WTO rattled by trade antagonists

Global trade body warns 2016 trade growth slowest since 2009 financial crisis.    The head of the World Trade Organization recently warned that the benefits of international trade are increasingly getting lost among the incessant anti-trade rhetoric being espoused worldwide.
   “The risk of the negative rhetoric is that it will evolve into damaging policies down the road,” said Roberto Azevêdo, WTO director-general, in an Oct. 20 speech before the Confederation of Norwegian Enterprise.
   Threats to amend existing free trade agreements and kill off those recently negotiated, such as the wide-ranging Trans-Pacific Partnership between the United States and 11 other Pacific Rim countries, were espoused by both Republican and Democratic candidates during the run-up to the Nov. 8 U.S. presidential election, and many European political leaders are also casting doubt on the benefits of entering the Transatlantic Trade and Investment Partnership with the U.S.
   The WTO chief acknowledged that trade may cause economic disruption to certain industries and communities through the outsourcing of work and jobs overseas.
   “On top of that, there is also a perception that trade serves only rich countries and big companies—and that poorer countries and smaller companies are left behind,” he said.
   “While I would dispute much of this, it is certainly the case that the benefits of trade still don’t reach as many people as they should,” he added. “That’s one reason that today’s slowdown in global economic performance has given rise to the anti-trade rhetoric that we are beginning to hear more and more.”
   Azevêdo, as he’s noted in recent statements and speeches defending trade, said the impact of trade on sending manufacturing jobs overseas is “overstated,” citing that trade is a “relatively minor cause of job losses.” Instead, he said the fault lies more with technological innovation.
   “Almost 50 percent of existing jobs in some developed countries are at high risk of automation today. And the number is higher in many developing countries,” he explained. “This is the real economic revolution that is happening today.
   “Many will find it unsettling. And that is completely understandable. But, like trade, technological progress is indispensable for sustained growth and development. So the answer is not to reject these forces. Quite the opposite: we must embrace them and learn to adapt,” he said.
   To deal with trade and technological changes, Azevêdo said countries have a responsibility to ensure their workers have the right skills to take on these economic shifts. For the WTO’s part, it must promote an open global trade system that “is truly available to all, and [ensure] that it continues to deliver those benefits that we want more people to enjoy,” he said.
   “This means maintaining and strengthening initiatives to increase trading capacity in developing and least developed countries,” Azevêdo said. “And it also means delivering new trade reforms through the WTO that can help everyone to compete and benefit, especially smaller enterprises and those in rural areas.”
   He highlighted the benefits to this effort from the WTO’s recently announced Trade Facilitation Agreement, which promises to cut cross-border red tape and boost global exports by up to 1 trillion dollars annually, and the Information Technology Agreement (ITA), which is expected to eliminate tariffs on a range of IT products and is valued at $1.3 trillion a year.
   The WTO recently reported that the majority of countries participating in the newly expanded ITA have implemented their tariff commitments under the deal. According to the WTO’s ITA Committee in early November, 18 of the 24 participants in the expanded ITA had submitted their modified tariff schedules to the trade body and others were on track to do so soon.
   The WTO said the ITA received a “major boost” when China submitted its ITA expansion commitments on Oct. 26. China’s Standing Committee of the National People’s Congress approved the expanded ITA on Sept. 3, and the country began implementing its first tariff cuts on covered goods on Sept. 15.
   Yet global trade in 2016 grew at its slowest pace since the financial crisis of 2009. In late September, the WTO slashed its 2016 global trade forecast to 1.7 percent from a previous projection of 2.8 percent growth this year due to ongoing concerns of an economic slowdown in China and several major developing economies, as well as waning import demand in the U.S.
   Real global gross domestic product (GDP) is expected to grow 2.2 percent in 2016 at market exchange rates, also the slowest rate since the 2009 recession.
   According to WTO figures, import demand in developing economies fell 3.2 percent during the first three months of 2016, but saw a “partial recovery” of 1.5 percent in the second quarter. By comparison, developed economies saw 0.8 percent growth in the first quarter, but negative 0.8 percent growth in the second.
   Overall, worldwide trade volumes slipped 1 percent in in the first quarter of this year before rising 0.2 percent in the second quarter, which “translated into weak demand for exports of both developed and developing economies,” the WTO said. Year-to-date, world trade growth has been “essentially flat,” with the average of exports and imports in the first half declining 0.3 percent from the same 2015 period.
   The WTO said it expects that exports from developed countries will grow 2.1 percent in 2016, compared with 1.2 percent growth in developing economies this year, while import volumes in developed and developing economies are expected to increase 2.6 percent and 0.4 percent, respectively.
   In addition, the organization noted the downward revisions mark the first time since 2001 that economic growth is expected to outpace international trade growth.