The deglobalization of international trade is far from being a reality, but “the first signs of fragmentation” are appearing, the World Trade Organization (WTO) warned on Tuesday, worried about the effects of this phenomenon on growth and development.
Historically advocated by anti-globalization movements, the idea of “deglobalization” has returned in force in the face of the profound disorganization of production chains linked to the war in Ukraine and the confinements in China due to the COVID-19 pandemic.
In its annual report on world trade, WTO economists argue in favor of “reglobalization” in a context where, according to them, “the first signs of trade fragmentation threaten to slow down growth and development”.
For several decades, the expansion of international trade has outpaced global GDP growth, but “this trend came to a sort of halt around the time of the 2008-2009 global financial crisis and has been stagnant since then,” he said. explained the chief economist of the WTO, Ralph Ossa, in an interview with AFP.
After this phase of slowdown in globalization, the question is “whether we are heading towards a phase of deglobalization,” he said, as the report shows that geopolitical tensions are starting to have an impact. on trade flows around the world.
“We are still far from deglobalization, but we are starting to see the first cracks in the system,” assured Mr. Ossa, stressing that this commercial fragmentation tends to follow geopolitical divisions, in particular since the Russian invasion of Ukraine.
The WTO has therefore carried out calculations which show that since the war in Ukraine, trade between the world’s two major geopolitical blocs – which the organization identified on the basis of countries’ votes at the UN General Assembly — experienced a growth rate that is on average 4 to 6% lower than that of trade within these blocs.
” At the crossroads “
“We are truly at a crossroads. And either we try to re-enter the path of globalization, or we will continue on this path of fragmentation,” observed another WTO economist, Victor Stolzenburg, who coordinated the report.
The report also shows that there has been an increase in trade tensions at the WTO, including a sharp increase in “trade concerns” raised by countries before various committees.
Another source of concern, according to the WTO’s chief economist, is the appearance of “the first signs of decoupling” in trade relations between China and the United States.
Because if trade between these two powers reached a record level in 2022, its composition suffered the effects of the Sino-American customs war, which led to a sharp slowdown in trade in certain product categories, such as semiconductors.
“The post-1945 international economic order was built on the idea that interdependence between nations through increased trade and economic ties would promote peace and shared prosperity,” notes the director general of the OMC, Ngozi Okonjo-Iweala, in the report.
“Today, this vision is under threat, as is the future of an open and predictable global economy,” she warns.
The WTO warns that dividing world trade into two separate blocs would represent an overall cost estimated at around 5% of real income, with some developing economies facing double-digit losses.