By Kirtika Suneja

Copyright indiatimes

New Delhi: The use of Artificial Intelligence (AI) can boost global trade projected by 34-37% by 2040 and generate substantial global GDP increases ranging from 12-13% across different scenarios, the World Trade Organization (WTO) said in its World Trade Report 2025 Wednesday.To explore the potential of AI, WTO economists ran simulations of different scenarios based on whether lower-income economies are able to narrow the gap with the infrastructure and technology levels of higher-income economies.In a scenario in which lower-income economies are unable to catch up, they would see their incomes rise by 8% by 2040, below the 14% gains of high-income economies. However, in a scenario of partial convergence, in which these economies close their digital infrastructure gap with high-income economies by 50% and adopt AI more widely, their income growth could reach 15%.The largest growth occurs in the trade of digitally deliverable services- 42% including AI services. This trade increase reflects reduced operational trade costs, strong projected growth of AI services combined with the high tradability of AI services, related to its geographic concentration of production in a few regions, and the above-average productivity growth in more tradable sectors, in particular digitally deliverable services.“WTO simulations suggest that the use of AI could boost goods and services trade by nearly 40% by 2040,” said WTO director general Ngozi Okonjo-Iweala.Live EventsAs per the report, the share of global subsidies targeting AI-related products has increased considerably since 2010, exceeding 15% at its recent peak. High-income and upper middle-income economies account for over 98% of these measures, and this demonstrates that there is a substantial risk of further concentration of AI capabilities.“However, the effects of the development and deployment of AI are raising concerns that many workers, and even entire economies, could be left behind…This exclusion has much to do with today’s tensions around trade,” Okonjo-Iweala. cautioned.The 2025 WTO–ICC survey results show that only 41% of small firms report using AI, compared to over 60% of large firms. Among low-income and lower middle-income economies, fewer than one-third of firms use AI.The number of economies adopting at least one AI-related IP policy rose to 140 in 2024 from 41 in 2017 but significant disparities remain across income groups.WTO analysis shows that a 10% increase in digitally deliverable services trade is associated with a 2.6% increase in AI patent citations across borders, according to the report.WTO noted that AI tools are already enhancing trade efficiency byimproving visibility within supply chains, automating customs clearance, reducing language barriers, strengthening market intelligence, improving contractenforcement and helping firms, including MSMEs, to navigate complex regulations.Among firms currently using AI, nearly 90% report tangible benefits in trade-related activities, and 56% report that it has enhanced their ability to manage trade risks.AI uptake scenariosThe impact of AI on inclusive growth will depend on how the digital divide across economies – which includes disparities in digital infrastructure, capabilities and hardware– is addressed, and on how the technology spreads globally, WTO said, as it simulated four AI uptake scenarios to capture different degrees of policy and technological catch-up between economies, and the differences between scenarios were substantial.In the benchmark scenario, where low-income economies do not catch up with high-income economies in terms of digital technology and infrastructure, high-income economies see their incomes rise by 14%, compared to 11% for middle-income economies and 8% for low-income economies.“However, this gap narrows considerably if digital infrastructure improves in low- income economies, with income growth projected at 11% for low-income economies, and 12% in both middle- and high-income economies,” the WTO said.Meanwhile, in a scenario that includes improvements in both infrastructure and broad AI adoption, low- lincome and middle-income economies are projectedto benefit even more, with GDP gains rising to 15% for low-income economies and to 14% for middle-income economies.Wages impactAs a result of the shift in tasks from human labour to AI, the skill premium, measuring the ratio of wages of high-skilled relative to low-skilled workers, could decline slightly.Globally, while the real wages of all labour groups are expected to rise, the skill premium is projected to decline by 3-4% across various scenarios.“The overall narrowing of the wage premium reflects the fact that the task substitution from human labour to AI is more pronounced for medium-skilled and high-skilled occupations than for low-skilled ones, meaning that the relative demand for medium-skilled and high- skilled labour declines” it said.WTO simulations show that the rental rate on capital – that is, the cost of using capital inputs – rises significantly relative towages, by about 14 percentage points. This is mainly because AI services both substitute for labour and rely heavily on capital. As a result, demand for capital increases more than demand for labour, pushing up the rental rate on capital.Market accessAs global AI governance continues to shape up, the WTO said it could help to guide its development to ensure that trade supports broader access to AI, through improved market access for AI-related goods and services and greater transparency and dialogue on trade-related AI policies.“For instance, market access for AI-enabling goods remains uneven, with bound tariffs reaching up to 45% in some low-income economies,” it said, adding that broader participation in the Information Technology Agreement and updated GATS commitments would contribute to making AI more affordable.However, striking an appropriate balance between these binding commitments – aligned with each WTO member’s implementation capacity – and policy flexibility is essential to maintain the predictability that credible commitments provide, while promoting more inclusive AI outcomes.Add as a Reliable and Trusted News Source Add Now!
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