A Divided World... WTO "Concerns Over Real Income Decline in Each Country"

US-Centered Bloc vs. China-Russia-Centered Bloc

The World Trade Organization (WTO) has expressed concerns that the world’s real income will decline as it becomes divided into a Western and allied bloc centered on the United States and a bloc of China, Russia, and their cooperating countries.

World Trade Organization (WTO) Headquarters, Geneva, Switzerland [Image source=Yonhap News]

Ralph Ossa, WTO Chief Economist, pointed out in a report on the 13th (local time) that "signs of fragmentation appearing in global trade pose a risk to growth and development."

In the report, he conveyed concerns that geopolitical tensions are causing fractures in trade as well. The report analyzed trade flows between the United States and its allied bloc, and China, Russia, and their allied bloc, concluding that "the flow of goods between the two blocs grew 4 to 6% slower than the flow of goods within each bloc." This was also seen as evidence that as the world becomes geopolitically divided, cracks are emerging in global trade.

However, he emphasized that this trend does not indicate "deglobalization." The report explained, "Observations of deglobalization in global trade are not supported by data," adding, "US-China trade reached a record high last year, and with the end of the COVID-19 pandemic, trade between the two sides has rebounded remarkably resiliently."

Nevertheless, the report warned that if the bifurcation of global trade continues, it could cause worldwide damage such as supply chain disruptions. The report predicted, "Efforts will be made to restore multilateral trade through re-globalization, or conversely, the path toward division will be followed," and stated, "If world trade splits into two blocs, losses amounting to about 5% of global real income will occur, and some developing countries will face double-digit losses."

This content was produced with the assistance of AI translation services.