The call for reforms in the multilateral trading system had never been as strong as it currently is, with almost all nations struggling to recover from the impacts of the COVID-19 pandemic. The world economy had already been reeling from growing US-China trade tensions, increasing protectionism, and divisions over the World Trade Organization (WTO) Appellate Body reforms before the pandemic shut down one-third of the global economy. For any economic recovery to be successful after the pandemic subsides, the multilateral trading system has to ensure an equitable and just environment for all nations, especially the developing ones. Trade experts have underscored the need for holistic WTO reforms to revive the global economy and put developing countries back on track. Some experts have even gone to the extent of recommending special and differential treatment to the developing nations to sustain multilateral trade as there have been massive job and pay cuts across industries over the past few months.
The US-China faceoff over tariffs and the growing trust deficit between the two nations have only drifted the world towards protectionism. In fact, the Ambassador of Barbados to WTO believes, “The WTO is under tremendous pressure due to the trade disputes between major members. Such a scenario doesn’t auger well for developing economies. We still feel the rules-based multilateral trading system is the best option for all. The much-needed reforms can make WTO work for all.” It is, therefore, all the more important that WTO reforms are carried out at soon as possible.
The sooner the flaws in the system are removed, the better it is, considering many countries are overly dependent on tourism, aviation, manufacturing, and exports. Since China and the US are two of the most powerful countries, economists are prompting other G20 nations to join hands and take the leadership role and come up with new mechanisms to keep multilateral trade going. They also believe the International Monetary Fund (IMF) should keep an eye on debt levels and ensure these do not become unsustainable.
With the global economy at an all-time low and COVID-19 cases continuing to rise, international cooperation and engagement on the trade front are crucial. As of now, it looks like only WTO reforms and multilateral trade can save the world economy from the aftermath of the pandemic.
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World Bank Warns about Prospects for the Global Economy in 2022 but Trade Is Set to Grow
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