The World Trade Organization (WTO) recently noted that world trade is continuing to face strong headwinds in 2019 and 2020 after already growing more slowly than expected in 2018. International trade is weighed down by several factors, including, inter alia, new tariffs and sanctions affecting widely-traded goods, weaker global economic growth, volatility in financial markets and tighter monetary conditions in developed countries.
Heightened trade tensions cannot explain all of the trade slowdown but they have undoubtedly played a significant role as consumers and firms alike have anticipated new trade measures taking effect. As nearly every unilateral trade measure is accompanied by a retaliatory act, trade tensions have wide international repercussions. Likewise, foreign investment control has become a top enforcement priority throughout several jurisdictions thereby slowing down the creation of new trade relationships.
Against this background and with the multilateral negotiations under the auspices of the WTO locked in stalemate, the focus of trade politics is currently on bilateral agreements such as the EU-Mercosur trade agreement and Economic Partnership Agreement between the EU and Japan. Those free trade agreements are sending a powerful signal that some of the world’s biggest economies still reject protectionism.
However, especially in times of increasing trade tensions, it is vital that the rules-based multilateral trading system, with the WTO at its core, is upheld and reinforced. Among others, the failure of the TTIP negotiations and the still possible No-Deal Brexit scenario prove that a strong and sound multilateral trading system is indispensable as the foundation of international trade.9.6_Final-State-of-Global-Trade-Report
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