Dr. Christian Bluth, Project Manager, Program Megatrends
The Bertelsmann Stiftung is a Knowledge Partner of the AIG Global Trade Series
This article first appeared on the Bertelsmann Stiftung website
On January 1st, the WTO will celebrate its 25th birthday. Whether it is looking forward to a rosy future is however uncertain. Their largest members, the US and China escalate their tariff disputes outside the organization. At the same time, the US’s blocking of the Appellate Body risks damaging the whole institution. The US and China should think twice though: together with Germany, they are among the largest beneficiaries of the rules-based trading system.
A membership that pays off: The USA, China and Germany are the countries that benefit the most worldwide from their accession to the WTO. They achieve by far the largest income gains, which are directly attributable to their membership in the trade organization. For the United States, income gains amount to about 87 billion US dollars (measured in gross domestic product, GDP). The Chinese generate income gains of about 86 billion US dollars and the Germans about 66 billion US dollars. These are the results of a recent study commissioned by the Bertelsmann Stiftung, for which the authors Felbermayr, Larch, Yotov and Yalcin calculated the wealth effects of WTO membership for 180 countries worldwide, including all 164 member states.
The whole of the WTO membership achieved a total increase in prosperity of around 855 billion US dollars. This corresponds to about average gain of 4.51 percent of GDP per member country. But membership in the world trade club is also good business for most countries, in addition to the top winners. For example, EU members benefit together with 232 billion and OECD countries with a total of 480 billion US dollars. But the success story also has its downsides: Countries that are not members of the WTO are losing out – on average -0.96 percent per country – due to the greater economic integration of WTO members.