World Trade Organization: War Causing Worst Global Trade Disruption in 80 Years

The global trading order is under siege, World Trade Organization director-general Ngozi Okonjo-Iweala warned as delegates convened for the WTO ministerial in Yaounde, calling the disruption the most severe the system has faced in eight decades.

“The world order and the multilateral system we used to know has irrevocably changed,” she said, stressing: “We cannot deny the scale of the problems confronting the world today.”

With 166 member states represented, the WTO meets in the Cameroonian capital amid stark divisions among its members, as trade ministers confront an array of pressures intensified by the ongoing war in the Middle East.

Over the next four days in Yaounde, delegates aim to revive an institution battered by geopolitical rivalry, stalled talks and rising protectionist measures — all unfolding while the regional conflict threatens to further disrupt international commerce.

“National governments and international institutions alike have been struggling to navigate rising geopolitical tensions, intensifying climate pressures and rapid technological change.

“Accompanying these shifts has been an increasingly loud questioning of multilateralism.”

Okonjo-Iweala said these shocks reflect deeper changes shaking the post-World War II architecture that was designed to prevent a recurrence of the 20th century’s large-scale catastrophes.

“It feels appropriate that at the moment when the world is in turmoil with conflict in the Middle East, Sudan, Ukraine, and elsewhere, at this time of great disruption and uncertainty, we have gathered in Africa to discuss the road ahead for the global trading system,” she said.

“Africa is the continent of the future.”

WTO ministerial conferences are normally held every two years; this meeting marks only the second time the summit has been hosted in Africa, following Nairobi in 2015.

Mideast war could spark financial system stress – ECB

The conflict in the Middle East also poses risks to financial stability, a senior European Central Bank official warned, saying it could precipitate “systemic stress” across markets.

The disruption arrives while markets are already uneasy about a possible tech-stock bubble fueled by AI enthusiasm and strains in the private credit sector.

“This conflict could trigger the unravelling of interconnected vulnerabilities and cause systemic stress,” ECB Vice-President Luis de Guindos said in Tallinn.

“It threatens to derail market sentiment at a time when asset valuations are high,” he added, noting the conflict could be “amplifying stress in the non-bank financial sector”.

De Guindos, who oversees financial-stability monitoring at the ECB, said so far the “spillovers to the euro area financial sector have remained contained”.

Markets have been shaken by the Mideast war, which escalated last month after US-Israeli strikes on Iran, triggering stock declines and sharp rises in oil and gas prices.

Iran has announced the Strait of Hormuz — a chokepoint that ordinarily carries roughly one-fifth of the world’s oil and gas shipments — is closed to vessels from countries it deems allied with the United States and Israel.

Warning of “far-reaching repercussions for the global economy”, de Guindos said the region was facing a supply shock.

“The scale of the impact and the implications for price and financial stability will depend on how much the war spreads, and how long it lasts,” he said.

Speaking in Frankfurt on Wednesday, ECB President Christine Lagarde suggested any inflationary impact from the conflict would likely be milder than the shock seen in 2022 after Russia’s full-scale invasion of Ukraine.

Meanwhile, traders have increased bets that the ECB could raise interest rates as soon as next month to counter an anticipated uptick in inflation.