Faced with the Risk of Protectionism, the World Economic Forum Offers Three Recommendations
To address the risk of deepening protectionism by global giants and the disastrous consequences that may result, affecting all countries to varying degrees, the World Economic Forum (WEF) has shared three recommendations in its report on global risks in its latest edition.
Fostering Multilateralism
The Global Risks Perception Survey (GRPS) estimates that the approach most likely to reduce long-term risks is through international agreements and treaties. A particular area to prioritize is the relaunch of reforms at the World Trade Organization (WTO) to resolve disputes, set tariff rules, and address digital trade issues.
With the ongoing geo-economic confrontation between the USA and China at the heart of a fragmenting world, new opportunities will arise for emerging powers like India or Gulf countries to fill the void and offer alternative multilateral solutions to the current global economic policy. These countries can also benefit by acting as a bridge between the West and the East, although they will also suffer from the negative effects of this fragmented environment. Small countries will face increasing pressure to align with either the West or the East in their trade relations.
Developing Strategic Relationships
Governments could consider giving more priority to efforts aimed at developing strategic, regional, or bilateral links with countries that offer complementary sectoral strengths, natural resource wealth, or knowledge. Regional "deep" trade agreements without WTO intervention, but in conformity with WTO requirements and based on plurilateral or mini-lateral WTO agreements.
Even at these levels, dialogue between stakeholders must reinforce the message that well-designed trade agreements can lead to beneficial economic and social outcomes.
Strengthening National Economic Resilience
In an environment where trade is becoming more costly and cumbersome, the focus must be on policies that strengthen the domestic economy, develop the financial sector, or invest in education, health, and infrastructure. On the supply side, developing greater autonomy in key strategic sectors such as energy, agriculture, and defense will become an increasingly important aspect of national resilience.
By adopting these recommendations, countries can better navigate the risks associated with protectionism and promote a more stable and prosperous global economy.
