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WTO, IMF, World Bank Issue Emergency Call For Trade Reform

"Trade has been vital in lifting living standards and reducing poverty over the years."

The World Trade Organization, the World Bank and the IMF are worried about global trade.

That makes sense because the most powerful man on the planet is trying pretty hard to roll back the clock on globalization and trade openness on the way to rewriting the rules of global commerce.

As a reminder, here’s how far we’ve come (or, put differently, here’s what we have to lose):

TradeWorld

(Barclays)

On Thursday, as everyone scrambled around at their desks to try and find a live feed they could stream of the Senate Judiciary Committee proceedings, the World Trade Organization was like that kid in the back of the classroom who never gets called on by the teacher (“Me, me, call on me, please!”).

Had anyone cared to call on the WTO Thursday, they would have discovered that the organization slashed its 2018 trade growth outlook to 3.9% from 4.4% in April. Additionally, the WTO said merchandise trade growth will be 3.7% next year, down from a projected 4% in their previous outlook.

Here’s what WTO Director General Roberto Azevedo said in a statement:

While trade growth remains strong, this downgrade reflects the heightened tensions that we are seeing between major trading partners. More than ever, it is critical for governments to work through their differences and show restraint.

That warning came just three days after the latest round of U.S. tariffs on China went into effect.

Fast forward to Sunday and, in a 42-page joint report, the WTO-IMF-World Bank issued an emergency call for a rethink of WTO rules and policies before it’s too late.

You can read the press release and full report below.

Press release

WTO-IMF-World Bank report: greater trade integration will boost shared prosperity

A new report issued today, 30 September, argues that trade integration can play a larger role in boosting shared prosperity. The report, by economists from the World Trade Organization, the International Monetary Fund and the World Bank, concludes that global trade policy can help to unlock opportunities provided by fundamental changes in the global economy.

In the report, entitled “Reinvigorating Trade and Inclusive Growth,” the economists find that the opening of trade has played a key role in lifting living standards and reducing poverty since World War II, but that this work remains incomplete. Trade reform has not sufficiently kept pace with the changing landscape of services trade, digital technologies, and foreign direct investment. Much also remains to be done in areas such as market access for goods and regulatory cooperation. Greater openness in such areas, the report claims, would promote competition, lift productivity, and raise living standards. In many other domains, such as the rural economy, gender and smaller enterprises, trade-related reforms are important to foster more inclusive growth and increase productivity. Moreover, the report notes that the current trade tensions may in part be rooted in issues that have been left unresolved on the negotiating table for too long. Cooperative action to secure greater, more durable openness could help to resolve these issues.

Director General Roberto Azevêdo said:

“Trade has been vital in lifting living standards and reducing poverty over the years but much more remains to be done. Many WTO members recognize that improvements are necessary in many areas of trade policy to keep up with the evolving needs of their economies and their people. This report is a welcome contribution to ongoing discussions on reinvigorating the trading system to the benefit of all.”

Full report

igo_30sep18_e
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