Ukraine war fragmenting world trade: WTO

The onset of the Ukraine war has started fragmenting world trade, resulting it in its reorientation along geopolitical lines, but a better alternative to fragmentation is re-globalisation, or extending trade integration to more people, economies and issues, according to the WTO’s World Trade Report 2023 launched on Tuesday.

Since Russia’s invasion of Ukraine, trade between two blocs, with different foreign policy alignments, has grown slower between 4 per cent and 6 per cent than trade within these blocs, the report noted. Trade concerns, many related to technical barriers, raised at WTO committees had also increased with a rise in unilateral trade restrictions.

“Recent crises, such as the Covid pandemic and the war in Ukraine, have fed into perceptions that globalisation exposes economies to excessive risks. Consequently, a trade-sceptic narrative has gained traction, suggesting that international trade is an obstacle to building a more secure, inclusive, and sustainable world. Viewing interdependence as a vice rather than a virtue, policymakers are now placing greater emphasis on economic independence,” the report noted.

Against this backdrop, the report critically examines the role of international trade in addressing some of the most pressing challenges — maintaining peace and security, reducing poverty and inequality, and achieving a sustainable economy. 

“The primary conclusion of the report is that international trade, anchored in a strengthened multilateral trading system, plays an indispensable role in creating a more secure, inclusive, and sustainable world,” it said.

Building upon these findings, the report makes the case that a better alternative to fragmentation is re-globalisation, understood as extending trade integration to more people, economies and issues.


Trade integration has been a source of resilience and peace, a major driver of global economic growth and poverty reduction, and as an engine for distributing the tools necessary to foster sustainability. “And, it can go a lot further to address today’s challenges: deeper, deconcentrated, and more diversified global supply chains — the bespoke re-globalisation — can give countries and people that have been left behind a means to participate more fully in global trade and to reap the resulting benefits,” it stated.

The spread of digital technologies can enable involvement in both goods and services trade. Also, trade can boost development opportunities and facilitate structural change, helping to achieve low-emission targets while supporting greener distribution of global production, it added.