In May 2017, Donald Trump triggered a renegotiation of the North American Free Trade Agreement (NAFTA). Some proposals, 23 years after NAFTA came into force, aiming to introduce a chapter on the digital economy and strengthen the agreement’s current arrangements, have been generally welcomed. Others, such as a tightening of rules of origin and changes to trade remedies, have prompted concern.
In November 2016 the Bank for International Settlements (BIS) published an updated economic impact study of Basel III and the ongoing reforms, suggesting the existence of some room for manoeuvre in the creation of additional capital buffers. We demonstrate in this analysis that this room no longer exists in the eurozone, where the dominant role played by banks in financing increases the economic cost of new regulatory requirements and reduces the optimal bank solvency ratio, above which the economic cost exceeds the estimated benefit of tighter regulation.
World trade has slowed sharply compared to global GDP growth since 2012. Is the slowdown in world trade due to cyclical factors, and sluggish investment above all others? Or is it due to more far-reaching structural changes, in which case world trade is unlikely to return to the vigorous growth rates observed from the mid-1990s to the mid-2000s.
