SAEDNEWS: WTO Urges Modernization of Global Trade System Amid Growing Disruptions
According to Saednews, The World Trade Organization (WTO) has warned that weakening the multilateral trading system could carry significant costs for the global economy, according to its annual flagship publication, the World Trade Report 2026: A Critical Juncture for the World Trading System. The report reviews the achievements of the global trading system over the past eight decades and examines the challenges it faces today, Xinhua reported.
WTO Director General Ngozi Okonjo-Iweala said the multilateral trading system has generated substantial benefits over the past 80 years, contributing to a more integrated and resilient global economy.
She noted that around 72 percent of global merchandise trade continues to take place under the WTO's most-favored-nation terms.
According to Okonjo-Iweala, the global trading environment has undergone major changes, but the central principle behind the system remains relevant: economies can gain more through cooperation than through unilateral action.
WTO members are currently discussing possible reforms, she said, adding that there is recognition among members that maintaining the current system without changes is not a sustainable option.
The report presents three scenarios for how the global trading system could develop in the coming decades.
In the first scenario, stronger multilateral cooperation could produce significant economic gains. Compared with the baseline trajectory, global GDP could be 2.9 percent higher and exports 17.9 percent higher by 2050.
The other two scenarios involve a weakening of multilateral trade rules.
Under a "geo-fragmented world," trade cooperation would increasingly be organized around geopolitical blocs. In that scenario, global GDP could decline by 5.1 percent and exports by 18.6 percent compared with the baseline.
A third scenario considers a world in which multilateral cooperation is largely replaced by a network of free trade agreements. Under that scenario, global GDP could fall by 6.9 percent and exports by 26.9 percent.
WTO Chief Economist Robert Staiger said the gap between stronger multilateral cooperation and a deterioration of the existing system could reach as much as 10 percent of baseline global real GDP.
He said the figures demonstrate the potential economic consequences of failing to pursue reforms if the current system is considered unsustainable by WTO members.
The report also highlights the long-term contribution of the multilateral trading system.
Over more than eight decades, the system has helped reduce trade barriers, expand global trade by nearly 50 times and support the development of a more integrated, rules-based global economy.
The WTO's analysis suggests that the direction taken by the global trading system in the coming years could have substantial implications for international trade, economic growth and cooperation among economies.
