This year, the World Trade Organisation (WTO) – the international body that sets global rules of trade turns – 25 years old, marking a period that has partly enabled international trade to flow smoothly.
According to the organisation’s Director-General Roberto Azevêdo, binding rules for global trade in goods and services have facilitated dramatic growth in cross-border business activity.
"Since 1995, the dollar value of world trade has nearly quadrupled, while the real volume of world trade has expanded by 2.7 times. This far outstrips the two-fold increase in world GDP over that period,” he said in a statement this week.
According to WTO, average tariffs have almost halved in both developed and developing countries from 10.5 per cent to 6.4 per cent.
Trade in services has been growing faster than the trade in goods, and digital trade has also followed the same trend.
Azevêdo said for dozens of economies that joined WTO after its creation, accession involved far-reaching reforms and market-opening commitments have been associated with a lasting boost to national income.
The organization has 164 members representing 98 per cent of global trade.
Rwanda has been a member since May 1996.
The WTO Director-General argued that the predictable market conditions fostered by the organisation have enabled the rise of global value chains.
"Confident in their ability to move components and associated services across multiple locations, businesses have been able to disaggregate manufacturing production across countries and regions,” he noted.
François Kanimba, Rwanda’s former Trade Minister sees the organisation as having facilitated trade, especially among developing countries, despite the changing "rules of the game.”
"The rules of the game [trade] have changed, but my strong belief is that there is something to commend. The idea of promoting multilateral trade has in some way or another helped trade growth in developing countries,” he said.
"There are many trade facilitation agreements decided on in forums that have enabled least developed countries like Rwanda to benefit from quota-free, duty-free markets,” he added.
Kanimba reiterated that there are currently divergent interests from powerful countries which challenge the principles of global trade that WTO has been promoting for the past years.
The Doha agenda is one of the trade agreements he mentioned, saying it has "created serious anger among developing nations,” challenging the capacity and role of WTO.
The Doha Development Agenda, initiated in 2001, is the latest round of negotiations intended to achieve major reforms of the international trade system through the introduction of lower trade barriers and revised rules.
Many developing countries thought the agenda promised major trade changes in agriculture, services and intellectual property, but after many failed negotiations there is no hope in sight.
WTO at shakiest stage
The WTO is also facing threats especially from developed countries which have, for the past two years, been demanding to reform the body. The United States, the EU, India, Mexico, have all been pushing for the organisation’s reform.
That has resulted in major trade wars with US and China, the two world’s largest economies, accusing each other of unfair trade practices and going further to impose tariffs on hundreds of billions of dollars, worth of one another’s goods.
The WTO chief did not deny the challenges faced by the organisation today, most especially the introduction of trade restrictions by several governments over the past two years, affecting $747 billion in global imports last year.
"The rising uncertainty about market conditions is causing businesses to postpone investment, weighing on growth and the future potential of our economies,” he said.
How WTO member governments face up to these challenges, he added, will shape the course of the global economy for decades to come.