AI and International Trade: WTO Report

The World Trade Organization (WTO) could play a pivotal role in facilitating trade related to artificial intelligence (AI), while ensuring trustworthy AI use and fostering global regulatory convergence, according to a new report by the WTO Secretariat.

The report, entitled “Trading with Intelligence: How AI Shapes and is Shaped by International Trade”, 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.

The report provides an overview of government initiatives taken at the domestic, regional and international levels both to promote and to regulate AI.

In the report’s foreword, Director-General Ngozi Okonjo-Iweala highlighted AI’s transformative potential, noting it could reduce trade costs, enhance productivity across sectors, and reshape traditional trade patterns.

AI, she said, could accelerate trade’s evolution by boosting services trade and creating new categories of AI-powered goods, such as autonomous vehicles and robotics.

However, she also cautioned that AI poses challenges, including risks of an “AI divide,” issues of data governance and privacy, regulatory uncertainties, and ethical and societal risks. She emphasized that maximizing AI’s benefits will require equitable sharing of these advantages across economies.

Challenges and Opportunities

The report warns of the risks posed by a growing AI divide among economies and between large and small firms. It underscores the need for trustworthy AI and clarifying AI’s relationship with intellectual property (IP). A lack of coordination could lead to regulatory fragmentation, which would hinder the development and governance of AI on a global scale.

The report identifies the WTO as a key platform for negotiation, discussion, and rule-making. It highlights the WTO’s role in fostering policy coherence, addressing trade-related aspects of AI governance, and mitigating risks associated with AI.

Key Findings

1.Transformative Impact: AI is reshaping work, production, trade, health, arts, and leisure, creating significant societal changes.

2.Intersection of AI and Trade: The report explores how AI intersects with and influences international trade.

3.Distinctive Characteristics: AI’s unique attributes differentiate it from other digital technologies, with profound implications for trade.

4.Reducing Trade Costs: AI enhances logistics, supply chain management, and regulatory compliance, making trade more efficient. Tools like predictive analytics and real-time data enable better decision-making, benefiting developing economies and small businesses.

5.Demand for ICT Products: AI adoption drives demand for ICT infrastructure, including AI chips, projected to grow significantly in the coming decade.

6.Productivity Gains: AI shifts economies’ comparative advantages by increasing productivity and emphasizing capital investment over labor.

7.Global Trade Growth: Simulations predict universal AI adoption could boost global trade growth by 14 percentage points by 2040.

8.Uneven Impact: High-income economies see stable growth, while low-income economies could experience significant gains under universal AI adoption scenarios.

9.Policy Questions: Key issues include the risk of an AI divide, challenges in data governance, and ensuring AI trustworthiness without stifling trade.

10.Addressing the AI Divide: Current disparities in AI R&D capacity, concentrated in a few large economies, risk exacerbating global inequalities.

11.Data Governance: Restrictions on data flows hinder AI innovation and trade. Full data flow restrictions could reduce global GDP by 5% and exports by 10%.

12.Trustworthy AI: Balancing trustworthiness with trade facilitation remains a significant challenge due to AI’s opaque nature and potential dual-use applications.

13.IP Challenges: AI raises complex IP issues, including algorithm protection, copyrighted material for training, and ownership of AI-generated outputs.

WTO’s Role

The report outlines several ways the WTO can address AI-related trade and governance issues:

1.Framework for AI Governance: The WTO promotes transparency, non-discrimination, and regulatory harmonization, fostering global alignment.

2.Facilitating AI Trade: WTO principles, such as non-discrimination and the Agreement on Trade-Related Investment Measures (TRIMS), support trade in AI systems and related goods.

3.Managing Trade Tensions: WTO committees serve as venues for resolving trade tensions cooperatively.

4.Inclusiveness: Special provisions and technical assistance for developing economies help them participate more effectively in international trade.

5.Multilateral Rule-Making: The WTO provides a platform for addressing trade-related aspects of AI governance, contributing to a robust global AI governance framework.