WTO Reform Warning: Opportunity Loss in Global Economy May Rise to 10 Percent
The World Trade Organization reported that failing to reform the global trading system could lead to losses of up to 10 percent in the world economy.
The World Trade Organization announced that failing to implement necessary reforms in the multilateral trading system could result in a potential opportunity loss of up to 10 percent in global GDP. The organization drew attention to the need to modernize trade rules.
Changes in the Trading System
Despite disruptions in the multilateral trading system, approximately 72 percent of global merchandise trade is conducted within the framework of WTO rules. This drop from 80 percent two years ago indicates that the current system is under severe pressure. It is estimated that trade among member countries has increased by approximately 140 percent since the organization's inception in 1995.
Situation of Developing Countries
The share of low- and middle-income economies in global trade rose from 23 percent in 1995 to 45 percent by the end of 2024. This increase is shown among the clearest signs of the trading system's success in making the global economy more open and inclusive.
Stronger Trade Boosts Economic Growth
It is estimated that a strengthened multilateral trading system could increase global GDP by 2.9 percent and global exports by 17.9 percent by 2050. This growth in GDP is calculated to correspond to an economic gain of 3 trillion dollars.
Scenarios for Least Developed Countries
It is calculated that the gains from a strengthened trading system will be higher for least developed countries, whose share in world trade is below 1 percent. Thanks to reductions in customs duties and trade costs, it is assessed that the GDP of these countries could increase by 7.7 percent.
Fragmented Trade and Free Trade Scenarios
In a fragmented system where trade cooperation is shaped around geopolitical blocs, it is projected that global GDP could drop by 5.1 percent and exports by 18.6 percent. In the third scenario, based on a network of free trade agreements, it is calculated that global growth could decrease by 6.9 percent.
Evaluations by WTO Management
WTO Director-General Ngozi Okonjo-Iweala stated that the fundamental logic of the system remains valid today and noted that members are actively participating in reform efforts. Chief Economist Robert Staiger noted that the data in the report are simulations and that the system must adapt to the new global economy.