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| Ngozi Okonjo-Iweala, the director general of the World Trade Organization / Yonhap |
Ngozi Okonjo-Iweala, the director general of the World Trade Organization (WTO), on Tuesday called on countries to "deconcentrate" their supply chains, instead of forming blocs to marginalize others, emphasizing trade diversification is essential for global growth and resilience.
She made the remarks at a forum in Seoul, expressing concerns over growing trade practices in which a handful of friendly nations establish exclusive supply chain networks and adopt policies to effectively reduce trade with certain countries.
"Governments have unfortunately weaponized trade relations in response to strategic rivalries or diplomatic disagreements ... (seeing) the risks of the integration exceeding the benefits, and this new mantra calls for more production to reshoring or friendshoring," Okonjo-Iweala said during a trade talk session co-hosted by the Ministry of Trade, Industry and Energy and the Korea Chamber of Commerce and Industry (KCCI).
"That is over-concentration in some trading relations for certain vital products. The way to make supply chains more robust and resilient is to deconcentrate them," she said.
Okonjo-Iweala stressed that such "friendshoring" practices will not only undermine global trade but could incur enormous economic costs, citing a WTO study estimating that countries will see their gross domestic product (GDP) shrink if the world economy splits into two trade blocs.
"It will reduce real GDP by at least 5 percent on average. Imagine losing the whole of Japan from the world economy, that's what we're talking about," Okonjo-Iweala said.
International cooperation is also vital in tackling global challenges, like climate change, and less diversified supply chains would mean less resiliency to localized shocks, such as from extreme weather events or disease outbreaks, she added.
She called for the need to "bring countries at the margins of the globalization process into the mainstream," or what she called "re-globalization" as advocated by the WTO.
She suggested countries, including South Korea, look for "nontraditional" partners for investments, noting how South Korea has been stepping up efforts in recent years to deepen economic relations with African nations.
This re-globalization could also offer South Korea many business and investment opportunities, as an aging population and shrinking workforce have begun to weigh on the country's future growth prospects, the WTO chief said.
Okonjo-Iweala arrived for a three-day trip to South Korea on Monday for talks with senior government officials and businesspeople on global trade and other issues. She took office in March 2021.
Her visit to Seoul marks the first such trip by a WTO chief in almost a decade. The last visit was by former WTO chief Roberto Azevedo in May 2014.
Some 200 participants attended Tuesday's session, including Trade Minister Ahn Duk-geun and KCCI vice chair Woo Tae-hee. (Yonhap)
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