The World Trade Organization (WTO) may have reduced average tariffs by nearly half and streamlined world trade in its 25-year history, but the multilateral trading body is faced with the challenge of rising protectionism across the globe, the WTO chief has said.
In a recent statement, WTO Director General Roberto Azevedo said since the establishment of the multilateral trading body in 1995, average tariffs were cut by almost half to 6.4 percent, from 10.5 percent. He argued those who acceded to the WTO were involved in “far-reaching reforms and market opening commitments” that have been boosted their incomes.
“The predictable market conditions fostered by the WTO have combined with improved communications to enable the rise of global value chains [GVCs],” Azevedo said.
“Confident in their ability to move components and associated services across multiple locations, businesses have been able to disaggregate manufacturing production across countries and regions. Trade within these value chains today accounts for almost 70 percent of total merchandise trade,” he added.
Azevedo also connected the decline in global extreme poverty rate to 10 percent to the rise of GVCs, as developing nations are able to catch up with developed economies in terms of increased purchasing power and consumer choice.
“In recent years, WTO members have agreed to streamline border procedures through a landmark agreement on trade facilitation projected to lift trade by over $1 trillion per year. They have also liberalized trade in information-technology products, and abolished harmful farm export subsidies,” Azevedo said in the statement.
However, the WTO chief did not deny the challenges faced by the organization today, most especially the introduction of trade restrictions by several governments over the past two years, affecting $747 billion in global imports last year.
“Despite these considerable achievements, it is no exaggeration to say that the WTO faces challenges today that are unmatched in our relatively short history. Over the past two years, governments have introduced trade restrictions covering a substantial amount of international trade—affecting $747 billion in global imports in the past year alone,” Azevedo argued.
“The rising uncertainty about market conditions is causing businesses to postpone investment, weighing on growth and the future potential of our economies. How WTO member governments face up to these challenges will shape the course of the global economy for decades to come,” he added.
As such, Azevedo advised governments to focus on the preservation and strengthening of multilateral trading rules upheld in the WTO, including negotiations aimed at slashing the most harmful fishing subsidies that are causing the depletion of oceans.
“Members know that we must have an agreement by June at our 12th Ministerial Conference in Nur-Sultan, Kazakhstan, or we will have to collectively shoulder the blame for missing a critical target for the Sustainable Development Goals. Agriculture negotiations have been reenergized with members taking pragmatic steps to identify where agreement on vitally important issues may be reached,” Azevedo said.
According to the WTO head, the upcoming 12th Ministerial Conference in Kazakhstan is expected to deliver new agreements, and frameworks, that will contribute to the stability of the multilateral trading body and its rules. “If the last 25 years have taught us anything about the WTO, it is that this organization is resilient and resourceful. We have served our members well over this past quarter of a century and we will continue to do so in the future,” Azevedo concluded.
Source: Business Mirror
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