A breakdown in trade relations between the major players could threaten the ongoing economic expansion and put many jobs at risk, the World Trade Organization said, amid an escalating trade war between the United States and China.
Noting that global cooperation will be essential to ease tensions and preserve the strong growth they are currently experiencing, Roberto Azevedo, Director General of the WTO, said that the trade body which was created as a forum for members to hold themselves to account, will play their part in this process.
âThe improved trade outlook is good news, but there are a number of downside risks threatening the global economy and the recovery in global trade. Economic factors include the expected tightening of monetary policy in developing countries and the limitation of credit and fiscal expansion in large emerging market economies, âAzevedo said at the annual spring meeting of the International Monetary Fund.
“However, the greatest threat is posed by increasing trade tensions and the possibility of us entering a sequence of unilateral, tit-for-tat measures, all of which create uncertainties for world trade and GDP growth. It is not possible to accurately map the effects of a major escalation, but it is clear that they could be serious, âhe said.
âA breakdown in trade relations between the major players could derail the recovery we have seen in recent years, threatening the ongoing economic expansion and jeopardizing many jobs. In an interconnected economy, the effects would likely be globalized, going well beyond the countries directly concerned. In this scenario, poor countries would lose the most, âAzevedo said.
Indeed, it can be argued that without the WTO, a wave of protectionist measures would have been triggered by the 2008 crisis, considerably worsening the economic effects of this slowdown, he said.
Azevedo said that a strong, rules-based multilateral trading system – as embodied by the WTO – provides the stability and predictability necessary for world trade to function smoothly and fully play its role in supporting the economic growth and development.
But the system can be continuously strengthened and improved. Since 2013, WTO members have implemented a number of important reforms, he argued.
Progress includes the Agreement on Trade Facilitation, the Agreement to Eliminate Agricultural Export Subsidies, and a series of measures to support our least developed members. In addition, a group of members have reached an agreement to expand the Information Technology Agreement, which eliminates tariffs on a wide range of information technology products, he said.
A potential trade war has been brewing between the two countries since April 2017, when Trump asked the Commerce Department to investigate whether foreign steel imports from China and other countries could pose a threat to national security.