GENEVA, Switzerland — Failure to reform the World Trade Organization could shrink the global economy by about 10% by 2050, a new report from the international body said Tuesday. The alert comes as the WTO struggles to reform itself in a period of heightened global pressure in geopolitics and industrial policy, plus U.S. tariffs. The WTO’s annual trade report compares three alternative futures for trade cooperation: enhanced cooperation, geopolitical fragmentation, and a world where the WTO is replaced by a network of bilateral and regional free trade deals.
Under enhanced cooperation, global GDP would be 2.9% higher by 2050, while exports would increase by roughly 18%. Under geopolitical fragmentation, GDP would drop by 5.1% and exports would also fall 19%. The worst outcome would be a world dominated by bilateral and regional FTAs, where the WTO’s role would be sidelined.
Global GDP would drop by 6.9%, and exports would also fall by 27%. Taken together, the figures represent a gap of roughly 10% of global GDP between the enhanced cooperation and FTA scenarios. The report states that the current trading system is facing its worst disruption in 80 years.
WTO Chief Economist Robert Staiger said the organization was dealing with an economy that was increasingly different from the one its rules were designed to govern. While 72% of global goods trade still takes place under the WTO’s most-favored-nation tariff terms, according to the report, that number stood at 80% two years ago, signaling a system under strain. According to the report, there are four structural developments putting pressure on the global trading system: the changing distribution of economic power, the growing role of state intervention, the changing nature of trade — and geopolitics.
Governments are increasingly viewing trade through the lens of national and economic security, supply-chain concentration, access to critical technologies, resilience and dependence on geopolitical rivals, Staiger said. The Geneva-based forum has been tested, particularly during the Trump administration, as U.S. President Donald Trump’s tariff regime shreds the global trade rulebook and openly flouts WTO rules.
The weakening of the organization comes as members struggle to reform it. WTO members failed to agree on a plan to reform the organization at the ministerial conference in Cameroon in March. The U.S. tied efforts to agree on a work plan to an extension of a global ban on digital tariffs known as the e-commerce moratorium.
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