TRADE: US Uncertainty Slowing Global Commerce, Says WTO

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, May 23 2001 (IPS) - International trade this year hinges on the outcome of the economic uncertainty reigning in the United States, following an exceptional global trade performance in 2000, says the World Trade Organisation (WTO) annual report, published here Wednesday.

The value of world trade in merchandise expanded last year by 12.5 percent, reaching a total 6.2 trillion dollars. But this year the global economy is experiencing a deceleration, “clouding the trade prospects for 2001,” says the WTO text.

Calculations made a year ago forecast 12-percent growth for world merchandise trade this year, but given the current circumstances, the prediction was adjusted to just seven percent.

Drawing up forecasts about trade performance for the rest of this year is complicated by the “contradictory signals” coming from the United States, said Karl Finger, head of the Economic Research and Analysis Division at the WTO.

The marked decline in imports in the world’s leading economy in the first months of 2001 is causing stagnation in international trade. Meanwhile, Europe has not successfully taken over the role as engine of production.

But it is still possible that the US economy could recovery in this year’s second half, with an energizing effect on international trade, Finger pointed out during the presentation of the WTO Annual Report 2001 at the institution’s Geneva headquarters Wednesday.

As long as the panorama remains “cloudy”, however, some 20 countries will bear the brunt of the economic slowdown because at least a third of their exports would normally be headed for the United States.

This group is headed by Canada and Mexico, which sell their North American neighbour more than 85 percent of their exports. The other nations that are highly dependent on revenues from sales to the US market are found in Central America, the Caribbean and Asia.

The WTO report indicates that growth in international trade in 2000 was extraordinary, as was the expansion of the global economy (four percent). Meanwhile, trade in most regions increased 10 to 15 percent.

But developing countries’ exports and imports rose more than 20 percent, putting their portion of world merchandise trade at its highest level in half a century.

Among the factors contributing to the improvement of the developing world’s trade performance were the economic recovery of Latin America and East Asia, the strong rise in oil prices and greater demand for imports in industrialised countries, says the report.

The WTO stresses that the information technology and telecommunications sector was once again among the most dynamic in 2001, despite the decline observed in the most recent quarter.

Global sales of semiconductors, for example grew 47 percent, reaching 204 billion dollars. Trade in mobile telephones rose 47 percent over 1999 levels as well, totalling 410 million units.

In addition, trade in personal computers saw a 15-percent expansion, with 135 million units sold.

In relation to 1999, prices for all internationally traded goods remained almost unchanged in 2000, because “sharply higher prices for fuel were offset by declines in the prices of manufactured goods,” says the global trade forum.

Non-fuel commodities – an essential sector for the world’s developing economies – saw a slight average price rise in 2000.

The WTO points out that “the recovery in metal prices and the higher prices for agricultural raw materials were not fully offset by price decreases for beverages and food.”

With this modest recovery, the average prices of non-fuel commodities stood more than 20 percent below their peak – reached in 1995 – and almost 10 percent below their average in the early 1990s.

Meanwhile, world trade in commercial services in 2000 grew five percent to an estimated 1.4 trillion dollars.

But the value of services exchange expanded at a slower pace than merchandise trade for the second consecutive year.

The export and import of commercial services accelerated in all regions, with the exception of Western Europe, due in large part to the depreciation of the euro in relation to the dollar.