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Come on, thank you for having me. Let me scan my screen with you.

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Hopefully this will work. So I'm very happy to be joining you, I'm talking about why trade finance matters in times of uncertainty.

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I will briefly go over to papers and the first paper is forthcoming in the extract issue,

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the supplement that you have just mentioned, and it's co-authored with Bundu Damu from Bilkent University.

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And this paper is incredibly simple, but nevertheless, the issue is important and it has policy implications.

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So I think it's it merits a discussion and admits bringing it to the attention of the world.

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Namely, the issue is trade, finance and its importance during times of uncertainty.

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But let me start with some very basic observations.

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In the beginning of the paper, we looked at the performance of exports relative to their historical average.

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So we took into account seasonality of exports of various products.

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And then we looked at what's happened to, let's say, a French or German exports.

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Month by month relative to the same period in the past three years.

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And here the solid lines show you the estimates, dislikes, why the dashed lines are the 90 percent confidence intervals.

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And look you see here is that since October, Germany and France have seen a decline in their exports relative to a historical average.

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That is not surprising. There has been a slowdown in the eurozone, which predates the pandemic.

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But then look at the figures for March. In France, it's dipping exports of almost 40 percent.

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In Germany, it's over 20 percent. If you look at the US, the decline is smaller.

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It's on the order of 10 percent. Why in Turkey?

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It's 25, actually. Turkey is quite an interesting case.

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It's a country where the pandemic were dependent.

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It got later and Turkey did not impose a lockdown on weekdays.

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Instead, they had lockdown's on weekends. So that means that during the period we are looking at.

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There was no supply shock. It just probably mostly the demand shock that we see here being responsible for the decline in Turkish exports.

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And of course, we wrote this paper a few weeks ago.

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By now, the figures for April are available.

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And actually globally we see an even bigger dip in international trade happening in April.

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Hopefully a pro will be at the bottom of that decline.

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Now that what we are interested in the paper is the resilience of exports.

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What type of exports prove to be more resilient than others?

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And the starting point of our paper is the observation that international trade is more risky than domestic trade.

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International trade involves shipping goods over long distances.

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That often takes a lot of time and the world will change. Can change while the goods are in transit, demands may change currencies.

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Exchange rates are shifting. Also, if you are doing business with foreign buyers, chances are you don't know that it's cheap.

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A lot of international trade relationships are short lived.

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They speak different language. They are subject to different regulations.

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And if you actually have talks to exporters, you would have come across stories of export to shipping goods and never seen the money.

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I came across such a company in Jakarta, Indonesia.

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They told me they made a shipment to Bosnia and they said, well, look, we send our goods.

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We never saw the money. Bosnia is far from Indonesia. It costs a lot of time.

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A lot of money to fly there. We don't speak the language. There isn't even our embassy in that country.

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So, you know, they never send the money. They just let it go.

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Now, if there are adverse events happening in the world in times of crisis, uncertainty goes up.

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So you are even more worried than normally whether you will be paid for the goods you shift, whether you will receive the goods you have prepaid.

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So firms, traders increase their demand for insurance.

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Actually, had the IBRD. We are active in the trade insurance space and we have seen actually a big demand increase in demand for those services.

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So in this paper, we ask a very simple question. Have trade flows insured by trade finance instruments being more resilient to the current crisis?

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So let me give you some background on how payment terms tend to be structured in international trade transactions that are standard ways of doing so.

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There's something called cash in advance, also known as pay and pray.

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You pay for the goods and then you wait for the producer to ship them to you.

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So that means that as an importer, you bear the whole risk of the transaction.

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Of course, there is another possibility that the roles can switch and it may be the exporter who bears all the risk.

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This is on their so-called open account terms. The exporter shifts the goods and then allows the buyer 30 or 60 or 90 days to make a payment.

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So in this case, it's the exporter who faces uncertainty about being paid.

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But of course,

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it is possible for the trading parties to shift the risk onto a bank that can be done through this so-called letter of credit where for a fee,

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a bank will insure an international trade transaction.

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It works in a very simple like the importer approaches their bank and gets purchases.

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This instrument. Letter of credit, which is a guarantee to the exporter that the exporter will be paid exporter if this

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quarter is worried additionally about the bank in the importing country going under,

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they can reconfirm the letter of credit, meaning they can obtain a guarantee from a bank in their own country,

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a guarantee against the bank in the important country going up under.

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So then the exporter ships the goods and the importer will not get to the ownership of

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the goods until the importer makes a payment and the payment is sent to the exporter.

