Context:

The World Trade Organization (WTO) recently released its World Trade Report 2025, titled “Making Trade and AI Work Together to the Benefit of All”. The report highlights the transformative potential of Artificial Intelligence (AI) for international trade, while also warning of risks if its benefits are not shared equitably.

Key Findings:

1.       Trade & GDP Growth Projections

o    Global trade in goods and services could increase by 34–37% by 2040 under various scenarios.

o    Global GDP is projected to grow by 12–13% in the same period, assuming supportive policies and narrowing of digital divides.

2.      Benefits for Low‑Income & Middle‑Income Economies

o    If these economies manage to reduce the digital infrastructure gap with high‑income countries by 50% and adopt AI more broadly, their income growth could reach 14–15% by 2040.

o    Export growth in low‑income countries could increase by up to 11%, specifically aided by improvements in AI‑driven services and digitally deliverable services.

3.      Key Drivers & Mechanisms

o    Lower trade costs (logistics, compliance, communications) due to AI automation.

o    Improved productivity in tradable sectors, especially digitally deliverable services.

o    AI‑enabling goods (semiconductors, intermediate inputs) trade was valued at USD 2.3 trillion in 2023.

4.     Risks & Concerns

o    Without inclusive policies, AI could widen economic and social inequality both within and across countries.

o    Unequal access to digital infrastructure, skills, and regulatory frameworks could prevent some nations or firms from benefiting.

o    Non‑tariff barriers on AI‑related goods and quantitative restrictions have increased, which may limit the spread of AI benefits. For example, measures applied to AI‑goods rose from ~130 in 2012 to nearly 500 by 2024.

Policy Implications:

• • Bridging the Digital Divide: Investments in broadband, compute infrastructure, access to semiconductors, and connectivity are essential.
  • Skills, Education & Retraining: Labour markets will be disrupted. Upskilling and reskilling are needed to avoid unemployment or underemployment.
  • Trade Policy Reform: Ensuring open and predictable trade rules, lowering tariffs on AI‑critical inputs, facilitating cross‑border data flows, updating IP and regulatory regimes.
  • Inclusive Frameworks & Safety Nets: Social policies to cushion those left behind, ensure small and medium enterprises (SMEs) and low‑income countries are not marginalized.

Challenges & Limitations:

• • Policy and Regulatory Fragmentation: Different standards, data regulations, privacy norms across countries could block seamless adoption.
  • Concentration of Capabilities: As noted, high‑income countries dominate AI hardware, research, computational power, possibly leading to monopolies.
  • Infrastructure Bottlenecks: Many countries lack strong internet, electricity, hardware; this will limit the rate at which gains materialize.
  • Ethical & Social Concerns: Job displacement, bias in AI systems, privacy issues; need for governance, accountability.

Conclusion:

The WTO report emphasizes the need for international cooperation, supportive policies, and fair access to technology to ensure the benefits of AI are shared equitably. By investing in AI infrastructure, fostering digital inclusion, and establishing global standards, countries can harness AI's potential to drive economic growth and development. As AI continues to evolve, it's crucial for policymakers to manage the transition carefully, investing in education, skills, retraining, and social safety nets to mitigate potential disruptions