The World Trade Organization (WTO) recently released the "2023 World Trade Report" (hereinafter referred to as the "Report"), which shows that early signs of trade fragmentation have emerged, which may drag down global economic growth. In this situation, incorporating more populations, economies, and urgent issues into global trade and strengthening multilateral cooperation is an effective solution to address global challenges, which helps the global economy develop towards a more secure, inclusive, and sustainable direction.
The Director General of the World Trade Organization, Ivira, pointed out in his report that the international economic order after 1945 was based on the concept of strengthening economic and trade ties, interdependence among countries, and promoting peace and common prosperity. She stated that for most of the past seventy years, this concept has guided policymakers and laid the foundation for an era of unprecedented growth, improved living standards, and poverty reduction. Today, this vision is under threat, as is the future of an open and predictable global economy.
The report states that the "multiple crises" in geopolitics, public health, environment, and economy have led some to believe that globalization poses excessive risks to countries. In the view of these people, greater economic independence, rather than interdependence, will better serve the welfare of voters. This viewpoint has already begun to affect trade policies, such as the sharp increase in the number of unilateral trade measures. If left unchecked, this trend may ultimately divide the world economy.
The economic costs of fragmentation will be enormous, "warned Ralph Ossa, Chief Economist of the World Trade Organization. The WTO model predicts that if the world falls into the worst-case scenario of comprehensive geopolitical competition, global average income will decrease by 5% and average trade volume will decrease by 13%.
Osa stated that trade skepticism is currently rampant, arguing that international trade is not conducive to building a safer, inclusive, and sustainable world. This narrative style is "fundamentally different" from the narrative style that has guided trade policy formulation since the signing of the General Agreement on Tariffs and Trade in 1947. He pointed out that in order to maintain peace and security, reduce poverty and inequality, and achieve a sustainable economy, "we need to embrace trade rather than reject it... we also need a multilateral trading system".
It is worth noting that even though globalization is currently facing challenges, Osa believes that overall global trade fundamentals are good, and the argument of de globalization is too exaggerated. Data shows that after the WTO Trade Facilitation Agreement came into effect on February 22, 2017, global trade volume increased by 231 billion US dollars, particularly benefiting developing countries.
The report also points out that despite facing challenges, international trade continues to thrive, which means that the claim of de globalization has not yet been supported by data.
By analyzing whether to divide the world economy or to promote broader and more inclusive integration (referred to as "re globalization" by the World Trade Organization) is more conducive to achieving the goals of member states, the report points out that fragmentation will not make the world safer, equal, or more sustainable, but rather the opposite. Fragmentation will make economies less prosperous, lack innovation, and flexibility. “