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So basically the bank serves as both an intermediary and an insurer.

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Insurer. And there is no essentially this eliminates all the risk on the part of the trading partners.

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Of course, you know, there's a catch. It casts a bit of money to make to purchase.

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This is just the final type of payment terms is so-called documentary collection.

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If there's a situation where banks are used as intermediaries, but they do not explicitly provide insurance.

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However, because the trading partners are dealing with a bank, they owe money to the bank.

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If you're properly structured this this transaction, it can help you mitigate risks.

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So in this very simple paper, what we did is we looked at Turkish data monthly monthly data between January 2013 and March of this year.

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These are the figures on exports. They are just this aggregated by this so-called six digit codes under the harmonised system.

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That means that we have several Toussant observations by product.

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There are several thousand products in those categories. And on top of that, we also know the payment terms that have been used in those transactions.

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Turkey is actually unique amongst us, amongst countries by requiring this information for both imports and exports and requiring

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proof that the payment terms stated are actually in those payment terms that are cheap use.

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So what we did is we looked at how Turkish exports, under various payment terms, performed relative to their historical average.

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We control for product specifics, seasonality. We controlled for the fact that durable goods tends to be hit more by economic downturns.

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We allowed for different effects on intermediate goods,

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on goods that's required greater contract intensity or goods produced by sectors that are more dependent on external financing.

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And when we did this, we saw a striking pattern.

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If you look at cash in advance exports, those were experienced a 40 percent decline in March of this year relative to historical average there.

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In that line, you see that's the confidence interval.

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So cash in advance. That's pay and pray. That's a very risky form of of trading, good assets, open account.

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Again, open account experience, a 28 percent decline.

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Documentary collection, which involves bank intermediation and therefore leads to some mitigation of risk, was affected much less severely.

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Why a letter of credit which provides insurance against the risk of non-payment of no delivery experience, no decline relative to historical average.

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So even though the green bar is slightly negative, the confidence interval shows you that the effect is not statistically significant.

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It's not significantly different from zero. That we consider this share of exports insured through letters of credit.

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In total exports. So here we did this at the product level, looking at Turkish exports to all destinations.

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Again, controlling for seasonality.

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And what you see that in March of this year, there is an increase in share of exports that are traded in on letter of credit terms.

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So exports that are insured through trade finance instruments while before March.

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You don't see any change because as the confidence interval includes zero prior to March,

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there is no statistically significant change in the share of exports backed by letters of credit relative to historical average.

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Now, when we repeat this exercise just for China, you'll see the same pattern, except that the happens earlier.

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It's in March where you see this spike in as sea based exports.

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Of course, China was facing the pandemic earlier.

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And therefore, the uncertainty when trading with China was present.

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Now, in our earlier work with Varnedoe and mature Croisette, we looked at trade finance in more general terms.

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And in particular, what we did is we created an index of how dependent various products are on trade insurance.

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So we looked at how frequently or how prevalent the usage of letters of credit is for particular products.

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And essentially we backed out from that information. Products, specific components, which captures how how much a given product needs trade insurance.

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And then we looked at global trade flows during the financial crisis.

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We know that during the financial crisis, I did the banking system in some countries.

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We went into a standstill and it was very difficult to obtain trade finance instruments.

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Essentially, our trade finance dried out.

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And what we saw in our analysis is that products that typically are very reliant on using trade insurance took a bigger hit

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during the financial crisis when they were destined for countries where it wasn't possible to buy to obtain this trade insurance.

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And also that we saw that in Shafron from trade the better.

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It was more resilient than arm's length trade off to the financial crisis.

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Why is that? Well, if you are trading within your firm, if you are trading with a subsidiary that's located in a different country,

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there is no risk your trading just with your within your company.

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If you are trading with with a business partner who you don't know, you are barranca big risk.

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And so, not surprisingly, trading interest from trade.

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So trade done by multinational corporation was much more resilient when it was

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destined for countries where it wasn't possible to obtain trade insurance.

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And in that paper, we tried to estimate to the importance of trade insurance to the great trade collapse that took part in 2009.

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And we came up with a figure of about 10 percent.

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So a lot of the great trade to collapse was due to the economic downturn to demand drive for goods drying out.

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But according to our estimates, 10 percent of that wall of this collapse was due to inability to insure trade flows.

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Of course, you know, the great trade collapse does not look like such a great trade collapse comparable to the figures we are observing now.

