Global trade shows resilience amid challenges, says WTO chief Ngozi Okonjo-Iweala

In a recent interview, World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala reported that global trade remains surprisingly robust despite facing numerous challenges, including stringent U.S. tariffs, the ongoing conflict in Iran, elevated energy prices, and significant geopolitical tensions. Okonjo-Iweala noted a surge in trade driven by advancements in artificial intelligence (AI), although she cautioned that the existing trading system is under considerable strain.

According to Okonjo-Iweala, 72% of world goods trade is still conducted under the WTO's most-favored-nation terms, which grant businesses a degree of predictability and stability amid shifting trade landscapes. She highlighted that global goods trade growth has outstripped WTO projections; instead of the anticipated 2.4 to 2.5 percent, actual growth reached 4.6% last year, with AI and related products contributing significantly to this expansion.

"Even we are surprised by the resilience of global trade, and we're grateful for it," Okonjo-Iweala stated in an interview with CNN. This strong performance comes against a backdrop of evolving U.S. trade policies under the Trump administration, increased tensions between the United States and China, disruptions resulting from the Iran war, and challenges to international shipping routes.

The WTO chief emphasized that companies continue to depend on the multilateral trading system for certainty in their operations. She said, "Businesses need some stability and predictability in the way they trade," which underscores the importance of the WTO framework even in politically charged climates.

In relation to the booming AI sector, Okonjo-Iweala mentioned that 42% of last year's trade growth was attributed to AI, semiconductors, and related technologies. This unexpected expansion trend has persisted into 2026, where first-quarter statistics suggest that goods trade growth could exceed projected values, reaching 3.2 percent compared to the anticipated 1.9 percent for the year.

The benefits of the surge in AI trade are, however, not universally distributed. Okonjo-Iweala pointed out that these gains are primarily concentrated in East Asia and North America, particularly the United States. She warned that if other regions do not share in the AI boom's benefits, it could lead to broader economic disparities.

During the interview, Zakaria, the host, raised concerns about the implications of the U.S. shifting towards protectionism, questioning the survival of the international trading system if its principal architect retreats from these foundational principles. Okonjo-Iweala acknowledged her initial fears regarding potential disruptions but expressed a newfound belief in the core resilience of the existing trade rules, stating, "There’s a core of the rules that really work, that it was largely well built, has benefited the world."

Despite the positive trade numbers, Okonjo-Iweala warned against complacency, asserting that just because trade appears strong does not mean the system itself is secure. She expressed concerns about trust deficits among WTO member nations, indicating that significant reforms would be necessary to adapt to changing dynamics in global trade.

Okonjo-Iweala also highlighted emerging trends such as the rapid expansion of digital and green trade. She emphasized that services trade, particularly for the U.S., is growing, which further illustrates the complexity of the global trading landscape. The chief remarked, "Even green trade is growing more than $2 trillion now," showcasing the evolving nature of international commerce beyond traditional goods.

While the current atmosphere poses challenges for the rules-based trading system, Okonjo-Iweala remains optimistic about the future of the WTO and free trade, encouraging dialogue and progressive reforms among member states to combat the existing trust deficit and bolster the framework that underpins global economic cooperation.

Source

Original IANS report

Edited with AI assistance.

Featured image: AI-generated representative image.