WTO warns nations that protectionism may widen rich-poor gap

The World Trade Organization urged governments to resist tariffs and other barriers to international commerce, arguing that protectionism risks undoing three decades of unprecedented progress in narrowing the gap between rich and poor nations.

The WTO report offers a staunch defense of globalization at a time when some of its pillars — low tariffs and rule enforcement — are under attack. Former President Donald Trump has vowed to put tariffs on all US imports if he returns to the White House, a move that WTO Director-General Ngozi Okonjo-Iweala has cautioned would spark a “free-for-all” of instability and uncertainty for companies.

“Restricting trade is typically an expensive way to protect jobs for specific groups within society” Okonjo-Iweala wrote in the foreword of the new report. It can “raise production costs, while inviting costly retaliation from disgruntled trading partners.”

Between 1995 and 2023, global per-capita income adjusted for inflation rose by about 65%, helping reduce the share of people classified as poorest of the poor to 10.6% from 40.3%, the Geneva-based WTO said in a report released Monday. Still, 712 million people globally lived in extreme poverty in 2022, it said.

With such mixed success, some leaders have questioned whether free trade governed by rules at the WTO spreads economic benefits fairly, leading to waves of tariffs and export controls from some of the organization’s founding members. 

“A more promising path towards a global economy that works for everyone lies in what we at the WTO have been calling ‘re-globalization’ – bringing more economies and communities from the margins to the mainstream of the global economy by helping them attract more trade-oriented investment,” according to Okonjo-Iweala.

But the WTO chief, whose five-year term expires on Aug. 31 next year, said trade alone can’t close the world’s income disparities.

“Countries need to act to ensure that as many of their citizens as possible can benefit from the opportunities created by open and rules-based international markets — or are, at least, cushioned against the downsides” of technological change or import competition, she said.