World Trade Report urges multilateral trading system upgrade

A lack of modernising global trading system and absence of the World Trade Organisation (WTO) would create an uneven turf in which the least-developed countries (LDCs) would lose out in terms of economic growth and exports.

The intergovernmental agency dealing with world trade governance rang the alarm bell in the wake of its virtual existential crisis with big powers dabbling in tariff and trade wars.

And, if the current structure of multilateral trade cooperation, under the umbrella of the WTO, is replaced by an unstructured network of free-trade agreements (FTAs), LDCs may lose 16.5 per cent of gross domestic product (GDP), which is more than three times the losses projected for high-income economies.

There are currently 44 LDCs on the United Nations (UN) list of which 37, including Bangladesh, have become WTO members to date. Four LDCs are negotiating to join the WTO now.

The World Trade Report 2026, released Tuesday in Geneva, made these projections. The title of the report is ‘A critical juncture for the world trading system’.

The report was formally unveiled in a session of the WTO Public Forum 2026. WTO Director-General Ngozi Okonjo-Iweala made the formal statement on the report followed by a panel discussion.

The report cautions that inaction to upgrade the trading system could reduce global output by up to 10 per cent.

Earlier, a press conference also took place at the WTO secretariat to present the highlights of the report and reply questions of the media representatives.

WTO Chief Economist Robert Staiger along with report coordinators Roberta Piermartini and Kathryn Lundquist talked at the conference to explain the key features of the report. The press conference was conducted by Ismail Dieng, director of WTO’s information and external relations division.

“The report’s model simulations compare alternative futures for trade cooperation,” said Staiger. The modelling compares three stylised futures.

He said global GDP would fall by 5.1 per cent and global exports by 18.6 per cent in a geo-fragmented world scenario. The fragmented world means the world that splits more sharply along geopolitical lines.

Under this scenario, real GDP is projected to decline by 10.6 per cent in LDCs and 7.3 per cent in middle-income economies, compared with 2.9 per cent in high-income economies.

Again, in an ‘FTA world’ scenario, global GDP would fall by 6.9 per cent and global exports by 26.9 per cent, added the WTO chief economist.

In the scenario, multilateral cooperation is replaced by a network of free-trade agreements without cooperation between the groupings. There is also an absence of WTO.

LDCs may face as high as 45 per cent of losses in their exports under the FTA world scenario though the losses would be lower at 33 per cent under a geo-fragmented scenario.

Collective LDC exports rose 11 per cent in the last year to US$ 309 billion, after rising by 8.0 per cent in the previous year. The share of LDCs in world merchandise exports also reached 1.21 per cent in 2025, according to WTO statistics.

Bangladesh is the top merchandise exporter amongst the group of LDCs covering around 17 per cent of all LDCs’ exports.

There is, however, a reason to be optimistic as per the latest world trade report. It mentions that under the ‘enhanced-cooperation scenario’, where multilateral trade cooperation is reinforced, global GDP would increase by 2.9 per cent or US$ 3 trillion by 2050 and global exports by 17.9 per cent.

Under the scenario, real GDP in LDCs is projected to increase by 7.7 per cent, compared with 3.1 per cent for middle-income economies and 2.5 per cent for high-income economies. Export gains for the LDCs would be 45 per cent under the scenario.

“The relatively larger gains for LDCs reflect the greater benefits they would derive from tariff-and other trade-cost reductions,” adds the report.

Source: The Business Standard