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The decline in trade is big. So these are two very simple papers, but I think their findings matter and their matter for the following reason.

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Since the financial crisis, we have observed a decline in the supply of trade finance.

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Now, as I was explaining letters of credit, I mentioned that often you need a bank that will reconfirm a letter of credit stock.

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If you are doing business, if you are exporting to Nigeria and you are Nigerian.

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Trading partner provides you with a letter of credit.

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You may have doubts whether the Nigerian bank will not go out of business.

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So you may want to reconfirm your letter of credit.

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So these links between banks in industrialised countries and emerging markets are extremely important for the good functioning of trade finance.

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This. International correspondent banks there you reconfirm letters of credit.

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They held a clear trade related payments.

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And what has happened since the financial crisis is that we have seen an increase in regulation,

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regulation pertaining to combating money laundering, combating terrorism, regulations pertaining to sanctions.

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And banks are expected to get to know their customers, to not have a lot of information about where a particular straight shipments of are going.

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And that means that, you know, the the reporting requirements are quite tough.

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And banks, which do not quite trust information they obtain from emerging markets, simply frequently choose not to take this risk.

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The risk of not having the information that is required by regulators and they simply decide to exit trade finance in emerging markets.

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And according to a recent report by the WTO and the International Finance Corporation,

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about 200000 of correspondent banking relationships have disappeared during the past decade.

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And that's about 20 percent of those of all existing correspondingly banking relationships.

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And African countries, Caribbean, Central Eastern Europe and Pacific Islands have been particularly affected.

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And this matters because this means that going forward, it will be if uncertainty continues,

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if we have a second and perhaps even third wave of the pandemic trade with developing countries

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and emerging markets will be adversely affected due to inability of ensure transactions.

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And also, you know, many observers are worried about how firms will fare through the crisis in particularly small and medium sized enterprises.

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The European Commission, for instance, is paying a lot of attention to SMB exporters.

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And it is and, you know,

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the lack the inability to ensure trade flows means that the level the playing field is tilted to the advantage of multinational firms,

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of big players at the expense of SMP.

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So let me stop here and give the floor back to Cameron.

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Thank you. Thanks, Panopto. That was extremely interesting.

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I'm not actually launched 10 questions for you.

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But I said there are already four on on the front from the from the world outside two.

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And they're actually incredibly good. So I'm gonna do the right thing and dump my questions, at least for the moment, and go to them.

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And I'd like to start with a very big one, which is around the relationship between trade and globalisation,

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and in particular, whether you think the current both the situation with the pandemic,

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but also, well, let's describe it as it is the fairly frosty relationship with many of the the bigger countries around the world.

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Is that going to affect the degree of globalisation, do you think?

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Well, we see these shortening of supply chains, as is often feel that this is an excellent question coming out.

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I mean, a lot of people are wondering whether globalisation will be rolled back.

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The US China trade war is not over. The US EU conflict is brewing.

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Many leaders will be tempted to protect their markets.

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And that may become very popular with the public. The public still has in mind the images of shipments of BP equipment being seised at the borders.

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So I think it would be very easy to sell to use resilience as an arrow to it for protection.

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Now, we did worry about protectionism during the financial crisis, but back then,

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G20 issued a statement very early on expressing commitment to free trade.

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This time we have not seen such a state. And because every government is extending help to its funds,

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it will be very easy to make a case that imports are subsidised and used existing exceptions under WTO rule and introduced countervailing duties.

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So in the absence of global leadership, the world sneak walk into protectionism.

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Yeah, I think that's that's a really interesting point, which I am thought of. I mean, it's probably obvious if you're in international trade.

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But the fact that there's so much support out there for firms gives the brilliant cover for protectionist responses.

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That's a great point. I've got to, again, sneakily ask one of my own questions.

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That difference in trade dropped between just, say, the French and the Germans.

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Friends and neighbours as they are 40 percent to 20 percent.

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It does lead you to wonder exactly what the drivers were and given your work,

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which was just really interesting around the difference between the drop in pay or pay and private,

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which I love that phrase and ensured trade with the letter of credit.

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Is it that the French are more likely to pay and pray?

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Does the strong Catholic religion give them more succour and they do more praying and paying than the Germans or what?

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What is behind the difference? You know, so we haven't looked at it in detail.

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I suspect some of it could be differences,

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geographic differences in what our exports are desperate for us as Germany shakes happily with China simply may have been affected, perhaps more.

