The United States, China and Germany benefit the most from the World Trade Organization WTO. This emerges from a study by the Bertelsmann Stiftung. According to this, the three largest exporting countries in the world achieved by far the greatest income gains through their membership in the organization. According to the study, Germany benefited from approximately $ 66 billion in revenue in 2016. Only the United States ($ 87 billion) and China ($ 86 billion) generated more revenue.
For the study, a group of scientists calculated the prosperity effects of WTO membership for 180 countries worldwide – including all 164 WTO member states. Both internal and external trade flows resulting from WTO membership were taken into account for the calculations for each country.
According to the study, membership in the organization is worthwhile for most countries. From 1980 to 2016, nominal exports in WTO member countries grew by 14 percent. Non-members, on the other hand, would see a decline in prosperity and a decline in exports. According to the authors, nominal exports to non-WTO countries fell by 5.5 percent over the same period.
Mexico and South Korea are also profiteers
According to the analysis, especially nations with strong export and production benefits from their WTO membership. In addition to the USA and Germany, this also applies to South Korea (roughly $ 31 billion in gross domestic product growth), but also to Mexico (roughly $ 58 billion).
Christian Bluth, trade expert at Bertelsmann Foundation, emphasized the importance of the trade organization. "The WTO is the operating system of the global economy that ensures that goods and services can circulate in a stable, rule-based environment on a daily basis." Worldwide, the WTO had created an increase in prosperity of around $ 855 billion in 2016. This corresponds to about one percent of the global gross domestic product.
Experts call for reform
However, the importance of the organization has recently waned, particularly in connection with the settlement of trade conflicts. Since the beginning of December, customs conflicts, such as those between the USA and China, can no longer be resolved in an orderly manner because there are no longer any judges in the dispute settlement procedure. The United States had blocked the appointment of new judges for years. This makes the WTO unable to act in dispute settlement. China has described US behavior as the "worst blow" against the WTO.
The Bertelsmann retail expert also criticized the current situation: "A rule-based system cannot last long without enforcing rules," said Bluth. The WTO urgently needs an update to continue generating wealth. If you opted for a system of purely bilateral trade agreements instead of the WTO, you would risk enormous losses in prosperity in international trade.
Criticism also came from the German Chamber of Commerce and Industry (DIHK), which warned of a negative impact on the German economy. "The erosion of the WTO due to the unresolved dispute settlement affects the internationally networked German economy particularly hard," said DIHK President Eric Schweitzer. German companies are dependent on world trade with fair rules. Schweitzer called on Germany and the EU to lead a "grand coalition of the willing" for a broad-based initiative. This would ensure the enforcement of WTO law at least between the "likeminded countries" – and thus somewhat more legal certainty for German companies. In addition, world trade rules should keep pace with the major economic changes since 1995. "Especially when it comes to subsidies and e-commerce, companies need modern and fair global rules," said Schweitzer.
In addition to the International Monetary Fund (IMF) and the World Bank, the WTO is one of the most important international organizations in economic policy. Above all, it is intended to provide a forum for negotiating tariff reductions and other trade barriers and to monitor whether international trade agreements are upheld. The Geneva-based organization was founded on January 1, 1995.