GENEVA, CH.- Trade multilateralism seeks to establish itself in today’s world as a promoter of prosperity, mainly for developing countries, at a time when societies experience disruptions in increasingly shorter periods that cause profound imbalances in global supply chains .
Eighty years ago, countries began to organize themselves to develop regulations that would govern the exchange of goods, while supporting the construction of peace by creating interdependence between them, which would lead to a lower possibility of armed conflict.
These efforts were embodied in the General Agreement on Tariffs and Trade , the precursor to what is now known as the World Trade Organization (WTO) , the body that deals with the rules governing trade between nations, and which is on the eve of its 30th anniversary.
WTO Director-General Ngozi Okonjo-Iweala is aware of recent criticism of the role of global trade, but she is staunchly defending the results achieved since the creation of the organisation (1 January 1995).
“This system has created prosperity. More than 1.5 billion people [in the world] have been lifted out of poverty,” said Okonjo-Iweala, the first woman to head the WTO, at a press conference held at its headquarters.
Here he gave a preview of the results of the World Trade Report 2024 , which sought to demonstrate the correlation between countries with a weak participation in world trade and their limited economic progress, against those that have established an open-door policy in the global exchange of goods and have achieved faster growth.
The report says that thanks to trade, the share of people living in extreme poverty in low- and middle-income economies has fallen from 40% to around 11% since 1995, while the share of trade in these economies’ GDP has doubled from around 16% to 32%.
“We found that the more you can increase trade, the more likely it is to prosper (although) the convergence we saw with incomes between rich and poor countries was disrupted by the pandemic. And it pushed some parts of the world backwards,” he said.
The recent COVID-19 pandemic was a clear example of the fragility of trade when global production and the proper functioning of supply chains were interrupted. The results of this event have encouraged, among other trends, production lines to be relocated to consumption centers in countries that offer competitive advantages for companies.
Developing countries such as Mexico have attracted these investments, although they still have significant barriers to overcome in order to meet this demand for relocation, a trend also known as nearshoring.
“Developing countries have very high trade costs due to bureaucracy, lack of infrastructure, regulatory frameworks that are not adequate (…) one of the things we have to do if we want to be competitive and integrate is to reduce our trade costs significantly and the WTO actually has a Trade Facilitation Agreement that, when implemented, has shown that it will significantly reduce direct costs,” said Okonjo-Iweala.
Trends in trade
“How can we reimagine trade?” the WTO director-general asked. She herself replied that the trend in global trade is moving towards the exchange of digital services, given their high rate of growth – around 8% annually – and their capacity to create jobs.
Likewise, the future of trade is “green and inclusive” , meaning that while seeking to create renewable supply chains, they should also diversify towards regions in developing countries where a complete production cycle is developed, from obtaining raw materials to producing a final product.
“Supply chains have to be regional,” he said.
This Tuesday, September 10, the Public Forum 2024 will begin here in Geneva , under the title “Reglobalization: Better trade for a better world” , one of the largest events of the WTO, bringing together more than four thousand participants and where around 600 speakers from around the world will hold 135 working sessions to analyze and debate the trends and future of global trade. Grupo T21 is part of the group of media that the organization has invited to cover this important event.
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