The World Trade Organisation’s gauge of the health of global trade fell to 87.6, it’s lowest reading since the goods trade barometer was launched in 2016. WTO has said international trade is set to drop “precipitously” in the first half of 2020 as coronavirus wreaks havoc on global supply chains and consumer demand.
In a report, the international organisation said the reading only captures the initial phase of global coronavirus lockdowns, and “shows no sign of the trade decline bottoming out yet”.
Global trade is set to drop by between 13 and 32 per cent this year, the WTO said, depending on how long the pandemic lasts and how effective government measures are.
Trade-in cars is set to suffer the most in the first half of the year, as lockdowns cause both production and demand to plunge. Agricultural trade has been the least affected as essential food shops have remained open. But it is still below the trend.
The WTO, which promotes free trade and lays down trade rules, said trade had already slowed in 2019 going into the pandemic.
“The volume of world merchandise trade shrank by 0.1 percent in 2019, marking the first annual decline since 2009, during the global financial crisis,” the report said.
At the heart of the 2019 slowdown was the US-China trade war. It saw the world’s two biggest economies ramp up tariffs on each others’ goods and dent economic confidence around the world.
Investors fear that another flare-up in US-China trade tensions could damage the recovery from the coronavirus crash. However, the two sides have said they are working cooperatively to implement the phase one trade deal signed at the start of the year.
Trade delegates from the UK and US governments will hold two virtual negotiating rounds next month, after the first formal round of talks ended last week.
The next round will see both sides start to introduce detailed proposals as they try to strike a “comprehensive trade deal at an accelerated pace”, according to Britain’s international trade secretary Liz Truss.
Discussions in the first round covered broad areas and principles on issues such as small and medium enterprises (SMEs), financial services, investment, legal barriers to trade and agriculture.
British negotiators in the first round of negotiations also emphasised to their US counterparts that the UK would not be willing to compromise on food standards in any deal and that the NHS would not be on the table.
“A number of areas showed particular progress, including where both teams identified positive alignment between respective negotiating positions. They identified a mutually high ambition for services, investment and digital trade, among other areas,” Truss said.
The US trade talks are also taking place parallel to post-Brexit trade negotiations with the European Union. The EU trade talks have a hard deadline of December 31 to complete a deal, while there is not believed to be a firm deadline for US talks.
[(The writer is our foreign correspondent based in the UK. He can be reached at firstname.lastname@example.org)]