WTO official: WTO has never been more important
- By He Shan
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E-mail China.org.cn, May 18, 2017
"For growth, for development, for managing an increasingly interconnected global economy, the World Trade Organization (WTO) has never been more important," said Yi Xiaozhun, deputy director-general of the WTO when he addressed the 6th World Business Leaders (Kunshan) Conference in Kunshan City in east China's Jiangsu Province on May 17.
Growth in the volume of world merchandise trade fell to its lowest level since the financial crisis last year, with an increase of just 1.3 percent. This tepid pace of expansion was half as strong as the 2.6 percent rise recorded in 2015.
Yi said the weak performance in the world trade in 2016 was partly due to cyclical factors, as economic activity faltered in both developed and developing economies, but it also reflected structural issues including weak investment, which is the most trade-intensive component of demand in most countries.
Looking ahead to 2018, the WTO forecasts a 2.1-4.0 percent trade growth rate.
Commenting on the projection, Yi said, "Overall, the WTO is hopeful for better trade outcomes, but we recognize that trade growth remains fragile and there are considerable risks."
Brexit and Trump's protectionist trade agenda are widely believed to have compromised globalization and jeopardized the world's economy.
"The results of various polls and elections have given signals that political support for freer trade has weakened. This is a major source of uncertainty," said Yi.
A comparison of polls conducted before the 2008 financial crisis and in 2016 in European countries suggests a downward trend in positive perceptions of free trade and globalization in most countries. This trend is also observed among the most pro-trade, pro-globalization economies. Since 2012, public attitudes towards international trade have also deteriorated in the United States.
Yi pointed out that public attitudes toward trade, however, differ widely across countries, both developed and developing. Attitudes tend to be more positive among emerging Asian economies with expanding manufacturing employment sectors such as Bangladesh, China, Malaysia, and Vietnam; as well as the more open advanced economies with trade surpluses, such as Germany, South Korea, and Spain.
"The picture may not be as gloomy as one may think but this does not mean that there are no challenges ahead of us," he said.
He concluded that for overall gains to materialize, economies need to adjust.
He suggested, in finding the right responses, we need to keep our eyes on the big picture.
He said: "Although important, trade is not the only force that is transforming the global economy. Technological change also requires adjustment. Actually, 80 percent of jobs are lost to new technologies, not imports. we have to adapt to this new world."
Since China's WTO accession, the fraction of the country's population living in extreme poverty has fallen from 32 percent to less than 2 percent. Meanwhile, China has become the world's second largest export destination, absorbing nearly 10 percent of global imports.
"Strong Chinese import demand was one of the few sources of support for the world economy during and after the global financial crisis, without which the collapse would likely have been even worse," asserted Yi.
Yi believes that almost none of the global trade challenges we face today would be easier to solve outside of the multilateral system.
"With all of this in mind, I think our task now is to keep strengthening the system, delivering new reforms and resisting the erection of new barriers to trade," he added.
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