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TWN
Info Service on WTO and Trade Issues (Sept24/06) Geneva, 10 Sep (D. Ravi Kanth) — The World Trade Organization’s director-general, Ms Ngozi Okonjo Iweala, on 9 September touted trade’s “transformative role in reducing poverty and creating shared prosperity – contrary to the currently fashionable notion that trade, and institutions like the WTO, have not been good for poverty or for poor countries, and are creating a more unequal world.” Ahead of its Public Forum starting on 10 September, the WTO released its World Trade Report 2024 to showcase the gains from globalization following its establishment in 1995 at the conclusion of the Uruguay Round of trade negotiations. In her foreword to the report, the DG said the report offers important insights on how to make “trade and the WTO work better for economies and people left behind during the past 30 years of globalization.” The report claims that trade cost reductions between 1995 and 2020 led to a 20 to 35 per cent faster income convergence of low- and middle-income economies with high-income economies. According to the WTO, the report found a weak correlation between trade openness and within-country income inequality. “Less trade will not promote inclusiveness, nor will trade alone,” the WTO’s chief economist Ralph Ossa said. “True inclusiveness demands a comprehensive strategy – one that integrates open trade with supportive domestic policies and robust international competition,” he added. However, it appears rather doubtful whether the claims made by the DG and the WTO economists will convince the major industrialized countries, particularly the United States, who seem to be departing from the current globalization model based on free trade due to a spate of economic problems ranging from rising inequalities to massive unemployment, said people familiar with the development. Several developing countries including Nigeria seem to be caught in a whirlpool of unprecedented existential crises, said people, who preferred not to be quoted. MAIN FINDINGS The report has highlighted several major findings, including the need for a comprehensive strategy that integrates open trade with supportive domestic policies to make trade more inclusive. Some of the main points from the report are as follows: * Never before have the living conditions and prospects of so many people changed so dramatically in the space of a few decades. * Integrating open trade with other key policy areas is essential to spread the benefits of trade to all. * Income convergence has progressed over the last 30 years, but it has slowed since the global financial crisis of 2007-08, and took a backward step during the COVID-19 pandemic. * Trade reforms have accelerated the structural transformation of low- and middle-income economies, contributing to income convergence. * Income convergence and global economic integration have been uneven, leaving some economies behind. * High trade costs and limited diversification hamper convergence. * Impediments to structural transformation and a limited ability to adopt foreign technologies can also prevent certain economies from reaping the gains from trade. * Geopolitical tensions, the technological revolution and climate change pose significant risks to economic convergence, both in terms of unwinding past achievements and endangering future prospects. * Reducing trade costs is crucial to leverage future opportunities for trade-led growth. * Trade policy needs to be complemented by policies that support structural transformation and technology absorption. * Inclusiveness across economies can support inclusiveness within economies, and vice versa. * Trade has played a significant role in reducing poverty, especially in low- and middle-income economies. * Over the past 30 years, global income inequality has remained high, but it has evolved differently across economies. * Gains from trade are unevenly distributed among individuals within the economy, but this does not inherently increase inequality. * While trade generally brings benefits to many, some groups of individuals may experience long-term losses. * Mobility obstacles reduce the gains from trade and exacerbate losses. * Trade policies that seek to mitigate the disruptive effects of trade by protecting specific groups of individuals can be costly and can negatively impact other segments of the population. * Making trade more inclusive is essential in a context of rising geopolitical tensions, technological revolution and climate change. * Removing discriminatory trade barriers affecting vulnerable groups could foster a more inclusive trading system. * Complementary domestic policies are required to make trade more inclusive. * The WTO contributes to inclusiveness across economies by promoting an open, rules-based and predictable multilateral trading system. * WTO rules also contribute to improving governance through economic reform, thereby promoting sustained economic growth. * WTO rules provide for various flexibilities aiming to enhance trade opportunities for developing economies, including LDCs. * Aid for Trade projects and similar technical assistance programmes available for developing economies have enhanced their export opportunities. * Greater efforts to include the economies that have been left behind in the global trading system require a more effective and inclusive WTO. * Greater international trade cooperation is also necessary to address evolving challenges in areas crucial to the future of trade, such as services, digital and green trade. * Finding the right balance between binding commitments and effective flexibilities is essential to further inclusiveness across economies. * Concerns about the distributional impacts of trade have led to a growing number of trade agreements including provisions explicitly related to inclusiveness within economies. * WTO rules also contribute to inclusiveness within economies. * Nothing in the WTO agreements restricts the use of non-discriminatory complementary policies for inclusiveness. * WTO members are increasingly discussing how to make trade more inclusive by fostering the greater participation of women and MSMEs in trade. * A number of trade-related technical and capacity-building initiatives in the WTO are contributing to making trade more inclusive. * The WTO could help to address inclusiveness issues within an economy by means of its transparency and monitoring functions. * The implementation of WTO commitments can also become more inclusive if vulnerable groups are actively involved. * The multifaceted “trade and” challenges faced today demand a robust and coordinated “WTO and” approach to further support inclusiveness across and within economies. +
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