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Economy
Technology

New report examines how AI may shape future of international trade

22 Nov 2024 - by Staff reporter
 Source: LinkedIn
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A new report published by the WTO Secretariat takes a deep dive into the potential impact of artificial intelligence (AI) on world trade – and its potential to level the playing field for developing economies and small businesses

Titled “Trading with Intelligence: How AI Shapes and is Shaped by International Trade”, it discusses how AI can reduce trade costs, reshape trade in services, increase trade in AI-related goods and services, and redefine economies' comparative advantages.

The report also highlights the increasing fragmentation of approaches to AI regulation, which may have a particular impact on trade opportunities for micro, small and medium-sized businesses. It provides an overview of government initiatives taken at the domestic, regional and international levels, both to promote and to regulate AI.

WTO director-general Ngozi Okonjo-Iweala says in the foreword: “This report aims to stimulate a discussion on how the WTO can promote the development and deployment of AI and help mitigate its associated risks and looming concerns about regulatory fragmentation.

“In this respect, two guiding questions the report tries to address are: how can the WTO help ensure that the benefits of AI are broadly shared? How can the challenges that AI presents be addressed in a globally coordinated manner?”

It argues that AI could help to overcome trade costs associated with trade logistics, supply chain management and regulatory compliance. For instance, AI can assist in automating and streamlining customs clearance processes and border controls, navigating complex trade regulations and compliance requirements, and predicting risks.

By lowering trade costs, it can help level the playing field for developing economies and small businesses, helping them to overcome trade barriers, enter global markets and participate in international trade, the report says.

It estimates that, under an optimistic scenario of universal AI adoption and high productivity growth up until 2040, global real trade growth could increase by almost 14 percentage points. In contrast, a cautious scenario, with uneven AI adoption and low productivity growth, projects trade growth of just under 7 percentage points. While high-income economies are expected to see the largest productivity gains, lower-income economies have better potential to reduce trade costs.

However, the report warns that the risk of a growing AI divide between economies and between large and small firms is significant, as are data governance challenges and the need to ensure that AI is trustworthy. There is also a need to clarify how AI relates to intellectual property (IP) rights.

The report emphasises that a lack of coordination could cause increasing regulatory fragmentation with regard to AI. It also notes that addressing the risk of a growing AI divide is essential to leverage the opportunities offered by this technology.

The full report can be accessed here.

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