Number Theory: Free trade has benefits but there are caveats

The World Trade Organisation (WTO) will complete 30 years on January 1, 2025. The multilateral trade body is perhaps facing the most difficult time today since its inception as the consensus on rule-based multilateral trade regime continues to weaken across countries and protectionism is becoming stronger even in the advanced economies.

The latest World Trade Report – it is the flagship publication of the WTO – acknowledges this challenge categorically but also tries to build a case for free trade. “Perhaps the biggest takeaway from the report is its reaffirmation of trade’s transformative role in reducing poverty and creating shared prosperity – contrary to the currently fashionable notion that trade, and institutions like the WTO, have not been good for poverty or for poor countries, and are creating a more unequal world”, WTO Director General Ngozi Okonjo-Iweala has said in the report. Its case for free trade notwithstanding, the report does note that gains from trade have not accrued to all stakeholders. Here are four charts which summarise the key message of the report.