The World Trade Organization in the latest edition of its World Trade Report urged for broader, more inclusive economic integration as it observed the creeping in of trade fragmentation, which it said could threaten global growth and development.
The WTO's flagship publication, launched on 12 September, highlights findings on how "re-globalization" — or increased international cooperation and broader integration — can support security, inclusiveness, and environmental sustainability.
The World Trade Report is an annual publication that aims to deepen understanding about trends in trade, trade policy issues, and the multilateral trading system.
The 2023 edition confirms that geopolitical tensions are beginning to affect trade flows, including in ways that point towards fragmentation of trading relationships.
However, the report contends that, despite these findings, international trade continues to thrive, indicating that talk of de-globalization is still in the nascent stage.
Globalization still prevalent
The report pointed to globalization as still prevalent as seen from the expansion of digital services trade, environmental goods trade, and global value chains. In addition, global trade continues to demonstrate resilience to recent global crises.
The paper examined the relationship between economic integration and three major economic challenges today: Security and resilience, poverty and inclusiveness, and environmental sustainability.
Those challenges have buttressed arguments that globalization has not delivered as expected or exposes countries to excessive risks. Many contend that greater economic independence — rather than interdependence — would better serve the well-being of their constituencies.
Such views have begun to shape trade policy, warned WTO Director General Ngozi Okonjo-Iweala. WTO has observed a sharp increase in the number of unilateral trade measures that if unchecked could ultimately fragment the world economy, she added.
Fragmentation extreme costly in economic terms
"Meanwhile, opponents of fragmentation argue that it would be extremely costly in economic terms, offers dubious benefits in terms of security, and would unwind the growth and development benefits that economic integration has delivered for people around globe," she said. "Even worse, far-reaching fragmentation would make it harder, possibly impossible, for the international community to address challenges of the global commons."
The paper also demonstrates how advances in information and communication technologies have made trade in services, particularly digital services, much easier, enabling underrepresented economies, as well as groups such as women and micro, small and medium-sized enterprises, to participate in global trade.
Trade a powerful force multiplier
The report likewise suggests that trade is a powerful force multiplier for unlocking environmental gains. Just as countries can reap economic gains by specializing in what they are relatively good at, the world can reap environmental gains if countries specialize in activities that they are relatively green at.