The World Trade Organization (WTO) has emphasized that merely reducing trade barriers will not achieve inclusiveness in the global economy. Ralph Ossa, the chief economist of the WTO, stated that true inclusiveness requires a comprehensive approach that combines open trade with supportive domestic policies and strong international collaboration.
Ossa made these remarks during the launch of the 2024 World Trade Report at the start of the 2024 WTO Public Forum in Geneva, attended by representatives from various WTO member nations. He highlighted that many economies and individuals continue to be left behind in the current trade landscape.
According to the report, income growth has been uneven, with approximately one-third of low and middle-income economies, which constitute 13 percent of the global population, experiencing slower growth compared to high-income economies on a per capita basis. Ossa pointed out that this trend has resulted in a widening gap between these economies and their wealthier counterparts, particularly in regions such as Africa, Latin America, the Caribbean, and the Middle East.
He identified high trade costs as a significant barrier to trade participation for these diverging economies, attributing these costs partly to trade policies that impose steep compliance expenses related to foreign standards and the incomplete execution of trade facilitation measures. In addition, he noted that domestic challenges, such as poorly developed infrastructure and inefficient services, also play a crucial role in obstructing trade.
Ossa further explained the issue known as “Dutch disease,” where resource-rich economies struggle to diversify their exports beyond primary commodities, thereby stunting the growth of their manufacturing and services sectors.
He added that obstacles to foreign direct investment (FDI), including both explicit restrictions and unfavorable investment climates, worsen the difficulties faced by these economies.
Ossa underscored that, in addition to economies, people within those countries are also being left behind, noting that income inequality within countries remains high, despite a slight decrease over the last three decades. This disparity often leads to discussions that frame trade as a contributor to income inequality. However, he clarified that trade integration does not have a consistent relationship with income inequality, as it can both exacerbate and alleviate inequality in different economic contexts.