WTO members must do more to safeguard and expand the role of trade as a tool to create jobs, reduce poverty and increase economic opportunity, WTO Deputy Director-General Anabel González said at a conference hosted by the World Bank and the Peterson Institute for International Economics on 14 February. She called on WTO members to accelerate the pace of work on WTO reform to match the size of the challenges facing the global trading system.
WTO reform is urgently needed to prevent that power replaces rules in global trade relations,” DDG González said, adding that “the cost of the resulting economic fragmentation would be massive, possibly 5% or more of long-term world GDP if the world economy were to split into two self-contained blocs”.
“Small and mid-sized developing countries would be hit the hardest, as they would see their prospects for trade-led growth and development severely curtailed,” she noted.
DDG González said that economic resilience calls for diversification, not decoupling. “We need better transparency and monitoring to map concentrated trade relationships, we need greater policy dialogue to chart coordinated solutions, and we need to continue opening and facilitating trade to bring alternative supply sources into the global economy,” she said.
“We also need to do a better job of fully leveraging the global market for effective and ambitious climate action,” DDG González said, adding that “there are many ways we can do this, from reducing trade barriers that increase the cost of accessing green technologies to ensuring that carbon border adjustments and other climate measures do not put exports of green goods and services from developing countries at a competitive disadvantage.”
DDG González said that helping developing countries tap into new sources of trade growth, not least trade in digitally enabled services, is essential to bring small and women-owned businesses from the margins into the mainstream of the global economy.
“Countries can and must use all available WTO tools to anchor their own reforms to improve their business and investment climate,” she said, adding that “doing so is one piece of the puzzle to attract the investment needed to develop digital infrastructure, close digital divides, improve digital skills and entrepreneurship and reap the full benefits of digital trade.”
“WTO reform entails updating all of the WTO’s core functions — transparency and monitoring, negotiation, and dispute settlement,” DDG González said, adding that “having a fully functioning dispute settlement system is a top priority, given its unique role in ensuring that WTO rules are applied consistently across WTO members, no matter their size”.
“Bits and pieces of WTO reform are already happening,” she added. “But we need to accelerate the pace to ensure that trade becomes an even greater force for good in the years and decades to come.”