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But, you know, we know that Eurozone has been slowing down and that's why we've seen a decline already before.

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And that's presumably something you could cheque, I guess, in your data set, because it sounds like it's quite rich.

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But the China example does make a lot of sense. Let me move to another question, which is also one on my list.

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So so I should actually credit rich cash from India for that last question about globalisation.

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Thanks for Tache. This one is from John Rosenfield about the role of block chain or Hollard chain.

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I have to admit, I'm not on top the whole of China, but the role of block chain in playing a role in international trade contracts post copeton.

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And I guess the question that I had that's related to this, I mean, two hundred thousand correspondent banking relationships lost.

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It's a phenomenally large number and it's kind of, as you say, a worryingly large number of international trade, particularly with,

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you know, less developed economies, unless there is some other mechanism that can kind of serve that role and could maybe not work hard.

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But but it. But is there some other fintech arrangement that could replace the correspondant

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banking relations and keep the wheels of trade working and running smoothly?

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I. I do not know. That's my honest answer. But I hope that somebody would develop an alternative.

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Now, let me tell you give you another reason why enthusiasm for trait's pinus has been dampened.

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That's because under Basel regulations, street finance is it receives high risk weighting.

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So it's treated as risky transaction, even though in reality the default rates are tiny because transactions are based by collateral.

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The goods that are being shipped now, you know, coming back to block your block chain,

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help with Records' with either records that could prove what what has been transacted.

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The problem always is enforcement and enforcement is it's costly.

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So at the moment, it's actually my multilateral development banks that are stepping, stepping in and trying to fill the vault.

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But, you know, the change that I'm happy to talk about are local value chains, because this is the other aspect of globalisation.

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So what the pandemic did is it drew our attention to a low probability events and to draw

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attention to the pretty good possibility that we may be facing more shocks going forward.

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You, of all people, know very well that climate change is progressing and it's going to bring more adverse weather events.

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So now it's not just pandemic. Is the possibility of more shocks coming forward.

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Is uncertainty about policy, which created this realisation that a long supply chain means vulnerability to shoppers?

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So the question is, will firms re optimise and move from just in time to just in case?

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And they are under tremendous pressure from policymakers to do that.

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President Macron spoke recently about economic patriotism and Warren Renauld got its five billion euro bailout.

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It was strongly encouraged to bring high value other activities to France.

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Japan is making funds available for its funds to reach shore.

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And I was just on a panel earlier today with somebody from China who was talking about some value chains already moving to Southeast Asia.

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But, of course, you know, building resilience is neither cheap nor easy.

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And, you know, during an economic downturn, very few firms have the courage to increase cost and price.

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And if you are a car manufacturer with hundreds plus first tier suppliers and hundreds of second tier suppliers, it's not a trivial task.

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It's interesting. There's some kind of Trade-Off for tension between efficiency on the one hand and resilience on the other.

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I'm just thinking about the analogy with the the energy system we try to understand better than that trading system.

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So this is some part of it where you often find people thinking that energy independence gives you that resilience, not energy security.

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But actually you look at the data and it isn't necessarily true. Having an international liquid market in a particular product like LNG can lead

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you to have greater security than if you're trying to do everything at home.

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And I guess I'm wondering whether there's an analogy there with just the general goods and services

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markets where actually resilience isn't necessarily served by shortening your supply chains.

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Maybe it's by thinking a bit more strategically about precisely how those supply chains are structured and where and with whom they connect.

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I don't know. What do you think of that idea? There exists at Trueblood Pala.

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So policymakers politicians actually not often say you don't need to be sure to increase resilience,

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but it's a flawed argument because any country is subject to shocks such as flooding strikes right at birth, whether some countries have earthquakes.

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So in a sense, bringing production home doesn't solve the problem.

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What solves the problem is diversification. So double sourcing and but, you know, it's precisely this double sourcing that increases the cost.

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Now, you know, in terms of. And food and the argument is often made, right?

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We need to be self-reliant. That's the wrong things to do. What the way to solve this issue is stockpiling strategic stockpiling.

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And, you know, in Britain, there were some shortages of food early in the pandemic.

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There were no shortages in Switzerland. Switzerland has stockpiles of food.

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This is done by the government in connexion with the large supermarket chains.

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And it's cost 12 euro per head per year and incredibly cheap way of ensuring supplies.

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How fascinating.

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It is definitely an analogy there with with the energy storage space, again, which I know better than than here, where you can look at the amount,

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I mean, so-called stockpiling that's affected the same thing, where you you insure yourself that you've got the supplies that you need.

