By Sharon Atieno (Special Report)

Between 16 October 2017 and 15 May 2018 The World Trade Organization (WTO) Members applied 75 new trade-restrictive measures including tariff increases, quantitative restrictions, imposition of import taxes and stricter customs regulations. This equates to an average of almost 11 new measures per month covering USD 84.5 billion in trade. All these in an effort to cope with the rising trade tensions.

The WTO has been caught up in rising trade tensions that began ten years ago with a financial crisis in the United States. These trade tensions have led to USD 413billion in trade affected by tariffs with 16 dispute settlement cases arising from them. WTO estimates full blown trade war cutting trade by 17 percent and GDP by 1.9 percent.

The financial crisis led to huge losses in the U.S. at an estimated cost of USD 648 billion due to slower economic growth, average of USD 5,800 in lost income per household. It also resulted to 5.5 million job losses.

The global effect of the financial crisis is lost growth estimated at over USD10 trillion, which is over one-sixth of global GDP in 2008. Gross debt across advanced economies stands at 106 percent of GDP as of 2016, compared to 72 percent in 2007. Other effects include protracted weak investment, declining share of labour income, subdued wage growth, and the rise of part-time work. Xenophobic episodes were experienced in Europe, North America, Asia and Africa with citizens blaming foreigners for the hard economic times.

In Africa, prior to 2007, African economies grew at an average of 6 percent; inflation decreased it to below 5 percent. Sub-Saharan Africa grew at 5.4 percent in 2008 which declined to 1.3 percent in 2009. Imports grew to 8 percent in 2008 but contracted by -4 percent in 2009. Exports grew to 8 percent in 2007 but fell by -0.071 percent in 2008 and -5.6 percent in 2009.

The current trade tensions are estimated to have a negative impact globally. WTO downgrades growth projections to 3.9 percent in 2018 and 3.7 percent in 2019 from April forecast of 4.4 percent and 4 percent. International Monetary Fund (IMF) cuts global growth forecast from 3.9 percent (2018/19) to 3.7 percent. Further escalation cut off more than 0.8 percent of global GDP in 2020. Growth to remain roughly at 0.4 percent lower in the long term. Other impacts include low production in manufacturing, low export demands, delay in investments, doubts about sourcing and production, commodity price fluctuations and equity markets roiling.

In Africa, the IMF projects that Sub-Saharan African growth will decline from 3.4 percent to 3.1 percent in 2018. With the increase in dollar, there will also be increase in the amount paid to cover debts. In 2013-2017, sub-Saharan African debt levels denominated in foreign-currency are up by 80 percent. In non-resource-intensive countries the jump is about 18 percent.

Per capita income growth remains sluggish. Rapid increase in the working-age population means that by 2035, the number of people in low-income countries reaching working age (15–64) will exceed that of the rest of the world combined, hence higher unemployment rates.

Concerns about the future particularly employment have led some voters to turn to politicians promoting nationalist economic policies such as anti-trade and anti-immigrant policies.

“Protectionism is a barrier to multilateral trade, too many countries are seeking exceptions in rules and dispute settlement,” lamented Dr. Chris Kiptoo, Principal Secretary, Ministry of Industry, trade and Cooperatives Kenya.

Protectionism is not the answer, as it is bound to make life more expensive for the consumer and make trade difficult. If the country does not want to import, then it will be difficult for others to export from it too. It should be limited to ensure that benefits are accrued by both the local producers and the exporters.

Trade is being blamed for loss of jobs due to increased technological advancement. It is estimated that 80 percent of job losses in the manufacturing industry is due to advance in technology in terms of robotics, automation and artificial intelligence among others. McKinsey survey of 46 countries says automation will change work in 60 percent of occupations. By 2030, 75-375 million workers will lose their jobs (3 percent-14 percent of global workforce). The loss is expected to be higher in developed economies than in Africa.

“In order to cope with the issues of unemployment, countries need to work on their training and education systems in order to equip their citizens for the jobs of today and tomorrow,” stated Keith Rockwell, director, WTO information and external relations division.

In developing countries, including Africa, manufacturing has been a source of well-paying jobs but as automation reduces wage advantages, service sectors like retail, transport, telecommunications, and financial and business services will be viable alternatives.