(VOVWORLD) - The recent turmoil in global trade and financial markets, triggered by US tariff policies, has raised questions about the role of the World Trade Organization as it marks its 30th anniversary this year.
 (Getty Images/VNA) |
At the opening session of the WTO’s Council for Trade in Goods (CTG) in Geneva on Wednesday, representatives from China, the European Union, Switzerland, Canada, Brazil, and other countries urged that the WTO’s role be elevated amid mounting threats to multilateral trade mechanisms.
A question for the WTO
Global trade is facing one of its most serious crises in decades. On April 2, US President Donald Trump announced reciprocal tariffs on more than 180 trade partners, sparking a week of global market volatility. Subsequent developments have pushed the world to the brink of a full-blown trade war as China, the EU, and Canada responded with countermeasures.
Although President Trump announced on Thursday a 90-day tariff pause for negotiations to take place, the risk of a global economic downturn remains high. Tension between the US and China, the world’s two largest economies, continues to escalate, with higher tariffs on the other’s goods paralyzing bilateral trade.
The recent trade instability has reignited debate over the WTO’s role and ability to enforce global trade rules and address increasingly complex challenges. Former European Commission President Jose Manuel Barroso said that such crises underscore the need to strengthen the WTO.
"What we need today is not trade wars. You'd like to have the big powers of the world to work together so that they can enhance not only open trade but also global prosperity. Supporting open, predictable, rules-based economy is exactly what the WTO was created," said Barroso.
Opportunities in crisis
WTO Director-General Ngozi Okonjo-Iweala said that the current tensions highlight the WTO’s role as a pillar for dialogue and fair and transparent trade cooperation globally, something its members all want to see, but she acknowledged that the US and other countries have legitimate concerns about the WTO and the system of multilateral trade. If the WTO is to be the most credible platform for resolving disputes among economies, it must become more effective.
“Maybe we could use today's concerns to change the system for the better. The great opportunity here is the WTO members to come together in a cooperative manner to safeguard the 74% of world's good trade,” said the WTO chief.
Saudi Ambassador to the WTO and Chairman of the WTO General Council Saqer Abdullah Almogbel said the WTO and its members are engaged in serious discussions to develop new mechanisms that would make the WTO a more powerful advocate for rules-based global trade.
“I'm holding consultations starting immediately this week with all interested delegations with the view to explore how we, the WTO members, can best engage on this latest development,” said Almogbel.
WTO data released this week shows that, while it previously oversaw around 80% of global trade, that has dropped to 75% since US-China tension began to escalate. Swift action is needed to prevent the worse-case scenario of two opposing trade blocs leading to a long-term decline of up to 7% of global real GDP.