The World Trade Organization (WTO) celebrated its 30th anniversary last month. In addition to commemoration, the globe reached a critical turning point in its efforts to promote international trade and economic growth. Above all, it illustrated how globalisation has increased the interdependence of the world's economies.
Most economies worldwide now rely heavily on international trade. The results of the 2023 World Trade Report, which emphasises the need for re-globalisation to tackle critical global concerns through improved cooperation, inclusivity, and sustainability, serve as evidence of this.
The report investigated the concept of re-globalisation, argued for the integration of more individual economies, and addressed critical concerns in global commerce. It assesses how re-globalisation can address global concerns while also considering the hazards of trade fragmentation.
At the same time, it emphasises the significance of maintaining an open, integrated global economy to successfully solve urgent global concerns.
At the close of last year, the report noted that global trade was worth more than $30 trillion, marking a five-fold increase since 1995. Tariffs have notably dwindled since the WTO's inception, resulting in reduced trade expenses.
This decline in global poverty parallels the growth in trade, underscoring its positive impact on economic development and human welfare. Overall, the report aims to deepen understanding of trade trends, policy issues, and the multilateral trading system, offering insights into the potential benefits and risks of various approaches to global trade.
Re-globalisation is emerging as a solution to global challenges, promoting increased integration, cooperation, and interconnectedness among economies. By extending trade opportunities and fostering dialogue, re-globalisation can address environmental, social, and security concerns on a global scale while reinforcing the importance of a well-functioning multilateral trading system.
However, the escalating fragmentation in global trade poses a significant threat, exacerbated by divergent interpretations of trade laws, the proliferation of free trade agreements, and the dysfunction of the WTO's Appellate Body.
In response, the report recommends improving the globe to ensure a resilient future. It suggests reducing tariff and non-tariff barriers in the manufacturing sector to enhance exports and integrate African economies into global value chains.
Additionally, it reveals that enhancing digital infrastructure can help lower trade costs in regions such as Africa. The report highlights the significance of regional economic integration through agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the African Continental Free Trade Area (AfCFTA) to optimise trade agreements and reduce intra-regional trade costs in Africa.
Trade fragmentation amplifies costs for businesses, particularly small enterprises that are prevalent in Africa, hindering their competitiveness and potentially increasing prices. Moreover, it exacerbates poverty and inequality, especially impacting women and small businesses, while also impeding economic stability and global cooperation.
Despite challenges such as trade fragmentation, initiatives like the AfCFTA offer opportunities for Africa to enhance its integration into global trade networks. Africa's significant role in the global economy, as well as challenges and opportunities, have an impact on its integration into global trade networks.
Africa's share of global trade has stagnated, with primary commodities dominating nearly 70 percent of its global exports in 2021, highlighting its vulnerability to international commodity market fluctuations. Intra-regional trade costs in Africa are notably high compared to other regions, with efforts like the AfCFTA seeking to alleviate such barriers and promote intra-African trade.
Enhanced regional trade integration, particularly through initiatives by the AfCFTA, could catalyse substantial growth in Africa's total exports and bolster its presence in the global market beyond commodities. By capitalising on its critical mineral endowment for the green transition and championing sustainable trade practices, Africa can elevate its position in global trade and contribute to a more inclusive and resilient global trading system.
Implementing these recommendations can lead to a more open, efficient, and fair global trading system that benefits all and supports sustainable economic development. By embracing re-globalisation principles and strengthening multilateral cooperation, the global community can pave the way for a more prosperous and sustainable future for all.
The writer is Kenya’s Ambassador to Belgium, Mission to the European Union, Organization of African Caribbean and Pacific States and World Customs Organisation. The article is written at a personal level.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