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And in the event of something going wrong and in a way, I mean, while it feels like this pandemic has increased costs,

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you could argue that this brittleness of the system, this lack of resilience was always there.

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And we were just instead of bearing those costs, like you might take out insurance on an annual basis to cover yourself when a shock does happen.

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We've just been made brutally aware that we didn't really have the systems and the insurance in place.

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So the system might be more costly on a year on year basis.

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But actually, by eliminating these very nasty shocks,

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you're probably you're potentially you're better off by paying for the insurance, as it were, rather than just suffering the shock.

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I guess you'd agree with that? Well, I think previously we made or firms made a calculated decision that it wasn't insurance wasn't worthwhile.

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I was shocked before that. Well, you know, the Japanese earthquake in 2011,

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which meant that Japanese auto makers in the U.S. stopped production because they couldn't get pricing components.

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But the perception was, you know, an earthquake is a one off.

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It's not going to come back tomorrow. But this time it's different and it is different because we have two shocks.

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We we have pandemic and we have uncertainty about trade policy for the past 20 years.

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We've been taking stable global trading rules, low stable tariffs for granted.

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I think we no longer can take that for granted. So it's the two types of shocks.

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And the idea that they are likely to come back.

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And that's, I think, what will increase the need for foreign choice for action right now is an interesting question.

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Come in here from the NSA about the psychological effects of CADAVID and the implications for the trade regime and for global markets.

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And, of course, I mean, a lot of economics is around expectations fulfilled or otherwise, and animal spirits.

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And you've already referred, I guess,

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to ways in which behaviour is changing because people have had a kind of cognitive shift in the way they see the world.

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So, Vanessa. Vanessa's question is, will this change perspectives, I guess, around the trade regime, but also about the significance of consumption?

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I mean, are we more likely to buy locally sourced goods locally?

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Is there any evidence of that in the data or do you have any personal views on that?

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So I think the most basic question is, are we going to change our consumption behaviour?

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So now the challenge is how do you you know, if governments say lockdown's are over?

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But how do you get people to go out and start?

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So I think this is the first issue. How do you revive the hospitality industry if people may still be hesitant to travel, to go to restaurants?

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And also because millions of people, tens of millions of people have lost their jobs.

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People may increase precautionary savings, so they may be less willing to spend.

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And then, you know, there is this whole issue of expectations and expectations related, for instance, to the future of trade policy.

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So if you remember the deal that has been made between the US and China,

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essentially China promised to import a certain amount of of goods from the US.

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And people tracking this say that, you know, that China is not on track to buy all these goods that they promised.

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So that means that there is there will be scope for reigniting of the conflict.

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And it is partially, you know,

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the reason why some observers are already commenting on the global value chains

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moving away from China to Southeast Asia to avoid tariffs on on Chinese products.

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I've got a kind of personal interested question. I've just spent three and a half hours with business school students on energy access.

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And one of our guest speakers, the chief executive of a business in India,

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noted that tariffs on clean energy had been really harmful to sat on panels and etc. been quite many batteries in particular,

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been harmful to the deployment of cleaner energy and renewables in India.

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I just I guess I'm wondering, given what you say about the potential rise in tariffs for a bunch of reasons,

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actually, do you do you think that tariffs are harmful?

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For a number of reasons, obviously.

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And you probably got some measure of the welfare cost of these kind of events that's presumably in the tens or hundreds of business billions.

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But I'm just wondering if there are consequences for energy, for health care, for other sectors of real social significance as well.

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I think you know, that the big discussion now we are having in Europe is about carbon adjustment taxes collected at the border.

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Right. So in a sense, if Europe gets serious about carbon prices pricing,

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then there will be a need to prevent the kitchen by by essentially charging the same equivalent of that on imports.

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And because it's incredibly difficult to implement something like this,

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I think this will create a lot of uncertainty about treatment of production outside of Europe.

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And this will be another factor that may incentivise firms to bring production back to the European Union, because this will give certainty about how.

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Carbon taxes will be assessed. I think it's just too neat.

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This is the biggest issue now. You know, interplay between environment and trade.

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My my view has long been, and I'm know accords with many, but perhaps not all other economists.

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That carbon border adjustment is in a way,

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it's a pro trade policy because you're levelling the playing field between domestic and international competitors.

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So everybody's paying the same carbon price. I haven't actually ever ask you this question.

