Although international trade and investment are often thought of as two sides of the same coin. the relationship is complex and has evolved over time. Global value chains (GVCs), for example, have sharpened the interdependencies between trade and foreign direct investment (FDI), as companies combine trade with investment to organise the supply of inputs, to expand in new markets, to access knowledge, and to provide services to consumers
As such, restrictions and distortions to cross-border trade and investment have an impact beyond their respective policy areas and can have significant spill-over effects, magnifying costs in the domestic and global economy. However, policy makers do not usually take a comprehensive or co-ordinated policy approach to establishing rules that govern trade and investment; absent more policy coherence between the two, we will not have the expected economic and social gains, and may even lead to undesired effects.
