Fragmentation of global trade costly for poorer countries [1]
Wednesday, April 26, 2023 - 03:41
Multilateral cooperation and solidarity in global trade is needed more than ever as the world navigates a “polycrisis” of climate change, pandemic, economic slowdown, inflation, food insecurity, and depletion of the oceans' resources, the World Trade Organisation Director General Ngozi Okonjo-Iweala told an outreach for Southeast Asian and Pacific journalists today.
“Your region is an important player in global trade and central to some of the issues which we are now grappling with at the WTO,” she said in a video address from Geneva on 25 April.
As the WTO prepares for its important 13th Ministerial Conference, MC13, in Abu Dhabi next February she warned of the negative economic consequences of fragmentation.
However, she believed that, “the WTO is capable of responding to the emergencies of our time and that WTO members can come together, across geopolitical fault lines, to address problems of the global commons.”
“We've heard a lot of talk recently about the end of globalization, about re-shoring and friend-shoring. Fragmentation would be costly for all economies, particularly poorer ones.
“WTO economists estimate that if the global economy decouples into two self-contained blocs, long-term global GDP would decrease by at least 5% - worse than the damage from the financial crisis of 2008-09. The IMF has found that some developing economies would in fact face double-digit welfare losses. Your region, where global supply chains are an important contributor to its economic success, would no doubt be also impacted.”
Harmful fisheries subsidies
The Director General said the WTO needs to complete the "second wave" of negotiations on fisheries subsidies by agreeing on new disciplines for harmful subsidies that contribute to overfishing and overcapacity, while at the same time taking into account the needs of fishing communities in developing and least developed countries.
“And we need to move quicker on ratifying the agreement reached last June, which will only enter into force once two-thirds of the WTO membership has accepted it. I'm happy that Singapore is one of four WTO members that have done so at this time, we need other countries in the region to come on board so that we can start helping our oceans to recover.
“We also need to make progress on reforming agriculture trade. We've been negotiating on this for more than two decades, with success in eliminating export subsidies. But big issues related to farm subsidies and tariffs remain unresolved. We need to look at how the growing concerns regarding food security can be incorporated and addressed holistically in the discussions,” she said.
Dispute settlement system
“We also need to make progress on WTO reform by MC13, in particular on reform of our dispute settlement system. Many members have identified this as their top priority. Ministers agreed at MC12 to have a fully- and well-functioning dispute settlement system in place by 2024; discussions are under way, but this is a difficult issue and we don't have a lot of time if we're to engage in substantive negotiations and achieve results. Nevertheless, the ongoing work on this issue is moving in the right direction.”
She said there were many more issues to address: ensuring effective application of special and differential treatment to developing and least developed members; access to COVID-19 therapeutics and diagnostics; extending our existing e-commerce moratorium.
“The challenge will be to manage what is on our MC13 plate, to prioritize a few issues and build as much convergence on them as possible.”
“Strategic competition is a reality. But we must have strategic cooperation alongside it. Engagement at institutions like the WTO can help build confidence, even trust, in managing the multiple tensions of today and the challenges of tomorrow,” she said.