Amid early signs of trade fragmentation that threaten to unwind growth and development, the World Trade Organization Trade Report 2023 has called for "re-globalization", showing new evidence on the benefits of broader and more inclusive economic integration.

The World Trade Report 2023, a flagship WTO publication, launched on Sept. 12 and released Wednesday, Sept. 13, features findings on how re-globalization can support security, inclusiveness, and environmental sustainability. 

The latest report defines re-globalization as increased international cooperation and broader integration, by integrating more people, economies and pressing issues into global trade and strengthening multilateral cooperation.  

This year's World Trade Report examines how re-globalization could address the three major challenges facing the global economy today: national and economic security, poverty alleviation and environmental sustainability.

“The post-1945 international economic order was built on the idea that interdependence among nations through increased trade and economic ties would foster peace and shared prosperity. For most of the past 75 years, this idea guided policymakers, and helped lay the foundation for an unprecedented era of growth, higher living standards and poverty reduction,” said WTO Director-General Ngozi Okonjo-Iweala in her foreword to the report.  “Today this vision is under threat, as is the future of an open and predictable global economy,” she added.

“The WTO is not perfect — far from it. But the case for strengthening the trading system is far stronger than the case for walking away from it,” DG Okonjo-Iweala said.  

In introducing the report at the opening of the WTO's annual Public Forum on Sept. 12, WTO Chief Economist Ralph Ossa said: “The main conclusion is that we need to embrace trade instead of rejecting it if we want to overcome the most pressing challenges of our time.”

“In particular, the report makes the case for extending trade integration to more economies, people, and issues, which is a process that we call ‘re-globalization’,” Ossa added. Trade integration “is a powerful tool to improve living standards, which helped lift hundreds of millions of people out of poverty.”

Starting with an analysis of the current state of globalization, the report confirms that geopolitical tensions are beginning to affect trade flows, including in ways that point towards fragmentation of trading relationships. 

For instance, WTO Secretariat calculations find, for example, that goods trade flows between two hypothetical geopolitical blocs — based on voting patterns at the UN General Assembly — have grown four-six percent more slowly than trade within these blocs. 

However, the report contends that, despite these findings, international trade continues to thrive, implying that talk of de-globalization is on balance still not supported by the data. The publication points to the expansion of digital services trade, environmental goods trade, and global value chains in addition to the resilience of trade to recent global crises.

The report also examined the relationship between economic integration and three major challenges facing today's global economic order:  security and resilience, poverty and inclusiveness, and environmental sustainability — areas in which arguments have gained ground that globalization has not delivered as expected or exposes countries to excessive risks. 

Looking at the evidence, the report makes the case that “re-globalization,” which is the renewed drive towards integrating more people, economies and pressing issues into world trade, is a more promising solution to these issues than fragmentation. The report shows that trade openness is strongly linked with a reduced likelihood of conflict and has led to sharp declines in poverty for over four decades. Also, technology improvements enabled by trade have had a strong impact in reducing carbon emissions.

Finally, the report emphasized the need for more trade and more cooperation to effectively address the major issues that policymakers are facing the world over — from security to inclusiveness to climate change. A re-invigorated and reformed WTO can play a central role in tackling these challenges.

For instance, Chapter C of the report suggests that re-globalization can contribute more effectively than fragmentation to a more secure world. It looks at the role of international trade in maintaining peace and security. It observed that the notion of security invoked in a trade policy context has evolved to include economic aspects, such as access to critical goods and resilience to shocks.