How protectionist policies are making the rich richer and the poor poorer in our economy!

In an era where globalization seems to be at odds with national economic interests, the World Trade Organization (WTO) has issued a stark warning about the rising tide of protectionism. After almost three decades of progress in narrowing income gaps between poor and wealthy nations, the WTO’s latest report paints a concerning picture of potential regression. Here, we delve into the implications of mounting protectionism and the challenges it poses to global economic prosperity.

1. Growing Income Disparities:
   • The WTO report reveals that income per capita in low- and middle-income countries has nearly tripled between 1995 and 2023, compared to a global average increase of 65%.
   • Director-General Ngozi Okonjo-Iweala emphasizes that this progress stands in stark contrast to the popular belief that international trade has not benefited poorer countries.
2. Backlash Against International Trade:
   • Despite the positive impact on global income levels, international trade has left many in affluent nations feeling marginalized and overlooked.
   • This sentiment has fueled a political backlash against international trade agreements, such as those upheld by the WTO.
3. Protectionism on the Rise:
   • Lawmakers in advanced economies, most notably the US, are turning to protectionist measures to address domestic economic challenges exacerbated by globalization.
   • Former President Donald Trump had promised significant tariffs on imports, particularly from China, to safeguard manufacturing jobs in the US.
4. Inequality and Job Loss:
   • While trade has benefited many workers, those in regional or industrial sectors that face trade-related job losses are at a disadvantage.
   • The WTO cautions that protectionist policies, while appealing in the short term, can harm economies by inflating production costs and inviting retaliation from trade partners.
5. Impact on Household Economy:
   • Recent research estimates that proposed tariffs could cost the average US household $1,700 annually, with poorer households bearing a disproportionate burden.
   • The UK’s departure from the EU single market resulted in a significant increase in food prices, impacting the poorest households the most.

As we navigate the complex landscape of global trade, it becomes evident that a delicate balance must be struck between open markets and safeguarding domestic interests. The WTO’s call for complementary policies to support workers and mitigate inequalities underscores the need for strategic and holistic economic strategies. Let us heed this warning and work towards a future where prosperity is inclusive and sustainable for all.