World trade - WTO chief economist warns against deglobalization
The World Trade Organization (WTO) sees signs of fragmentation in the global economy and warns of possible deglobalization. "The economic costs would be very high," said the German Chief Economist of the World Trade Organization, Ralph Ossa, to the German Press Agency. And that's not all: global trade is important for security of supply, sustainability and justice. Ossa sees the global community at a crossroads.
"We are seeing the first signs that there is a reorientation of trade based on geopolitical spheres of influence," said Ossa. The WTO has divided the world into two hypothetical blocs for an investigation: on the one hand, countries that vote with the USA in the United Nations and, on the other, those that stand alongside China. Since the start of the Russian attack on Ukraine in February 2022, trade within the blocs has grown four to six percent faster than between the blocs.
World at a crossroads
The situation is not yet dramatic, but could become so, warned Ossa. The WTO has calculated what would happen if the world actually fell apart into two rival power blocs and the blocs erected trade barriers against each other. In such a scenario, industrialized countries would lose an average of three percent of their gross domestic product by 2050, while poor and emerging countries would lose 6.5 percent, the WTO wrote in its World Trade Report in autumn 2023.
"There is currently a lot of discussion about whether we should become more independent of other countries, whether we should perhaps only trade with friendly countries or only rely on our own production," says Ossa. There is a risk that "the flattening of globalization will turn into deglobalization". The world is still a long way from this. But it is at a crossroads. Countries have to decide whether they see world trade as part of the solution to problems or as part of the problem. The WTO, with its 164 member countries, whose task is to promote fair global trade for the benefit of all, sees trade as part of the solution.
Global trade has been a blessing during the coronavirus pandemic, said Ossa - apart from the early days when countries temporarily halted exports of important goods such as face masks. This included Germany at times. Masks, home office equipment and vaccines were produced in international supply chains and made available through trade. In addition, it is not known where the next shock will occur and who will have the solution ready. A multilateral trading system ensures that there are always alternative procurement options in a crisis.
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- Amidst concerns about deglobalization, the World Trade Organization (WTO) and global economy are at a critical juncture, with fragmentation evident.
- The WTO's Chief Economist, Ralph Ossa, speaking to the German Press Agency, emphasized the importance of world trade for ensuring supply security, sustainability, and justice.
- Ossa highlighted the emergence of geopolitical trade reorientations, with the WTO categorizing nations into two hypothetical blocs based on their UN voting alignments: one with the USA and another with China.
- The United Nations (UN) and World Health Organization (WHO) have also been part of the international dialogue surrounding geopolitical tensions, with trade volumes within blocs increasing faster than between them.
- The World Trade Organization, along with its 164 member countries, including Switzerland, the USA, and Germany, advocates for fair global trade as a solution to global challenges.
- China's role in world trade has been significant, with its trade dynamics impacting global economy and the WTO's strategic considerations.
Source: www.stern.de