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But as an international trade expert, as you see it the same way or what you see it as a kind of dirty protectionist strategy.

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You know, the devil is in the details. The devil is how you implement it.

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So it could be used as a force for good.

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It could be used to focus the minds off of European trading partners to take action on carbon pricing.

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Presumably, if they have if they do something on that front, there will be no need for carbon adjustment talks.

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But, of course, it could be misused as a protectionist measure.

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That is a fair enough answer. If I may just add.

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Yeah, I think the only way it can be made compatible with WTO rules is if you say it doesn't discriminate between domestic and foreign producers.

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Right. And, you know, that would provide some assurance that it's not protectionist.

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But, of course, you know, with global value chains, with goods and building components from many countries,

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it will be incredibly hard to do that calculation.

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My my response to that kind of concern has been, in fact, you don't need to be don't need them to be identical.

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You just need to favour the other producer rather than your domestic producer.

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More so provided your erring on the side of caution and imposing a lower carbon border adjustment on importers rather than on your domestic producers.

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You're probably sites. You're under WTO rules, you will be safe, but then you will then be popular with domestic producers.

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Right. And, you know, you need to be able to get and buying into the policy.

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And mind your population.

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But then if we're starting from no border adjustment, it's this is this also not a case of not letting the perfect be the enemy of the good?

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I mean, your domestic producers would be would be would prefer to have something rather than nothing.

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And something is a lot better than nothing, even if it isn't perfection and having absolute equality between domestic and international producers.

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Well, my sense is that, you know, this would be introduced in conjunction with increasing the price of content.

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And that's our idol. I say, you know, the biggest challenge at the moment is, you know, we are spending tons of money.

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Every government is we would like to use the money to promote climate change mitigation efforts.

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But you don't want you know, you still want to get to buying from the population, from the business community.

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And it's incredibly hard to to sell the idea that we will increase carbon taxes at the time of very severe economic downturn.

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Thanks. So we've got a couple of questions from Ben and from John, again, Rosenfield,

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about trade finance effectively and whether the this could be delivered by a nation state, stem cells.

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And I guess to some extent it is with with Exim Bank and so on,

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whether or whether private sector banks should be taking a lead in managing these

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letters of credit and insurance products for for the international trading regime.

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After me, I don't know enough about this as I should. But is this dominantly private or public?

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And do you think there has been or could be a shift one way or the other?

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So, you know, there is a huge industry providing trade finance, you know, private industry.

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Now there are government agencies that provide export guarantees and, you know, Exxon X in banks, you know, are sponsored by governments.

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I think the key question is how to make sure that whatever is provided by the state is not perceived as state aid run.

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Well, that this is this is the big issue.

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And in a sense, you know, one of the most thorny issues that need to be resolved at the WTO is state aid provided by China.

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You know, if you go back to 2000 when China joined the WTO on what was perceived back then as very tough times.

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But, you know, over 20 years, it like it grew incredibly fast.

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It became a much more important market. And also back, you know, 2001, it was still the time, you know, end of history.

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Everybody assumed a state owned enterprises would go out.

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We all would go away. Right. China would move away from state owned enterprises.

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This has not happened yet. And now, you know, the WTO rules are not being fit for purpose.

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And I think, you know, I would expect tightening of rules on state aid going forward.

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And I think that's why state intervention here may be difficult if it's on a large scale.

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Yeah, that makes sense, actually, that we would be heading in that direction. It leads me to one of the other reflections I had as you were talking.

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This is a little bit more perhaps tangential,

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but given the amount of injections into the into various economies where you've had and the potential for inflation down the line,

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possible possibly currency movements as well.

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And the context where NoDoz, this U.S. Chinese dispute about whether the Chinese were an exchange engaging or exchange rate manipulation.

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Have you noticed any of this going on during the carbon price crisis where where there have been big,

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I guess, monetary responses that have shifted exchange rates that have affected trade patterns?

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Or is that too early to say or perhaps too marginal an issue?

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Well, what was striking early on was that many emerging market currencies lost value.

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And one of the trade consequences of that was that suddenly it became more

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attractive for domestic food producers to export rather than sell domestically.

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Emerging market governments started being worried about food inflation, so they started imposing export bans on agricultural products.

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And that was extremely worrisome because it had a cascade that we could have artificially created a spike in food prices,

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even though there is absolutely no concern that we would have a shortage of food.

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And, you know, 10 years ago, we had a case of such spikes.

