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“Reglobalization”-WTO’s Solution to Fix Supply Chains

Author: Exports News
Jun 10, 2022
2 min read
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Jun 10, 2022
2 min read
“Reglobalization”-WTO’s Solution to Fix Supply Chains

Global supply chains have been congested for more than two years into the pandemic, with companies and consumers around the world experiencing delays and higher prices to ship goods. Both the Russian invasion of Ukraine and Western sanctions on Russia have added to those disruptions.

The Director-General of the World Trade Organization (WTO), Dr. Ngozi Okonjo-Iweala, called for addressing choke points in global supply chains by bringing more countries into international production networks, something she termed “reglobalization.”

How Can the Global Supply Chain Become More Resilient?

Dr. Okonjo-Iweala stated last March at the start of the Global Supply Chain Forum, which brought together government officials, the heads of major ports, ocean carriers, logistics companies, and others, that the pandemic has been especially hard on small businesses and that poor and landlocked countries are at risk of being pushed out of global value chains. However, she believes that a global trade boycott is not the solution.

“Deeper, more diversified international markets remain our best bet for supply resilience,” Dr. Okonjo-Iweala said.

Dr. Okonjo-Iweala also went on to say the organization is monitoring the impact of the conflict to global food security, including sharp price increases for grain, oilseeds, vegetable oils, fertilizers and energy. She also emphasized that many of the supply chains issues during the pandemic have been the result of more goods moving across borders than ever before. She believes they were “problems born of success.”

Packed goods in international markets during pandemic.

Without effective government policies to sustain demand and help businesses, seafarers, truckers, port workers, and others adapt, “the pandemic could easily have led to a prolonged collapse in growth and trade,” she said.

According to Dr. Okonjo-Iweala, the global volume of merchandise trade has almost quadrupled between 1990 and 2019, and current systems need to be adapted to deal with threats like pandemics and climate change. A broader and deeper investment in digital technology — including blockchain and robotics — could also be a key to reducing global supply chain congestion. Diversification of markets and investment - both public and private - are among the tools put forward by Dr. Okonjo-Iweala and other participants.

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