Ngozi Okonjo-Iweala, the director-general of the World Trade Organisation, has warned that further fragmentation of global trade into rival blocs could erase as much as 7 percent of global GDP in the long term, urging countries to resist retaliatory trade measures amid rising geopolitical tensions.
Speaking during a fireside chat at the 20th anniversary of Streamsowers & Köhn, a commercial law firm, in Lagos on Thursday, Okonjo-Iweala said the world was experiencing its biggest disruption to multilateral trade rules in nearly eight decades, with increasing reliance on power-based relations rather than rules-based international trade.
She said the WTO had consistently advised member states against retaliatory tariff measures despite escalating trade tensions, warning that such actions would deepen divisions in the global economy.
“If the world fragments into two trading blocs, you’re going to see a seven percent loss in global GDP in the longer term,” she said, noting that weaker economies would be forced to align with one bloc or another, further undermining international trade.
According to her, the growing use of tariffs to address political, immigration and other non-trade disputes has made it increasingly difficult for the WTO to resolve trade disagreements because trade instruments are now being deployed to tackle issues beyond the organisation’s mandate.