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Fortunately, this time, many of these governments have decked out because, you know,

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these these export bans, the restrictions are very harmful because they fuel this protectionist rhetoric.

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Right. You know, countries are exports. We need to be resilient. Therefore, we need to protect.

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That makes makes sense and it's fascinating how these interconnections can emerge in ways that you hadn't.

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Well, I certainly hadn't anticipated that. I yeah.

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Very interesting. There's another slightly off the wall question here.

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I hope John won't mind me saying that, but what is the relationship between big data and artificial intelligence in the trade regime?

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And could this shift as we move into a post Kofod trade regime?

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Wow, what a question. I think all trade economists tend to be a very conservative bunch.

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So the most adventurous papers I've seen were on 3D printing.

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And trying to ask, you know, will 3D printing lead to a decline in international trade?

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Right. Why should goods if you can just print them?

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And you know, at least that this study I have seen it, which was actually focussing on a pretty particular product.

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Hearing aids. Where are you this pregnant? You third into the aether. And 3D printed out.

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The answer I gave was no, actually, trade will not you know, it could actually be printed, could be trade promoting on big data.

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I don't see why it would harm trade. I asked you could see the positives.

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Right. You are better able to assess where the demand is.

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You know, using using information, you don't need to sell high frequency information.

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So that's good. That could allow you to target your shipments.

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And you are in make production more responsive. That makes sense.

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I'd like to take you back, though, to the point that 3D printing could be trade promoting, at least in hearing AIDS patents and other goods as well.

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But what is the underlying economics that that does promote that?

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I mean, I guess I probably need to know the cost structure of the sorts of goods that are 3D printed.

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Is it energy? Is it the raw materials and then the trading,

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the costs of actually moving the goods around to have a sense of why this could be trade promoting rather than trade reducing.

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So in this particular paper written by Caroline Floyd and co-authors from the World Bank,

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I believe the argument was was the following before when you were getting a hearing aid, somebody had to take an imprint of your ear.

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This had to be shipped somewhere as somebody made in that rich country factory

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in France is Denmark is a country that specialises in production of Q&A.

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So in the context of the shift and in this factory, in a high cost country, they would produce the piece that you needed using 3D printing.

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Cut the cost. Increase the speed. But primarily by cutting costs, it made it affordable for more people.

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So it expanded the markets. Oh, I see.

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So now you have your earpiece made locally, then you are just buying the actual electronics that's needs to go inside that piece.

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But the is still made in the no longer made in Denmark or they asked made in demo.

393
00:49:42,130 --> 00:49:51,440
So the idea was that you know, you locally get to do the plastic part that gets into your ear toward buying the electronic always.

394
00:49:51,440 --> 00:50:00,300
The Governor, Mark Sanford instigated it actually, so that for most expensive markets and that's, you know, increases trade, I say.

395
00:50:00,300 --> 00:50:08,850
So another way of putting it is perhaps that you've got components of a good that can be 3D printed components that can't.

396
00:50:08,850 --> 00:50:16,560
And if you expand the market for the overall good, then the components that aren't subject to this technology are still going to be traded even more.

397
00:50:16,560 --> 00:50:21,420
Yeah. OK, now I wanted to actually.

398
00:50:21,420 --> 00:50:28,400
We're running out of time here, but we got time for one last question and I might ask about trading services.

399
00:50:28,400 --> 00:50:34,590
I've been mainly focussed on trading goods in this discussion.

400
00:50:34,590 --> 00:50:40,380
Clearly, the trade in services domestically of haircuts has diminished.

401
00:50:40,380 --> 00:50:49,880
So the classic example in your international trade, one hour one, and I could probably do with a bit more trade in haircuts myself.

402
00:50:49,880 --> 00:50:55,120
But what are we learning about international trade in services?

403
00:50:55,120 --> 00:51:07,580
So, you know, so we have, in a sense, exploited a lot of benefits that have come from low tariffs on goods and low transportation costs.

404
00:51:07,580 --> 00:51:13,140
And that's why, in a sense, you know, that there has been a slowdown in global trade in goods,

405
00:51:13,140 --> 00:51:16,910
in the growth rate of trade, in goods that pre-date three dates.

406
00:51:16,910 --> 00:51:27,110
Call it so. Trading services exploiting differences in wages of skilled workers across countries is the next frontier.

407
00:51:27,110 --> 00:51:33,050
And I think here we may see an increase, you know, since the beginning of the pandemic.

408
00:51:33,050 --> 00:51:39,350
Many people have been thrown into this giant experiment of working from home.

