Turning headwinds for trade into tailwinds

There is no doubt that 2018 has been a tumultuous year for global trade. It has been marked by trade tensions among the economies responsible for the majority of global exports and imports: China, the European Union and the United States. And by threats to weaken or even dismantle the World Trade Organization, the multilateral trade body.

Tariffs and counter-tariffs, and threats of more to come, have dominated news headlines. The measures and uncertainty are impacting those that actually make the trade world go around: companies in developed and developing countries alike.

All this is counterproductive. The effective working of the multilateral trading system was not just a critical factor in the rapid poverty reduction of the past forty years; keeping markets broadly open enabled the world to return to growth after the 2008 financial crisis. Protectionism and short-term policy is threating to undo all this.

The United Kingdom’s decision to leave the European Union also left its mark on 2018. While the last weeks of the year underscored that much remains to be settled about Brexit – scheduled to take effect on 29 March 2019 – the process will continue to have profound effects on European countries in the coming months and beyond. 

These events should not be allowed to overshadow the ways in which 2018 was also a good year for international cooperation on trade.

At an African Union summit in Kigali, Rwanda, in March, African leaders signed the African Continental Free Trade Agreement (AfCFTA). The accord shows that for most countries, collaboration and integration are seen as the most viable path towards more sustainable economic growth.

Once it enters into force, the AfCFTA will build an integrated market for the cross-border movement of goods, services, people, capital, and ideas covering more than one billion people, with a combined gross domestic product of more than $3 trillion.

While ratification is still in its early stages the AfCFTA is a first step for African countries to speed up cooperation that will bring expanded opportunities to their businesses and citizens.

This issue of International Trade Forum is dedicated to regional integration and trade. What seems to be a common thread among contributors is that rather than being a threat to the multilateral trading system, regional trade agreements are more likely to support and strengthen the current order. This is perhaps best exemplified in the European Union, but other regions are looking to step up cooperation too: in Asia, Africa and the Americas.

Headwinds are likely to continue for global trade in 2019. The hope is that more countries and people are going to come out in defence, not only of trade, but of the global multilateral system. While it is recognised that most of the institutions we have set up to ensure greater collaboration among people and countries – including the United Nations and the WTO – are in need of updating, we cannot afford to lose them.

It is only by working together – especially on trade – that we can ensure that the 99% gain a much greater share of the global economy.