BERLIN (Reuters) - A full-blown trade war would have serious effects on global economic growth and there would be no winners in such a scenario, the director-general of the World Trade Organization (WTO), Roberto Azevedo, said on Tuesday.
Speaking at a Berlin industry event against the backdrop of growing trade tensions between China and the United States, Azevedo said: “The warning lights are flashing. A continued escalation of tensions would pose an increased threat to stability, to jobs and to the kind of growth that we are seeing today.”
A full-blown global trade war with a breakdown in international trade cooperation would reduce global trade growth by around 17 percent and GDP growth by 1.9 percent, Azevedo said.
“There would be no winners from such a scenario and every region would be affected,” Azevedo said. The European Union itself would have about 1.7 percent taken off its GDP growth, he said, adding: “Clearly, we cannot let this happen.”
Azevedo pointed to several reform proposals that addressed trade-distorting practices and the WTO’s existing mechanisms to resolve trade disputes, adding that members had to agree on which reforms they wanted to focus on.
“Clearly, this informed debate is gaining significant momentum and that is positive,” Azevedo said, adding the G20 summit in Buenos Aires in November would be crucial to agree on the next steps to safeguard the rules-based free trade order.
“Of course, the system can be better, in fact it must be better. But it’s nonetheless vital. So while we work to improve it and ensure that it’s more responsible to evolving economic needs, we must also preserve what we have - and I count on your support to that end,” he said.
(This version of the story corrects figure in third paragraph to 17 from 70 percent)
Reporting by Michael Nienaber, editing by Riham Alkousaa