Australia faces global trade uncertainty as international rules collapse
Australia could face significant economic risks if the global rules governing trade continue to weaken, the World Trade Organization (WTO) has warned.
In its latest annual report, the WTO said the international trading system is at a critical point as countries increasingly move away from the framework that has supported global trade for decades.
WTO chief economist Robert Staiger said Australia, as a medium-sized economy, has a strong interest in maintaining a rules-based trading system. He warned that a further breakdown could leave countries pursuing their own economic and geopolitical interests without common international rules.
The WTO’s authority has already been weakened. The United States blocked appointments to its trade appeals body during the first Trump administration in 2019. The organisation also found that more countries are entering trade agreements that do not fully follow WTO rules.
The report identified several pressures on the global system, including shifting economic power, government intervention, digitalisation, artificial intelligence, environmental challenges and rising geopolitical tensions.
It warned that further fragmentation of global trade could reduce the size of the world economy by around 5 per cent if trade splits along geopolitical lines. If the WTO were to disappear entirely, the decline could approach 7 per cent.
WTO Director-General Dr Ngozi Okonjo-Iweala said the trading system must adapt to major changes in the global economy. These include the growing influence of developing economies, different government approaches, global supply chains, digital trade and AI, environmental pressures, and increasing concerns over national security.
The WTO says reforms are needed to ensure the global trading system remains effective and relevant in a rapidly changing world.
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Source : 9 News
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