News From the WTO

The WTO has probably never been needed so much as at present with increasing trade wars between the US and China, the UK separating from the EU (‘Brexit”) and other international trade disruptions, however, the US has withheld its support for the replacement of judges (“the appellant body”) to hear cases between the member states and is now refusing to agree the 2020 WTO budget.  The US is asking for changes to the budget for the appellant body (dramatically reducing it). Like all other decisions of the WTO, the budget is adopted by consensus. Normally when an international organisation’s budget cannot be agreed in time for the next year, it continues running on the old budget or on some other established basis so the organisation does not grind to a halt.

Meanwhile, the WTO Director-General’s annual overview of trade-related developments discussed on 12 December at a meeting of the Trade Policy Review Body shows that trade restrictions by WTO members continue at historically high levels. Between mid-October 2018 and mid-October 2019, the trade coverage of import-restrictive measures implemented by members was estimated at USD 747 billion. This is the highest trade coverage recorded since October 2012 and represents an increase of 27% compared to the figure recorded in the previous annual overview (USD 588 billion). The review notes that new trade restrictions and increasing trade tensions added to the uncertainty surrounding international trade and the world economy.

This needs to be put against the general downturn in trade in 2019. After a positive surge in 2018, global trade and economic output stagnated in 2019, according to UNCTAD’s 2019 Handbook of Statistics. Merchandise trade is predicted to drop by 2.4% to US$19 trillion, after significant growth rates in 2018 (9.7%) and 2017 (10.7%). Trade-in services are predicted to only increase by 2.7% to $6 trillion, a considerable reduction from 7.7% in 2018 and 7.9% in 2017. Real global economic output (GDP – gross domestic product) is now expected to grow by 2.3% this year, 0.7 percentage points less than last year.