April 21, 2024
World Economy

Global economy weighed down by war, uncertainty and instability, trade chief warns

“People everywhere are feeling anxious about the future and this will be felt at the ballot box this year,” the head of the WTO said.


War, uncertainty and instability are weighing down the global economy, the head of the World Trade Organisation (WTO) warned on Monday, urging the bloc to embrace reform as nearly half the world’s population brace for elections this year.

WTO Director-General Ngozi Okonjo-Iweala sought to offer some praise for her organisation as it held its biennial meeting in the United Arab Emirates, even as it faces pressure from the US and other nations.

But she was blunt about the risks ahead, as higher prices for food, energy and other essentials sting people’s pockets, “fuelling political frustration”.

“People everywhere are feeling anxious about the future and this will be felt at the ballot box this year,” she said.

None are perhaps more critical for the WTO than the US presidential election on 5 November.

Running again is former President Donald Trump, who threatened to withdraw the US from the WTO and repeatedly levied tariffs — taxes on imported goods — on perceived friends and foes alike. A Trump win could again irritate global trade.

Okonjo-Iweala did not mention Trump by name, but offered a warning about attacks against multilaterism.

“The multilateral trading system, which I term a global public good since it was created 75 years ago, continues to be misconstrued some quarters and undermined,” she said.

But, even if President Joe Biden is re-elected, the United States has deep reservations over the WTO. 

The US under the past three administrations has blocked appointments to its appeals court, and it’s no longer operating. Washington says the WTO judges have overstepped their authority too often in ruling on cases.

The US has also criticised China for still describing itself as a developing country as it did when it joined the WTO in 2001. Washington, Europe and others say that Beijing improperly hampers access to emerging industries and steals or pressures foreign companies to hand over technology. The US also says China floods world markets with cheap steel, aluminium and other products.

Two new members

The WTO’s member nations will discuss a deal to ban subsidies that contribute to overfishing, extending a pause on taxes on digital media such as movies and video games, and agricultural issues while meeting this week in the Emirati capital of Abu Dhabi.

Also on Monday at the opening session, Comoros and Timor-Leste joined the WTO, bringing the number of nations in the bloc to 166.

But headwinds remain for the organisation and the world’s economy, particularly as the recovery from the coronavirus pandemic remains uneven across nations.

Okonjo-Iweala made no mention of Israel’s war on Hamas in the Gaza Strip, though she noted the ongoing disruptions to shipping caused by Yemen’s Houthi rebels in the Red Sea over the conflict.

“Shipping disruptions in vital waterways like the Red Sea and the Panama Canal are a new source of delays and inflationary pressure,” she said.

The WTO is also hampered by its voting format, with major decisions requiring consensus — meaning countries must actively vote in favour for proposals to take effect.

“If we thought the world looked tough in mid-2022 when we were slowly emerging from the pandemic and the war in Ukraine had shaken food and energy security, we are in an even tougher place today,” Okonjo-Iweala said.

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