The deputy director-general of the World Trade Organization (WTO) has stressed the importance of open and predictable trade markets if the global economy is to make a successful recovery in the wake of the Covid-19 pandemic.
Speaking at the Amadeus Institute in Morocco, Yonov Frederick Agah said trade has already played a key role in addressing shortages of medical supplies, food and other essentials throughout a turbulent 2020, but will have an even greater role to play moving forward.
He stated that if countries look inwards and close up trade, this will lead to issues including "unnecessary supply shocks, slower global trade growth, weaker productivity and lower living standards".
While there are obvious short-term risks as Covid-19 cases continue to surge around the world, the longer-term danger will be of a weak, faltering growth trajectory that leaves output well below the pre-pandemic trend.
Countries can avoid this by promoting trade-friendly policies that make the movement of goods and services as easy and as cost-effective as possible.
On this front, he noted many nations are responding well to this. Mr Agah observed trade-facilitating policies have outnumbered trade-restricting measures by nearly two to one, while many restrictions on trade that were introduced earlier in the crisis have now been rolled back.
As a result, WTO economists now estimate global merchandise trade will shrink by just over nine per cent this year. While this is still a historically large decline, it is significantly better than even the WTO's most optimistic outlook earlier in the year, when it forecast a drop of between 13 and 32 per cent on global trade volumes.
Several WTO members have also put forward ideas for making supply chains more resilient, which would reduce incentives to restrict trade in future crises.
These include initiatives that will help improve respect to digital trade, facilitate investment and alleviate growing concerns over the environment, such as in the fishing industry, which could come to fruition in the near future.
