- The WTO warns rising protectionism and state intervention threaten global trade rules and economy
- Only 72% of global trade uses WTO tariff terms, down from 80% in 2022, signaling concerning trends
- Fragmented trade blocs could reduce global GDP by up to 6.9% and exports by nearly 27% by 2050
The World Trade Organization is pressing for a revamp of global trade rules, warning that mounting protectionism, geopolitical strains and expanding state intervention in industry are threatening to splinter the international economy.
In its annual report, the WTO said the rules governing global commerce had failed to keep pace with a rapidly changing economy, as economic power has shifted, digital technologies have expanded, supply chains have grown more complex and governments have taken a larger role in steering markets.
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About 72% of global merchandise trade currently takes place under WTO most-favoured-nation tariff terms, down from around 80% in 2022, highlighting what Staiger described as a “worrisome trend”.
WTO Chief Economist Rob Staiger said the global trading order had reached a pivotal moment, as mounting political and economic strains increasingly test the rules underpinning international commerce, Reuters reported.
The WTO's economic modelling showed the potential cost of a fragmented global economy.
If the world splits into competing geopolitical blocs, global GDP could be 5.1% lower and exports 18.6% lower by 2050 compared with a scenario of continued cooperation.
In a more severe scenario, where multilateral cooperation breaks down and is replaced by a patchwork of free trade agreements, global GDP could decline by 6.9%, while exports could fall by nearly 27%.
By contrast, stronger multilateral cooperation could lift global GDP by 2.9% and increase exports by almost 18%, the report said.
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Least-developed countries could gain the most from greater cooperation but also face the steepest losses if trade fragmentation deepens.
The warning comes as countries increasingly turn to regional and sector-specific trade agreements amid heightened trade tensions and sweeping US tariffs.
Staiger said such arrangements could complement the WTO system but cautioned that competing trade blocs could divert commerce away from the most efficient producers and raise barriers for outsiders.
The WTO also said trade policy uncertainty had reached unprecedented levels, with governments increasingly relying on tariffs, subsidies, export controls and industrial policies.
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