Home >politics >policy >WTO downgrades global trade growth forecast

Geneva: Global merchandise trade is expected to decline to 3.9% in 2018 from the previous year, as a result of escalating trade tensions between the US and China and the Trump administration’s decision to target imports from Canada with crowbar tariffs, said analysts.

“Escalating trade tensions and tighter credit market conditions in important markets will slow trade growth for the rest of this year and in 2019," the World Trade Organization (WTO) said on Thursday. “The new forecast for 2018 is below the WTO’s 12 April estimate of 4.4%, but falls within the 3.1% to 5.5% growth range indicated at that time."

“A rise in actual and proposed trade measures targeting a variety of exports from large economies (the US, China, the European Union, Japan, and Canada, among others)," according to WTO, caused uncertainty. “Monetary policy tightening in developed economies has also contributed to volatility in exchange rates," which is adversely impacting trade, the trade body argued.

“The downgrade (from 4.2% to 3.9%) reflects the heightened tensions that we are seeing between major trading partners," said WTO director general Roberto Azevedo, without naming the country causing trade tensions.

On Wednesday, US President Donald Trump signalled his intention to impose new tariffs on imports of automobiles from Canada if Ottawa refused to agree with conditions put forth by America on dairy and other products. Trump also claimed that the trade war with China is yielding huge success for US companies and farmers, and charged Beijing for interfering in US elections in Iowa.

“I like President Xi a lot. I think he’s a friend of mine. He may not be a friend of mine anymore (because of the trade war)," Trump said, during a press conference on Wednesday evening in New York.

However, China’s foreign minister Wang Yi flatly dismissed Trump’s statement and said China never interferes in the domestic matters of any country.

The US President said he turned down a request from Canadian Prime Minister Justin Trudeau because of Ottawa’s continued hardline positions during the ongoing negotiations with Washington for revamping the North American Free Trade Agreement (NAFTA). Canada indicated that it will not be rushed into renewing NAFTA. “We will keep working as long as it takes to get to the right deal for Canada," said Trudeau.

Meanwhile, Trump boasted about his agreement with Japanese Prime Minister Shinzo Abe for launching negotiations on a bilateral trade agreement in goods and services trade. Though not as comprehensive as other US free trade agreements, the two countries plan to extend negotiations into other trade and investment areas, following the completion of the agreement, according to Washington Trade Daily of 27 September.

Significantly, the US, EU, and Japan joined hands on 25 September to negotiate new rules on industrial subsidies, state-owned enterprises, forced transfer of technology, and theft of intellectual property, in a concerted battle with China at WTO.

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