Global trade expansion may lose momentum amid tensions – WTO
The WTO's Director-General warned that reciprocal trade restrictions cannot be the new normal.
The World Trade Organisation (WTO) released its 2018 World Trade Outlook Indicator (WTOI) today showing that trade expansion will likely slow further in the third quarter of 2018. The WTOI latest reading shows that the index dropped from 101.8 to 100.3, barely above the 100 baseline value for the index.
This loss of momentum, according to the report, reflects weakness in component indices, including export orders and automobile production and sales, which may be responding to the ratcheting up of trade tensions between the United States and other countries such as Canada, China, and European Union member-countries.
“Global trade is under threat. Whether or not you call the current situation a trade war, certainly the first shots have been fired,” said the Director-General of the WTO, Roberto Azevêdo. “This calls for our attention, and most importantly, our action.”
According to the report, moderation in the overall WTOI index was driven by export orders, which have declined steadily over the course of the year. Automobile production and sales have risen slightly recently but remain below trend.
In the statement released today, the WTO ‘s Director-General warned that reciprocal trade restrictions cannot be the new normal. He said a continued escalation would risk a major economic impact, threatening jobs and growth in all countries, and hitting the poorest the hardest.
“There is a responsibility on the whole international community to help resolve these issues,” said Azevêdo “I have been consulting with governments and leaders around the world, urging dialogue and exploring steps to unwind the current situation”
Africa's share of global trade remains very small, at around 2 percent of world trade. Exports generally remain highly focused on commodities. On March 21, 2018, 44 African leaders signed an agreement to create the Continental Free Trade Area (CFTA) following several years of negotiations. The CFTA is touted as the largest free trade agreement since the creation of the WTO.
The market size is expected to include 1.7 billion people with over $6.7 trillion of cumulative spending by 2030 if all African countries, including Nigeria and South Africa, join the free trade area.
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