The fact that there is
additional income means that resources are available for governments to redistribute
The WTO’s own
estimates for the impact of the 1994 Uruguay Round trade deal were between
$109 billion and $510 billion added to world income (depending on the
assumptions of the calculations and allowing for margins of error).
More recent research
has produced similar figures. Economists estimate that cutting trade
barriers in agriculture, manufacturing and services by one third would boost
the world economy by $613 billion — equivalent to adding an economy
the size of Canada to the world economy.
In
Europe, the EU Commission calculates that over 1989–93 EU incomes
increased by 1.1–1.5% more than they would have done without the Single
Market.
So
trade clearly boosts incomes.
Trade also poses
challenges as domestic producers face competition from imports. But the fact
that there is additional income means that resources are available for
governments to redistribute the benefits from those who gain the most —
for example to help companies and workers adapt by becoming more productive
and competitive in what they were already doing, or by switching to new
activities.
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