WTO AND GLOBAL VALUE CHAINS: OPPORTUNITIES AND RISKS

Abstract

Global Value Chains (GVCs) have reconfigured the geography and governance of production: goods and services are increasingly produced through fragmented, internationally dispersed stages. The World Trade Organization (WTO), as the principal multilateral institution for trade rules, interacts with GVC dynamics through market-access commitments, rules on standards and technical measures, disciplines on non-tariff measures, agreements affecting services and intellectual property, trade facilitation, and dispute settlement. This paper examines how WTO rules and institutions create opportunities for developing and emerging economies to integrate into GVCs and capture associated gains — greater market access, technology and knowledge transfer, foreign direct investment (FDI), and higher value-added activities — while also identifying the attendant risks — lock-in at low value-added segments, vulnerability to shocks and lead-firm power, regulatory and compliance costs, and potential social and environmental externalities. Drawing on theoretical literature and empirical case evidence, the paper outlines the principal transmission channels linking WTO engagement to GVC participation, discusses empirical methodologies used to evaluate impacts, and proposes policy strategies that countries can adopt to maximize upgrading and mitigate downsides. Finally, the paper highlights institutional and multilateral policy issues — including quality of rules, dispute settlement effectiveness, and the need for cooperative approaches to standards and digital trade — that shape the capacity of the WTO to support inclusive and sustainable GVC integration.