WTO says fragmentation and unilateral environmental rules are a risk to trade

The World Trade Organisation (WTO) has flagged a concern regarding the rise in fragmentation in international trade primarily caused by unilateral environmental measures such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) and the Inflation Reduction Act (IRA) in the United States. The body has noted a nine-fold increase in the number of trade concerns raised at the Council for Trade in Goods over the last six years, and has flagged that this may be indicative of potential trade disputes in future. The primary concerns of members include the CBAM and the EU’s measures to implement its Green Deal, the IRA in the US, and export restrictions by Indonesia. This may lead to a potential spiral of reactionary measures and a more fragmented world, dominated by regional trade blocs, said the WTO. The world should instead be moving towards re-globalisation as the best way to tackle the problems of security, poverty, and climate change.

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