AI Transformation in Global Trade

Artificial intelligence (AI) is set to transform global trade significantly, with projections indicating a potential increase in trade value by nearly 40% by 2040, as highlighted in a recent report by the World Trade Organization (WTO). This transformation could result in lower trade costs and enhanced productivity, driving a substantial rise in both trade and global GDP.

According to the WTO's World Trade Report, global trade is expected to grow by 34-37% under various scenarios, with global GDP rising by 12-13%. Deputy Director General of the WTO, Johanna Hill, stated that AI could be a bright spot amid the complexities of the current trading environment, reshaping the future of international trade.

The report outlines how businesses can leverage AI to minimize costs in logistics, regulatory compliance, and communication. Notably, AI-driven translation technologies can facilitate faster and more cost-effective communication, enabling small producers and retailers to expand into global markets. This is particularly crucial for low-income countries, where improved digital infrastructure could increase export growth by up to 11%.

However, the report warns that without targeted investments and inclusive policies, AI might exacerbate existing economic divides. The development and deployment of AI raise concerns about job displacement, potentially leaving many workers and entire economies behind. WTO Director General Ngozi Okonjo-Iweala emphasized the need for policymakers to manage the transition to AI carefully.

She noted that while AI could transform labor markets and improve some jobs, it could also displace others. This necessitates investment in education, skills development, retraining, and social safety nets to ensure a smooth transition. To maximize the benefits of AI, the report stresses that predictable trade, supported by WTO rules and lower tariffs on essential raw materials like semiconductors, is vital.

In conclusion, while AI holds the promise of revolutionizing global trade and boosting economic growth, it is imperative to implement inclusive policies to ensure that the benefits are equitably shared and that no one is left behind in this technological evolution.