WTO: US measures could trigger historic contraction in global trade

 

Dr. Ngozi Okonjo-Iweala, Director General of the WTO has revealed that it is thoroughly analyzing the implications of these actions, which, added to those implemented at the beginning of the year, could trigger a contraction of approximately 1% in the volume of world merchandise trade This worrying projection represents a drastic downward revision of almost four percentage points compared to previous estimates, sowing concern among members and anticipating an uncertain global economic future.

 

The news has generated a wave of inquiries from WTO members seeking clarity on the scope and potential impact of the US measures on their respective economies and on trade stability. international trading system as a whole. The WTO Director-General has assured that she is actively engaging with these members, providing information and seeking answers to their growing questions.

 

In an official statement, the WTO secretariat expressed its deep concern about this situation. "The recent announcements will have substantial implications for global trade and the prospects for economic growth," the document reads. The organization did not hesitate to point out the seriousness of the situation, warning about the risk of escalating trade tensions"I am deeply concerned about this decline and the possibility that it could escalate into a tariff war with a cycle of retaliatory measures that will cause further declines in trade," the secretariat warned.

 

The WTO's warning comes at a delicate time for the global economy, which is still recovering from the impacts of the COVID-19 pandemic and facing challenges such as inflation and geopolitical instability.

 

 

While the specific details of the measures announced by the United States have not been detailed in the WTO statement, the strength of the warning suggests that this would be significant trade restrictions, possibly tariffs or quotas on the import of various products. The concern lies in the domino effect these actions could generate, prompting other countries to take similar retaliatory measures, which would inevitably lead to a cycle of protectionism detrimental to the global economy.

 

The WTO recalled that, despite these new measures, a considerable part of world trade is still governed by the Most Favored Nation principles (NMFThe WTO's free trade agreement (FTA), a fundamental pillar of the multilateral system that guarantees non-discriminatory treatment among members, has seen a slight decline in the proportion of trade under this regime, falling from 80% at the beginning of the year to the current 74%, highlighting a worrying weakening of multilateralism. "WTO members must unite to safeguard these gains," the secretariat urged, calling for cooperation and commitment to the organization's fundamental principles.

 

The organization also warned of the significant trade diversion effects that could arise as a result of these measures. imposition of trade barriers by a country can lead to its trading partners look for alternatives in other marketsdisrupting traditional trade flows and generating new tensions. In this regard, the WTO called for responsibility. "I urge Members to manage the resulting pressures responsibly to prevent trade tensions from escalating," the secretariat stated.

 

At this time of uncertainty and growing concern, the WTO reaffirmed its central role as a platform for dialogue and mechanism for the prevention and resolution of trade conflicts“The WTO was created precisely to serve in moments like these: as a platform for dialogue, to prevent the escalation of trade disputes, and to promote an open and predictable trading environment,” the secretariat emphasized. The organization called on its members to actively use this forum to seek cooperative solutions and avoid further fragmentation of the global trading system. “I encourage Members to use this forum to collaborate constructively and seek cooperative solutions,” the statement concluded.