view,” adding that they were “forgetting that the economic underpinnings of the digital economy is cross border, forgetting that what drives companies today … is their ability to move not just goods, but also data, people that go with it, investment,” she said.
“So all of this requires a regulatory framework and it has to be a global regulatory framework,” said Gonzalez.