Global trade slows on high tariffs, lack of policy coordination – WTO

The World Trade Organisation has said that global trade which rose by 2.8 percent in 2015 is at risk from high tariffs, huge trade costs and lack of policy coordination among member countries may imperil 2016 forecast of 2.6 percent growth.

Roberto Azevêdo, director-general of the World Trade Organisation stated this when he gave the keynote address at the World Trade Symposium in London today.

He said that high tariffs continue to inhibit trade, especially for the poorest. “Some of the highest rates are found in sectors of particular interest to developing and least-developed countries.”

“Non-tariff measures and the lack of policy coordination are big hurdles. Take trade costs. In 2010 developing countries trade costs was equivalent of a 219 per cent import tariff. This is an area where we can make a big difference — as cutting trade costs by just 1per cent supports a 3-4per cent increase in trade growth.

While calling for greater lossening the knots around services, Azevedo said, “Restrictions in services also hinder potential for trade and investment growth. Services now account for 40per cent of world cross-border trade in value added terms, and FDI stocks account for above 60per cent of services trade.”

He further called on members to strengthen regional trade agreements which he said are increasing in number.

“This is very positive and can support work at the multilateral level. However, it can also create challenges, especially when regional initiatives explore rules in areas that are not currently covered by the WTO. We need to ensure coherence between these initiatives so that businesses do not face a costly patchwork of rules and regulations.”

He called for action on what he described as anti-trade rhetoric if trade is to continue supporting growth.

The event organised by the Financial Times and Misys, has as theme: ‘Trade and Globalisation in the 21st Century: the Path to Greater Inclusion’.