WTO boss Ngozi Okonjo-Iweala delivers a stark warning to 100-plus trade ministers in Geneva, as they fight to put the global trading system back on track.
| A decoupling of the US and Chinese economies would batter the world’s GDP by more than the 2008-09 global financial crisis, World Trade Organisation director general Ngozi Okonjo-Iweala has warned.
She said that if the world split into two self-contained trading blocs, the long-run level of global GDP would be 5 per cent lower than otherwise, compared with a 3.5 per cent loss in potential output from the GFC.“This 5 per cent estimate represents just the start of the economic damage. Additional losses would come from reduced-scale economies, transition costs for businesses and workers, disorderly resource allocation, and financial distress.
“An effective WTO is essential to the open, rules-based global trading system that underpins Australia’s and the world’s economic prosperity.” Ministers will also discuss reforming the WTO itself. Negotiations on fisheries, agriculture and other issues have been gummed up for so long that groups of more liberal countries have been banding together within the WTO to negotiate so-called “plurilateral” agreements.
“We must reflect hard on how to modernise our negotiating function and innovate new approaches whilst improving existing ones.”
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