DDG González noted that the global trade landscape is undergoing profound changes, driven in part by global companies’ efforts to recalibrate their supply chains to achieve a better balance between efficiency and risk in investment and sourcing decisions. “According to most business surveys I have seen, the dominant strategy for supply chain managers so far has been not to re-shore but rather to increase input stocks and diversify, which is causing production to shift between countries, especially in Asia,” she said.
“Other forces, however, are pulling in a different, more worrisome direction,” DDG González noted, citing the potential of geopolitical tensions, great power rivalry, trade-restrictive industrial policies and techno-nationalism to make trade less diversified, markets more concentrated and economies weaker and more vulnerable. “In this scenario, there would be no winners, just losers, and poor countries would be hit the hardest,” she said.
According to DDG González, subsidies can be a positive and potent tool to achieve legitimate public policy goals. “But if not managed well, the drive to promote strategic sectors for economic and national security reasons could intensify trade tensions and give rise to mutually harmful subsidy races,” she said, noting that “a full 46 per cent of global goods trade is now in products and on trade routes in which at least one firm has received a subsidy, up from 11 per cent in 2009.”
“We cannot escape geopolitics, but neither can we escape the need for cooperation if we want to have a fighting chance of tackling the big challenges of our time, from climate change to global pandemics, and from food insecurity to rising debt vulnerabilities and more,” DDG González said. From a trade perspective, “the priority must be to build guardrails that minimize the chances that growing trade tensions will overwhelm trade cooperation and the rules-based trading system.”
DDG González said that “the WTO’s 12th Ministerial Conference last year has demonstrated that effective and meaningful trade cooperation is possible despite geopolitical, technological and security competition”.
“The pragmatism and flexibility shown by all 164 WTO members contributed greatly to secure multilateral outcomes on key issues of the global commons, including a landmark agreement to cut harmful fisheries subsidies, a decision to exempt food aid purchases from export restrictions and a hard-fought compromise on intellectual property for COVID-19 vaccines,” she said. “Much work remains, so let’s roll up our sleeves and join forces to deliver even more,” she concluded.
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