World trade back to pre-crisis level, uncertainty looms: WTO

16:22, April 08, 2011      

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World exports in real terms surged by 14.5 percent 2010, reclaiming the ground it lost during the financial crisis, however there were clouds over future growth, the Geneva-based World Trade Organization (WTO) said in its annual world trade report, issued Wednesday.

"World trade bounced back strongly in 2010," WTO Director-General Pascal Lamy told the media at the report's release. "Only one year after falling by 12 percent, export volumes rebounded by 14.5 percent, which is the largest annual expansion on record," he said.

However, due to recent political turmoil in the Middle East and price hikes for oil and other primary commodities, WTO is more cautious in its outlook for 2011, forecasting a modest 6.5 percent increase for the year.

The global trade regime noted in particular the natural and nuclear disasters in Japan.

WTO forecast Japan's exports to decline by 0.5 percent to 1.6 percent in 2010, with imports rising between 0.4 and 1.3 percent, a relatively mild downgrade. The forecast was based on WTO research of trade effects from natural disasters, which indicates a relatively small economic impact from natural disasters after the initial shock.

The medium-and long-term impact from Japan's disasters on overall world goods trade "should be small," said WTO Chief Economist Patrick Low, "but the pattern of trade is clearly going to be affected and certainly in the short run, on account of Japan's key role as a supplier of intermediary goods, particularly electronic components and auto parts."

WTO expected disaster-affected goods from Japan with close substitutes might be imported from other countries, or purchased domestically, whereas goods that did not have substitutes would experience temporary shortages, before being compensated by higher demand.

The possibility of progress in the multilateral trading system, represented by the Doha Round Negotiations, stalling is another factor that might undermine the potential of global trade.

"Our negotiations are going through a very difficult stage," Lamy said.

He compared the multilateral trading system with a mule, which was reliable, endurable and dependable. "The difficulty with mules is that they sometimes get stuck. They don't go backwards but they refuse to move forwards either. And this is a bit of what's happening with the multilateral trading system today," Lamy said.

The Doha Round has encountered serious problems in sector negotiations, as members still can not bridge the apparent gaps in areas such as Agriculture and Non-agricultural market access (NAMA).

In the meantime, Low, the chief economist, said emerging economies had injected new dynamics into global trade. "The emerging economies are certainly doing a great deal by way of pushing up the global average," he said.

And the region of Asia, which covers many of the emerging economies, had outperformed all other regions with an increase of 23 percent in terms of export volume.

China led the growth by a massive 28 percent growth in exports and imports up by 22 percent, while India's exports and imports gained around 20 percent and 11 percent, respectively.

"For China, this means a real increase in trade growth about 15 percent higher than the 2008 level," Low said, noting the country had not only regained the losses suffered during the financial crisis, but also made marked progress.

Source: Xinhua
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