WTO Warns Of Most Serious And Sustained Disruption To Global Trade

WTO Warns Of Most Serious And Sustained Disruption To Global Trade The World Trade Organization WTO has warned that the global trading system is facing its most serious and sustained disruption in living memory, with growing challenges to established trade rules threatening economic growth and living standards worldwide. In its latest report, the WTO said the multilateral trading system had reached a “critical juncture”, warning that a shift away from cooperative trade policies towards unilateral action could impose significant economic costs. The organisation said increasing geopolitical tensions, protectionist policies, industrial subsidies and changes in the global balance of economic power were putting pressure on the rules that have governed international trade for decades. According to the report, a return to predominantly unilateral trade policies could reduce global gross domestic product GDP by around five per cent by 2050, while global exports could fall by approximately 18.6 per cent. The WTO warned that the consequences could be particularly severe for developing and poorer economies, which rely heavily on predictable access to international markets. The organisation said the weakening of multilateral trade cooperation could create a more fragmented global economy in which countries increasingly trade within competing geopolitical blocs. WTO Director-General Ngozi Okonjo-Iweala said the current disruption was occurring on a scale not seen since the multilateral institutions were created in the aftermath of the Great Depression and World War II. She stressed that international trade cooperation had helped narrow income differences between developing and advanced economies while contributing to greater economic stability and peace among trading nations. The WTO chief maintained that despite major changes in the global economic landscape, cooperation remained preferable to unilateral action. The WTO report examined several possible futures for the international trading system, including scenarios in which global commerce becomes increasingly divided along geopolitical or regional lines.A highly fragmented system could significantly reduce global economic activity. Reuters reported that the WTO’s modelling found that a severe geopolitical fragmentation scenario could reduce global GDP by up to 6.9 per cent and exports by nearly 27 per cent by 2050. By contrast, stronger multilateral cooperation and reforms to the trading system could increase global GDP by about 2.9 per cent and exports by roughly 18 per cent by 2050. The organisation said its members must work towards updating trade rules to reflect changes in the global economy, including the growth of digital commerce, increased state intervention, industrial policy and new geopolitical realities. The WTO’s 166 members have struggled to reach consensus on reforms, with negotiations in several areas remaining difficult because of competing interests among developed and developing economies. The organisation said the current situation should be treated as an opportunity to strengthen the multilateral trading system rather than abandon it. The WTO’s annual report ultimately warned that preserving predictable, rules-based international trade will be crucial to protecting economic growth, living standards and opportunities for developing economies in the years ahead.