Reference:

• The World Trade Organization (WTO) has released its World Trade Report 2025.

Key Findings:

1. Trade Growth Forecast:

• With appropriate policies such as digital infrastructure and skill development, AI could increase cross-border flows of goods and services by 34–37% by 2040.
• Under various scenarios, global trade value could rise by up to 40%.

2. Productivity and Cost Reduction:

• AI is expected to reduce trade costs and increase productivity, especially in medium- and low-income countries if the technological gap is bridged.

3. Inclusive Access:

• AI makes trade more accessible, for instance by providing developing countries with AI-enabled inputs (raw materials, semiconductors).
• In 2023, the global trade of such AI-enabled goods was USD 2.3 trillion.

4. Inequalities:

• High-income countries have greater access to AI, while low-income countries face a digital divide.
• Labor markets may be affected by AI, but trade can help balance these effects.

5. Impact on Global GDP:

• AI is expected to boost global GDP, but policy failures may result in unequal growth.

Trade Volume and Forecasts:

Additional Insights:

• Goods trade in 2025 is expected to grow 0.9%, better than April’s -0.2%, but below the baseline of 2.7%.
• Risk scenario: Reciprocal tariffs could reduce trade by 1.5% in 2025, impacting LDCs more.
• Regional breakdown: Decline in North America, limited positive contributions from energy-exporting economies.

Challenges:

• Policy Uncertainty: Tariff wars (e.g., USA-China) may shrink trade; instability could reduce global trade by up to 3% in 2025.
• Digital Divide: Low-income countries may not fully benefit from AI due to lack of digital infrastructure and skills.
• Labor Market Impact: AI may reduce jobs, especially in developing countries.
• Regulatory Gaps: Lack of transparency in AI-related trade measures (SPS, TBT).
• Global Risks: Protectionism, geopolitical tensions, and falling oil prices could slow growth in 2026.

Recommendations:

• Inclusive Policies: Invest in digital infrastructure, skill training, and technology transfer to ensure low-income countries are not left behind.
• Strengthen WTO Role: Enhance dialogue on AI, use tools like ePing, and develop digital trade rules.
• Trade Facilitation: Ease trade of AI-enabled goods, reduce tariffs on raw materials and semiconductors.
• Risk Management: Prioritize multilateral negotiations to reduce policy uncertainty.
• Capacity Building: Increase support for developing countries to make AI-led trade development inclusive.

India’s Global Trade Position:

• Merchandise exports: Rank 14th, share 2.2%
• Merchandise imports: Rank 7th, share 3.4%
• Commercial services exports: Rank 6th, share 5.3%
• Commercial services imports: Rank unchanged, share 4.1%

World Trade Organization (WTO) Overview:

• Established: 1 January 1995
• Headquarters: Geneva, Switzerland
• Objective: Establish and enforce rules to ensure global trade is free, transparent, and smooth.
• Members: 164

Key Functions:

1. Monitor and implement trade agreements.
2. Resolve trade disputes between member countries.
3. Coordinate global trade policies and rules.
4. Support trade empowerment of developing countries.

Main Bodies:

• Ministerial Conference: Highest decision-making body
• General Council: Executive and policy-making body
• Dispute Settlement Body (DSB)
• Trade and Development Council