WTO cuts its global trade forecast

THE WORLD trade Organisation (WRO) cut its forecast for global trade growth this year by more than a third yesterday, reflecting a slowdown in China and falling levels of imports into the US.

The new figure of 1.7 percent, down from the WTO’s previous estimate of 2.8 percent in April, marked the first time in 15 years international commerce was seen lagging the growth of the world economy, the trade body said.

The figures should be a wake-up call for governments, WTO director-general Roberto Azevedo said in the six-monthly trade outlook report.

“We need to make sure that this does not translate into misguided policies that could make the situation much worse, not only from the perspective of trade, but also for job creation and economic growth and development which are so closely linked to an open trading system,” the report quoted him as saying.

The data underlined concerns that, after a long period of growth through globalisation and reliance on global trade, governments are increasingly seeking to protect their own industries during a period of economic difficulty and economies are increasingly driven by domestic consumption.

Although all governments deny protectionism, trade is no longer outpacing economic growth as it used to. Trade has grown 1.5 times faster than gross domestic product over the long term, and twice as fast when globalisation picked up in the 1990s.

This year trade will grow only 80 percent as fast as the global economy, the WTO said, the first reversal of globalisation since 2001 and only the second since 1982.

Azevedo said the benefits of trade should be shared more widely, with a system that does more to include poor countries, small firms, marginalised groups and entrepreneurs – an apparent nod to anti-globalisation activists who say secretive trade talks are exclusively aimed at helping big business.

Meanwhile, British trade minister Liam Fox promised yesterday that Britain’s departure from the EU would not create a legal vacuum at the WTO, and said his country was determined to champion free trade.

Britain is a full and founding member of the WTO, but its WTO membership terms are currently shared with the rest of the EU, Fox told a WTO conference in Geneva.

“The UK will continue to uphold these commitments when we leave the European Union. There will be no legal vacuum. But this will not stop us pursuing a more liberalised trade agenda in the future,” he said. – Reuters