LONDON -- The tragic events of Sept. 11 have exacerbated the economic position of every country. New stimulus measures have been instituted in the United States and interest rates have been cut elsewhere. But these are not enough to put growth back on track. An expansion in world trade would bring major benefits to world economies.
New and improved security measures needed to cope with terrorist threats will increase the costs of transborder trade. Unless alternative measures are taken to reduce other costs, trade will diminish. Such reductions will lead to falling standards of living in developed countries but they will bear hardest on developing countries whose economies are less able to bear the pain of reductions in trade.
Increased flows of trade generally bring greater benefits to developing countries than any amount of aid, tied or untied. The exports of developing countries, however, remain hampered by barriers kept in place in developed countries to appease local lobbies. Dismantling these barriers must be a high priority for the World Trade Organization.