WTO head expresses concerns over US tariff impact on global economic growth
The head of the World Trade Organization has welcomed the agreement between the United States and China to reduce their tit-for-tat tariffs, while expressing concerns over the impact of the US tariff policy on global economic growth.
WTO Director-General Ngozi Okonjo-Iweala spoke to NHK in Tokyo on Wednesday.
On Monday, the US and China said they agreed to cut additional tariffs on each other by 115 percentage points, following their trade talks in Switzerland.
Okonjo-Iweala described the move as a "positive outcome," saying that the US and China have established a good communication channel, the result of which was the announcement by the two countries.
Okonjo-Iweala said a decoupling of trade between the US and China could lead to fragmentation of world trade, which would have quite severe consequences for global economic growth.
She expressed concerns that if the world trading system fragments into two blocs, up to 7 percent of global GDP could be lost in the longer term.
The WTO chief also noted that many countries do not want to be made to choose one side or the other. She said that they want good relations so they can trade with both sides.
Okonjo-Iweala stressed the importance of free trade, saying that globalization has helped lift many countries into prosperity, and brought 1.5 billion people out of extreme poverty over the past three decades.
At the same time, she noted that the WTO faces challenges such as the uneven distribution of wealth and widening disparity.
The director-general is advocating the concept of "reglobalization" to address the issues. It involves deconcentrating supply chains to benefit countries or areas that have not benefited so far.
She said it kills two birds with one stone, as a more resilient world system will be built and those left behind will be included.
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