June 21, 2023
In her keynote address to the 13th World Chambers Congress in Geneva on 21 June, Director-General Ngozi Okonjo-Iweala said the multilateral trading system works but that parts of it need reform. She also underlined the risk to global prosperity if trade fragments into rival blocs and reiterated her call for “re-globalization” rather than deglobalisation.
Rising geopolitical tensions and the constant crises of recent years — the COVID-19 pandemic, the war in Ukraine, climate shocks and the resulting disruptions to trade — have sparked questions about whether the multilateral trading system still works, the Director-General told the gathered business leaders.
“My answer is: Yes, the system works. Yes, parts of it need to be fixed. We need to fix what needs fixing. We don’t need to throw the baby out with the bathwater,” she said.
“The WTO has made things better for business,” the Director-General said, citing the Information Technology Agreement eliminating tariffs on almost USD 3 trillion worth of trade, the Government Procurement Agreement opening up more than USD 1.7 trillion in annual public contracts to competition from firms in participating members, and the Trade Facilitation Agreement cutting red tape and making it cheaper and faster to move goods across borders.
Nevertheless, the WTO’s dispute settlement system still needs fixing in order to provide the certainty business needs, the Director-General noted. In addition, keeping the WTO fit for purpose for the 21st century economy requires updating the organization’s rulebook, particularly in regard to digital trade.
“The future of trade is services, it’s digital, it’s green — and it has to be inclusive,” she said.
A looming threat is deglobalization and fragmentation of trade. WTO economists have warned that a decoupling of the world economy into two rival blocs would lower long-run global GDP by over 5 per cent, with developing and least developed economies hurt the most.
“We must push back against the pressures for global economic fragmentation, which would be costly and could well weaken supply resilience,” the Director-General said. “A better path forward is what we are calling ‘re-globalization’: deeper, more deconcentrated markets, achieved by bringing more people and places from the margins of the global economy to the mainstream.”
“Greater diversification would make it harder to weaponize interdependencies,” she continued. “This holds for critical minerals as well. Many rare earths are not so rare, but we need technological innovation so that the developing countries where they are found can extract and process them in cleaner ways.”
The Director-General urged business leaders to continue speaking up for multilateral cooperation on trade, adding that the “companies and chambers you run are at the centre of making trade work better for people and the planet.”
Held every two years, the World Chambers Congress brings together participants from around the world to address common challenges that shape the activities of chambers of commerce and businesses. The 13th Congress is focusing on the topics of multilateralism, innovation and sustainability during the June 21-23, 2023 event.
The World Trade Organization (WTO) deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.