WASHINGTON, Sept 30 — Long-delayed reforms to the global trading system have sparked an increase in tensions among major economies, and derailed the economic benefits most often felt by the poor, according to a new report released today.
The failure to continue to adjust global trade rules in the last two decades, particularly in agriculture and services, has undermined the potential to boost growth and reduce poverty, according to the joint report by the International Monetary Fund (IMF), World Trade Organisation (WTO) and World Bank.
The organisations are urging redoubled efforts to accelerate reforms, especially in the WTO, to salvage the economic benefits of trade, which have stalled, and ensure the prosperity is shared more widely.
“The system of global trade rules that has nurtured unprecedented economic growth across multiple generations faces tensions,” the report said.
“Though only recently brought to the fore, those tensions are rooted in issues that have been left unresolved for too long.”
US President Donald Trump capitalised on the rising antagonism towards globalisation in his campaign for the White House and since taking office has pursued a confrontational trade policy that has imposed steep tariffs on allies and adversaries without distinction.
Trump also harshly criticised the WTO, saying it has allowed China to exploit the rules and been unfair to the United States.
The IMF has warned that the trade confrontations are a serious risk to the global economy that could undermine economic growth.
And a WTO report last week said global trade would be slower than previously expected, as escalating trade tensions “will slow trade growth for the rest of this year and in 2019.”
Despite raising living standards around the world since the end of World War II, trade reforms stalled in the early 2000s and remain incomplete while domestic policies continue to impede trade, the joint report said.
Global trade volumes grew about seven per cent annually in the 1990s — double the rate of global GDP growth — but slowed sharply in the years before the 2008 financial crisis.
A critical issue has been the failure to adjust rules to reflect the dominance in trade of services, including ecommerce, which now account for two-thirds of global GDP and employment, and half of global trade, the report said.
Services are key to trade in goods as well, since manufacturing relies on many services to bring their products to market.
“The current focus on trade tensions threatens to obscure the great untapped benefits possible from further trade reform,” the report said. — AFP
Source: The Malay Mail Online