409
00:51:39,350 --> 00:51:45,110
And once you cross the psychological border too remote to work, you know,

410
00:51:45,110 --> 00:51:52,210
if you are a British farmer or a German friend, why do you have to constrain yourself to British or German workers?

411
00:51:52,210 --> 00:51:56,660
You know, why not hire somebody from Poland, Bulgaria or India?

412
00:51:56,660 --> 00:52:03,110
Now, obviously, there are some limitations, time zones and data protection regimes.

413
00:52:03,110 --> 00:52:09,720
In some industries, there are requirements about where they tend to distort the ability to travel.

414
00:52:09,720 --> 00:52:13,490
You know, we still want to see your employees once, once in a while.

415
00:52:13,490 --> 00:52:21,590
But I think the fact that so many firms have tried remould work, many of them are going to stick with it.

416
00:52:21,590 --> 00:52:31,220
And I think that's going to make them think seriously about hiring workers located somewhere else.

417
00:52:31,220 --> 00:52:36,830
Yeah, that's a great point. I'm a Hans. Trade in services could get a real kick from this cross.

418
00:52:36,830 --> 00:52:42,630
Interesting. I thought I thought that might be the last one, but I think I'm going to squeeze in one more.

419
00:52:42,630 --> 00:52:46,640
I wanted to ask you so you can blame this one on me.

420
00:52:46,640 --> 00:52:50,720
No. Anybody else. It's just it's a bit more of a parochial question.

421
00:52:50,720 --> 00:52:56,720
Here we are. Well, it's here I am in Oxford facing Brexit.

422
00:52:56,720 --> 00:53:01,130
Within less than, well, six months. I mean, formally, we've left.

423
00:53:01,130 --> 00:53:08,270
But potential no deal scenario. And that's being led on top of a curve.

424
00:53:08,270 --> 00:53:16,820
It induced economic downturn and trade issues. Where does this leave this particular country?

425
00:53:16,820 --> 00:53:23,480
Are we facing the sunny uplands of global Britain trading with the rest of the world?

426
00:53:23,480 --> 00:53:28,920
We're using our newfound freedoms. Or are we in a bit of a mess?

427
00:53:28,920 --> 00:53:38,120
Well, Cameron, if you have broken your lack leg, doesn't matter that you broke your ankle as well.

428
00:53:38,120 --> 00:53:45,300
It does matter, particularly when you are trying to learn how to walk with crutches.

429
00:53:45,300 --> 00:53:55,350
So in a sense, you know, Kovack has been such an incredible shock to the economy.

430
00:53:55,350 --> 00:54:07,400
Anything else that creates further uncertainty and increases costs of doing business now is less than optimal.

431
00:54:07,400 --> 00:54:11,420
That's a lovely line about breaking your leg and breaking your ankle.

432
00:54:11,420 --> 00:54:17,600
My fear is we might have broken one leg and then broken the other. Which is which is significantly worse.

433
00:54:17,600 --> 00:54:21,230
Oh, no. Thank you very much for sharing all of your wisdom,

434
00:54:21,230 --> 00:54:30,590
intelligence and insights from those two papers and for contributing to this special issue of the Oxford Review of Economic Policy.

435
00:54:30,590 --> 00:54:33,920
Very grateful. And I'm sure those watching will be grateful to him.

436
00:54:33,920 --> 00:54:39,560
Before we wrap up, I just wanted to note that again, joint with the Oxford Martin School,

437
00:54:39,560 --> 00:54:50,900
we have three more sessions coming before the summer break and then some more coming in the new academic year with some authors in this issue.

438
00:54:50,900 --> 00:54:57,020
Next stop on the 21st of July, which is in five days from today,

439
00:54:57,020 --> 00:55:07,460
is Professor Colin Meyer and support Colea on reforming the UK's financial system to promote regional development in post in Britain.

440
00:55:07,460 --> 00:55:12,110
So I hope you listening and will join me then to hear Paul and Colin.

441
00:55:12,110 --> 00:55:14,990
And I hope you'll join me again, at least virtually.

442
00:55:14,990 --> 00:55:25,370
I'm afraid that you're not going to hear the riotous applause in the audience in the lecture theatre and the old Indian Institute on Broadstreet.

443
00:55:25,370 --> 00:55:31,320
Take it from me virtually. We're very grateful. Thank you very much. Thank you very much.

444
00:55:31,320 --> 00:55:32,885
Thank you for having me.