The Future of Trade and Investment: A Call to Prevent Economic Fragmentation

The document warns that rising geopolitical tensions, particularly between the US and China, are driving the world toward a 'sovereignty-first' trade environment characterized by unilateral barriers and the erosion of multilateral rules. It highlights the risks of economic fragmentation, including slowed global growth and disrupted supply chains, while suggesting that revitalizing the WTO and leveraging open regional agreements can arrest this trend.

• The global trade environment is currently veering toward a 'sovereignty-first' scenario, marked by an increase in the use of tariffs as weapons, specifically between the US and China. The US imposed duties on $360 billion of Chinese products, while China retaliated with tariffs on $110 billion of US goods.
• There is a growing trend of using national security exceptions to justify trade restrictions, a practice initiated by the US that has spread to other nations, including Japan and Korea, thereby undermining post-WWII multilateral cooperation.
• The world is seeing a shift toward 'competing coalitions' and 'mini-deals' based on political intervention rather than broad cooperation. These developments threaten the WTO's most-favoured nation principle and the consensus on non-discrimination and reciprocity.
• Global data governance is fragmenting into three distinct approaches: the US focus on free flow of data, the European focus on privacy and consumer protection, and the Chinese focus on cyber sovereignty.
• Economic fragmentation is contributing to a downward trend in global growth, with 2019 projections indicating the slowest growth since the global financial crisis. This environment disrupts long-term business planning, capital spending, and technology-based global supply chains.
• The World Trade Organization (WTO) is facing a fundamental crisis, particularly regarding its system for the orderly settlement of trade disputes, which risks leaving firms and citizens without a common set of enforceable principles for cross-border exchange.
• Despite the trend toward fragmentation, several open regional agreements provide a potential path forward, including the EU-Mercosur trade agreement, the African Continental Free Trade Area, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

APA

Tan, Y., & González, A. (2020). The Future of Trade and Investment: A Call to Prevent Economic Fragmentation. World Economic Forum. http://www3.weforum.org/docs/WEF_GFC_Trade_Briefing_Paper.pdf

Chicago

Tan, Yeling, and Anabel González. The Future of Trade and Investment: A Call to Prevent Economic Fragmentation. World Economic Forum, 2020. http://www3.weforum.org/docs/WEF_GFC_Trade_Briefing_Paper.pdf.

Wikipedia

{{cite report |last1=Tan |first1=Yeling |last2=González |first2=Anabel |title=The Future of Trade and Investment: A Call to Prevent Economic Fragmentation |publisher=World Economic Forum |date=January 2020 |url=http://www3.weforum.org/docs/WEF_GFC_Trade_Briefing_Paper.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{tan2020future, author = {Tan, Yeling and González, Anabel}, title = {{The Future of Trade and Investment: A Call to Prevent Economic Fragmentation}}, institution = {World Economic Forum}, year = {2020}, month = jan, url = {http://www3.weforum.org/docs/WEF_GFC_Trade_Briefing_Paper.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }