Following sweeping tariffs announced by U.S. President, Donald Trump, the director-general of the World Trade Organisation, Ngozi Okonjo-Iweala, has warned of a looming contraction in global merchandise trade.
In a statement issued on Friday, the WTO chief warned that the rapidly escalating situation could push the world deeper into economic uncertainty and fuel a full-blown trade war.
According to her, “Our initial estimates suggest that these measures, coupled with those introduced since the beginning of the year, could lead to an overall contraction of around one percent in global merchandise trade volumes this year, representing a downward revision of nearly four percentage points from previous projections.”
Despite the downturn, she stressed that most global trade still operates under WTO rules
She adde that, “The vast majority of global trade still flows under the WTO’s Most-Favored-Nation (MFN) terms. Our estimates now indicate that this share currently stands at 74 percent, down from around 80 percent at the beginning of the year”.
She urged member states to act responsibly and avoid an uncontrolled spiral of retaliatory measures. “Trade measures of this magnitude have the potential to create significant trade diversion effects. I call on Members to manage the resulting pressures responsibly to prevent trade tensions from proliferating”.
Okonjo-Iweala reaffirmed the WTO’s role as a mediator in times of rising tensions, just as she called for constructive use of the organisation’s platform by member states.
