(MENAFN- AzerNews) By News Centre
The global economy has not embraced decoupling but is showing
signs of fragmentation, which would be "very costly" for all,
Nikkei Assia reports citing World Trade Organization
Director-General Ngozi Okonjo-Iweala, Azernews reports.
The WTO chief also sounded a warning on the potential impact of
the war between Israel and Hamas, as well as the constant threat of
"The 2024 outlook is still relatively optimistic, with a
projection of about 3.3% growth for goods trade, but the risks are
heavy to the downside," Okonjo-Iweala told Nikkei.
Global free trade has faced headwinds of revision since 2017,
when U.S. President Donald Trump withdrew America from the
Trans-Pacific Partnership. Under his successor, Joe Biden, the U.S.
has sought to limit China's access to advanced technology in
semiconductors and other areas, enlisting partners like Japan and
some European nations in a strategy they call "de-risking."
Okonjo-Iweala said the WTO does not see "big signs of a broader
The volume of trade in goods and services is "still quite
substantial," at about $31 trillion, and "even trade between China
and U.S. and China and EU are still relatively robust," she
Yet some of the emerging signs of fragmentation warrant caution,
the WTO chief said.
"Intermediate goods are measures of the health of global supply
chains," Okonjo-Iweala said. "And we saw the share of intermediate
goods of world trade fall from an average of about 51% over the
past three years to 48.5% in the first half of 2023. So we're a
little concerned about this."
The WTO has estimated that if the world decouples into two
trading blocs, global gross domestic product will fall 5% in the
This would be a "huge loss," she said. "It's like losing the
whole of the economy of Japan."
The WTO wants member states to support the free, stable, and
predictable flow of trade "because we believe we cannot solve the
world's problems at the moment without a free and fair trading
The U.S., the EU, and Japan have accused China of not following
through on the commitments to free trade it made when joining the
WTO, particularly on state aid for industry. Okonjo-Iweala
acknowledged the criticism but said it runs both ways.
"The U.S. and many other members complain about the issue of
industrial subsidies in China, and they feel that maybe China is
not notifying the WTO," she said.
"But equally China also complains about the agricultural
subsidies of the other members," she added.
The WTO is studying the issue of subsidies "across the board"
with the OECD, the IMF and the World Bank, and once it has gathered
the evidence, "then we'll be able to make some decisions about how
do we tackle these problems of level playing fields."
Group of Seven trade ministers discussed dealing with economic
coercion -- which includes unilateral trade restrictions --- during
talks last weekend in Osaka, Japan. Okonjo-Iweala emphasized that
the WTO has a role in fighting such abuses.
She described talks between Canberra and Beijing over Chinese
tariffs on Australian wine as "a very good example" for WTO
members. The tariff dispute has been seen an as example of economic
coercion by China.
The WTO chief also called for dialogue over China's ban on
imports of Japanese seafood following the release of treated
wastewater from the Fukushima nuclear plant.
"We strongly encourage China and Japan to have good
people-to-people dialogue," she said.
The WTO this month slashed its 2023 forecast for global growth
of trade in goods to 0.8%, down from the April projection of 1.7%.
The downgrade reflects slowing economic growth in China and a weak
Trade growth is forecast to recover to 3.3% in 2024 but faces
risks including the ongoing Middle East conflict.
"That is one of the regions where a lot of the world's oil and
gas comes out of," Okonjo-Iweala said. "So inevitably this will
have an impact."
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