The scaling back of tariffs has stopped, and new tariff barriers are being erected. At the same time, the WTO’s position has weakened, making it more difficult both to resolve disagreements and carry out needed regulatory reforms. Last year was marked by trade tensions between the United States and China. The United States raised tariffs on a range of imports, and China retaliated in kind. Protectionism means reduced growth capacity, putting at risk the gains brought about by open borders. If the world enters a new period of rising trade barriers, a prime engine of growth and development may lose its momentum. The most serious consequences of new tariff barriers will be faced by developing countries. The WTO has more than 160 member countries. Many of the new countries have experienced rapid growth. Substantial technological and economic gaps have been reduced. Living standards have improved for large population groups. But not everyone has reaped the gains associated with globalisation and trade. Some have lost. Inequalities have widened. This explains to a large extent the opposition to globalisation and international cooperation. Chart: China exports more advanced products The current trade tensions are also about power and influence. Many Asian countries are emerging as important drivers of the digital economy. China is rapidly adopting artificial intelligence and using big data. Exports are shifting from simple to more complex products. China is now the world’s next largest economy1 and is competing with advanced western countries in many arenas.

Øystein Olsen: Economic perspectives Address by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), to foreign embassy representatives, Oslo, 8 April 2019. * * * Accompanying slides of the speech. Your excellencies, ladies and gentlemen. Firsts of all, I would like to thank you for taking the time to attend this event, which provides me with an opportunity to present Norges Bank’s view of the economic situation and some of the challenges ahead. International economic cooperation is creaking Throughout history, technological innovation and increased trade in goods and services have been important sources of growth and development. The two driving forces have functioned in tandem. Trade barriers have been reduced in recent decades. Faster transport and advanced communications systems have greatly facilitated access to broader markets. Global value chains have emerged, and service providers can be located far from customers. With freeflowing capital, we can invest globally. Chart: World trade has grown markedly Since the 1970s, world trade has grown rapidly. As a percentage of world GDP, international trade has almost doubled. A number of new countries have also increased their share in world trade. A more closely integrated world economy has facilitated specialisation, innovation and better use of local resources. The room for exchanging ideas and knowledge has expanded. Increased competition and innovation have gone hand in hand. Chart: Trade gives Norway opportunities Efficient global trade is particularly advantageous for small open economies, like Norway. Norway has benefitted greatly from the opportunities afforded by trade with other countries.