World Trade Organization calls for more to be done to ‘include’ poor countries

(Geneva) The World Trade Organization (WTO) called on Monday for more to be done for poor countries, arguing that trade openness alone is not enough to reduce inequality between and within economies.

In its 2024 World Trade Report, the WTO examined the role that trade has played in reducing the income gap between economies since the organization was founded in 1995.

“Perhaps the most important takeaway from the report is that it reaffirms the transformative role of trade in reducing poverty and creating shared prosperity – contrary to the current popular view that trade and institutions like the WTO have been bad for poverty, or for poor countries, and are creating a more unequal world,” WTO Director-General Ngozi Okonjo-Iweala writes in the foreword.

“The second most important message is that we can do much more to make trade and the WTO work better for the economies and people that have been left behind over the last 30 years of globalization,” says Mr.^me Okonjo-Iweala.

According to the report, lagging low- and middle-income economies tend to be less engaged in international trade, receive less foreign direct investment, be more dependent on primary commodities, export fewer complex products and trade with fewer partners.

For the WTO Director-General, protectionism is “not an effective path to greater inclusion” because it can increase production costs and lead to costly trade retaliation.

“Immediate priority”

“Less trade will not promote inclusion,” WTO Chief Economist Ralph Ossa said in the statement.

But “trade alone will not be able to promote inclusion either,” he says: “True inclusion requires a comprehensive strategy – that is, one that integrates trade openness and supportive national policies as well as strong international cooperation.”

According to the WTO, such national support policies to make trade more inclusive may include, for example, skills training, unemployment benefits, education to improve skills and labour mobility, competition policy to ensure that consumers benefit from lower prices, reliable infrastructure and well-functioning financial markets.

“This includes restoring a fully functioning and accessible dispute settlement system, a goal that WTO members are actively pursuing,” he said.

The dispute settlement system has been paralyzed since late 2019 following Washington’s blocking of the renewal of the appellate body judges, a practice initiated under Barack Obama and continued by Donald Trump and Joe Biden. In March, however, WTO members renewed their commitment to resolve the issue this year.

The report also states that becoming a member of the WTO, or a signatory to its predecessor, the General Agreement on Tariffs and Trade (GATT), increases trade with other members by an average of 140%. The WTO has 166 members since the accession of East Timor on 30 August and the Comoros on 21 August.