The World Trade Organization’s director general urged countries to embrace re-globalization rather than fragmentation in the face of the current economic crisis, according to a report released Thursday.
Dr. Ngonzi Okonjo Iweala said that closer economic integration has led to a massive reduction in global poverty and inequality, and that only a strong and effective multilateral trading system can solve current issues such as climate change.
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The report comes at a time when many countries are skeptical of global trade, arguing that it leaves them vulnerable to repeated and interconnected crises. For example, the wave of defaults that hit African countries last year and the cost of living crisis caused by the war in Ukraine have fueled resentment toward the current financial system.
President Ruto of Kenya, who hosted the Africa climate summit last week, said that Africa is suffering under unfair trade conditions that view the continent as a risk rather than a partner.
“How do we get Africa to pay five times more (than the rest)?” Ruto asked. “We are not asking to be favored or treated differently; we just need a conversation.”
The WTO report acknowledged that the benefits of global trade have been mixed in Africa, with integration and economic convergence being slower compared to the rest of the world. It also warned that fragmentation would make it harder to solve global challenges and roll back developmental gains.
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“Narratives matter in economics and in policy. The currently ascendant narratives around trade may contribute to a gradual erosion of the trading system and the WTO,” Iweala said. “Re-globalization offers a better path forward. Bringing more countries and communities from the margins of the global economy to the mainstream would make for deeper, more diversified markets that are more resilient to shocks.”
The WTO remains positive in its outlook, but faces an uphill battle to maintain the current rules-based financial order in the face of great international stress.
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