WTO Stresses Need for Open Trade and Strong Domestic Policy
GENEVA — The World Trade Organization (WTO) emphasized on Monday that open trade alone is insufficient to bridge the economic disparities between affluent and developing nations, urging for more comprehensive measures to support poorer countries.
In its 2024 global trade report, the WTO assessed the impact of trade on reducing economic inequalities since its inception in 1995. WTO Director-General Ngozi Okonjo-Iweala highlighted the report’s key finding: trade has played a significant role in alleviating poverty and fostering shared prosperity.
“Despite some current criticisms suggesting that trade and institutions like the WTO have exacerbated poverty and inequality, our report reaffirms trade’s positive impact,” Okonjo-Iweala stated in the report’s foreword. However, she also acknowledged that substantial efforts are still required to enhance the effectiveness of trade and the WTO in benefiting economies and populations that have been marginalized over the past three decades of globalization.
The report reveals that low- and middle-income countries often engage less in international trade, attract fewer foreign direct investments, and rely more heavily on commodity exports. Additionally, these countries tend to export fewer complex products and trade with a limited number of partners.
“Protectionism, as illustrated in the report, is not a viable solution for achieving inclusiveness,” Okonjo-Iweala cautioned, noting that such measures can increase production costs and provoke retaliatory actions from trading partners.
WTO Chief Economist Ralph Ossa reinforced this view, stating, “Reducing trade alone will not foster inclusiveness, nor will trade by itself suffice.” He advocated for a more holistic approach that combines open trade with supportive domestic policies and international collaboration.
The report underscores the importance of domestic policies such as vocational training, unemployment benefits, and education aimed at creating a more skilled and adaptable workforce. Additionally, it calls for effective competition policies to ensure consumer benefits through lower prices, improved infrastructure, and functional financial markets.
