Reuters A crane lifts steel wires at a factory of the Dongbei Special Steel Group Co., Ltd. in Dalian, Liaoning province, China November 27, 2017.

A Trade War on the Poor

How a Collapse of the WTO Would Hurt the Worst Off

Last week, President Donald Trump’s announcement that he would be slapping steep tariffs on imported steel and aluminum set off fears of a global trade war. But in reality, the international trading system has been unraveling for some time. After taking a quick glance at the World Trade Organization today, one might be excused for believing that it is a dead man walking. 

Recurrent deadlocks have plagued the Doha negotiations since their launch in 2001, damaging the credibility of the organization that oversees this unfortunate negotiation process. The WTO’s Ministerial Conference in Nairobi in 2015, which coincided with the 20th anniversary of the WTO’s founding, should have been a moment for celebration. Instead, it turned out to be an embarrassment: for the first time the Ministerial Declaration reflected not consensus but fundamental division over whether even to reaffirm the Doha mandates, which had sought to launch an ambitious round of multilateral trade liberalization with a close eye on development issues. At its Ministerial Conference in Buenos Aires, in 2017, the WTO sank to a new low: this conference was unprecedented in its failure to even produce a Ministerial Declaration. The WTO seems to be whimpering its way to an inglorious end. And if the global trading mechanism does indeed collapse, the consequences will be adverse for all parties, but especially so for the poorest of the world.

PUNISHING DEVELOPING COUNTRIES AND THE POOREST PEOPLE

In 2010, the Millennium Development Goals reached one of its targets, of cutting extreme poverty by half. The most important factor that contributed to this achievement was economic growth in many developing countries, especially China and India. Although such growth was fueled by several factors, one critical driver was international trade. Extensive research shows that the countries and regions that harnessed the opportunities afforded by low tariffs and open markets did particularly well, aided as they were by a reliable system of enforceable trade rules—all negotiated, monitored, and implemented under the auspices of the WTO.

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