Ngozi Okonjo-Iweala, director-general of World Trade Organisation (WTO) has said the future of trade is services which will be digital, green and inclusive.
Speaking at the ongoing World Economic Forum (WEF) Annual Meeting 2023 in Switzerland, she said as many countries prioritize national security in their trade policy, there is a risk that “friend-shoring” would distribute the gains of economic growth unequally.
According to a statement by WEF, the war in Ukraine, concerns about COVID and fragile supply chains have caused many nations to rethink their approach to trade and question the future of globalization.
“WTO and others have warned that deglobalization would negatively impact the world and especially emerging economies. The question for global leaders is how to create a new agenda for global growth,” it said.
It said many nations have seen a push to relocate manufacturing closer to consumers’ demand, after supply shocks associated with port blockages, the war in Ukraine and the pandemic.
“Moreover, concerns about national security have caused many nations to question their over-reliance on certain countries for critical goods and services, such as European dependence on Russian energy,” the international organisation added.
Laurence Fink, chairman and chief executive officer at BlackRock said for the United States, Mexico is likely to be a major beneficiary of the US reconfiguration of supply chains, given Mexico’s educated workforce, low wages, railway transport and pro-business political climate.
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“But Mexico is not going to be the sole beneficiary of that change,” he added, citing Eastern Europe, Turkey, Indonesia and other parts of South-East Asia as well.
Creating a trade agenda that prioritizes inclusivity and decarbonization is a major priority, said Alexander De Croo, Prime Minister of Belgium.
“Many European governments have welcomed the recent embrace of sustainability in US economic policy. The world can only be happy that the United States has moved to the right side of the aisle on climate,” he said.
Alexander added that European leaders have concerns over the specifics of the recent US legislation but, overall, the positive step gives Europe the opportunity to focus on its specific advantages, such as research facilities and long-term investments in wind energy.
“Without such coordination, there is a risk that Europe and the US simply compete to provide more subsidies and tax breaks for business,” he said.
Robert Habeck, German Vice-Chancellor noted that Germany is saying “yes” to bilateral trade agreements, but ultimately, “we have to stick to the idea of multilateral institutions.”
