Editorial
The World Trade Organization (WTO) has conducted a comprehensive analysis of its three-decade history of promoting and facilitating international trade. The analysis provides valuable insights into the advantages and limitations of the surge in global commerce over the past few decades.
The report acknowledges that the benefits of international trade have not been equally distributed among rich and poor countries, as well as between low- and middle-income economies. Despite this disparity, the WTO’s efforts have contributed to a significant income convergence of 20-35 percent for middle-income economies compared to high-income economies.
One of the key findings emphasizes the transformative role of trade in reducing poverty and fostering shared prosperity, countering claims from anti-globalization groups that organizations like the WTO perpetuate poverty and inequality. Membership in the WTO and its precursor, GATT, has resulted in a remarkable 140 percent increase in trade among members.
While income inequality remains a challenge in many parts of the world, the analysis indicates that it is not inherently linked to trade and import competition. In fact, data suggests that most countries have experienced greater prosperity as a result of increased trade.
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The report underscores the importance of complementary domestic policies and robust international cooperation to maximize the benefits of trade. It recommends measures such as vocational training, unemployment benefits, education for a skilled workforce, competition policies, reliable infrastructure, and strong financial markets to support countries and populations that have been left behind.
Looking ahead, the WTO acknowledges the need to reduce trading costs, bridge the digital divide, and update trade regulations to reflect the growing significance of services, digital, and green sectors.
The report emphasizes that while more trade is essential, it must be accompanied by measures to ensure that benefits are equitably distributed, particularly among lower-income groups in low-income countries. For example, South Asia could benefit from increased trade, which would bring in foreign exchange and drive the development of internal frameworks for more equitable distribution of gains.
The report arrives at a critical juncture, as income convergence slowed after the global financial crisis of 2007-08 and reversed during the Covid-19 pandemic. This underscores the importance of enhancing collaboration between countries and strengthening supply chains.
In conclusion, the report highlights the significant impact of trade on global prosperity. It also emphasizes the urgent need for balanced, inclusive, and sustainable trade policies which may benefit all economies and sectors.
