Despite growing global trade tensions, tariff disruptions and other economic shocks, about 72 per cent of world goods trade is still conducted under the World Trade Organisation’s (WTO) Most Favoured Nation (MFN) terms, Director-General of the WTO, Dr Ngozi Okonjo-Iweala, has said.

Okonjo-Iweala said the resilience of the multilateral trading system was largely driven by businesses’ need for stability and predictability in international trade, noting that WTO rules continued to provide that foundation despite growing pressure on the global trading system.

Speaking on the state of global trade, she said, “Despite the turmoil and uncertainty in the last year, we are surprised by its resilience and remain grateful for it.”

She said the organisation had examined how much of world trade was still taking place in accordance with WTO rules, against the backdrop of a changing global economic environment in which multilateral trade rules were under pressure.

According to her, despite global shocks and tariffs, international trade continued to grow, exceeding the WTO’s projections.

She recalled that the organisation had projected goods trade growth of about 2.4 to 2.5 per cent last year, but actual growth came in at 4.6 per cent, almost twice the initial estimate.

She attributed much of the stronger-than-expected performance to trade in artificial intelligence (AI)-related goods, which grew by 42 per cent.

She said the growth included trade in semiconductors, processors, hardware and software, reflecting the increasing importance of AI and related technologies to global commerce.

For the current year, she said the WTO had taken into consideration several risks, including United States tariff measures, problems surrounding the Strait of Hormuz and rising energy prices, before projecting global goods trade growth at 1.9 per cent.

However, she said first-quarter performance was stronger than expected, with global goods trade growing by 3.2 per cent.

“To our utmost surprise, Q1 delivered 3.2 per cent growth in global goods trade, far more than what was projected,” she said.

The WTO chief, however, warned against complacency, stressing that the strong performance was not necessarily an indication that the trend would continue indefinitely.

She said the rapid growth in AI-related trade remained uncertain, noting that it was unclear whether the current expansion could be sustained or represented a temporary bubble.

“This doesn’t mean we should become complacent, as AI has a lot of uncertainty, and we do not know if this can be sustained or if it is just a bubble. We have to watch and see,” she said.

She also expressed concern that the benefits of AI-driven trade expansion remained largely concentrated in East Asia and North America, particularly in the United States.

She warned that the concentration could become problematic if other parts of the world were not brought into the expanding trade opportunities.

Okonjo-Iweala said the continued resilience of global trade had surprised her, particularly given the scale of disruption facing the international trading system.

“I used to think that because this is the worst disruption to global trade in 80 years, we wouldn’t see these kinds of numbers, but I am seeing some persistence in the numbers that lead me to believe that there is a core of the rules that really work,” she said.

She said the resilience demonstrated that the WTO system had been well constructed and had made significant contributions to global prosperity.

“This organisation is well built and has benefitted the world, increased prosperity and taken over 1.5 billion people out of poverty. The system is resilient, but we must remember that it is not robust,” she said.

Looking ahead, she expressed optimism that global free trade could regain momentum but stressed the need for urgent reforms to the international trading system.

She, however, cautioned that any return to freer global trade was unlikely to replicate the system as it existed in the past, citing a growing trust deficit among WTO members.

According to her, rebuilding consensus and implementing the necessary reforms would not be easy, but members were increasingly recognising the need for change if the organisation was to remain relevant.

“There is now a trust deficit among members. It will not be easy to carry out the necessary reforms, but for some reason, members have come to accept that if we are going to be a modern organisation and maintain resilience and robustness, they must accept the reforms,” she said.

She also highlighted the rapid expansion of digital trade and digitally delivered services, describing the segment as an increasingly important component of global commerce.

She explained that digitally delivered services referred to services traded electronically and noted that the segment was growing even faster than other areas of digital trade.

“The United States currently dominates in this aspect, and other countries can tap into this fast-growing segment,” she said.

Okonjo-Iweala said the overall resilience of global commerce demonstrated that, despite the shocks and uncertainty confronting the international economy, trade remained on a growth path.

“Despite global shocks and uncertainty, real trade is growing and is worth over two trillion dollars and counting,” she said.