The Resilient Restructuring of Global Trade: The Rise of Regional Agreements and the Reshaping of Supply Chains

The Resilient Restructuring of Global Trade: The Rise of Regional Agreements and Supply Chain Reshaping

After decades of rapid growth, the global trading system is facing unprecedented pressure. The rise of protectionism, geopolitical tensions, and post-pandemic supply chain adjustments all seem to herald a retreat from globalization. However, the latest World Bank research shows that global trade has not been crushed; instead, it has shown remarkable resilience. More importantly, trade links among emerging market economies are becoming a core pillar of the new landscape.

Surge in Restrictions and the Normalization of Uncertainty

In recent years, the number of global trade restriction measures has continued to rise. Data show that in the first ten months of 2025, more than 2,500 new trade restrictions were introduced globally, nearly five times the number in the same period in 2015. Trade policy uncertainty remains elevated, averaging about five times the level of the 2000s. The WTO dispute settlement mechanism is paralyzed, the number of deep trade agreements has plummeted, and the multilateral trading system is under enormous pressure.

But at the same time, businesses have adapted to a higher-cost environment by adjusting supply chains and increasing inventories. In the first eight months of 2025, global merchandise trade volume grew at a monthly average of 4.7%, notably faster than the 2.7% in 2024, and marked a significant rebound from the contraction in 2023. Services trade, especially commercial and information services, also remained steady.

Emerging Markets: From the Periphery to the Center

A notable trend is the rising weight of emerging market and developing economies (EMDEs) in global trade. Over the past decade, they have contributed nearly 40% of global trade, up significantly from 25% in the early 2000s. More importantly, trade ties among them have grown increasingly close. By 2024, about 60% of EMDEs exported more to developing economies than to advanced economies, compared with just 28% in 2000.

The deepening of this "South-South trade" is reshaping global production networks. Strengthened intra-regional investment and supply chain collaboration have made emerging economies not just passive participants in global value chains, but active architects of them.

The Revival of Regional Trade Agreements

In 2025, international trade policy took an unexpected turn. The number of trade agreements signed that year was more than twice the average of the previous five years, signaling a renewed interest in regional integration. The CPTPP continued to expand, the African Continental Free Trade Area (AfCFTA) now includes 55 countries, the EU concluded agreements with Mercosur, Mexico, Indonesia, and others, and China and ASEAN upgraded their free trade arrangement.

These agreements are not simply about tariff reductions; they represent deeper rule convergence. They aim to reduce the complexity of rules of origin, harmonize standards, and promote the development of services trade and digital trade. The dense emergence of regional trade agreements reflects a shared desire among countries to seek certainty and supply chain security in an era of global fragmentation.

Policy Implications: Four Pillars for Building Resilient Trade

Policy Implications: Four Pillars for Building Resilient Trade

In the face of an uncertain trade environment, the World Bank report proposes policy recommendations for EMDEs. First, countries should actively embrace regional integration rather than resort to protectionism. If AfCFTA-related measures are fully implemented, African exports are expected to grow by more than 30%, and intra-regional exports could double. Second, reducing non-tariff trade costs is crucial. In EMDEs, cumbersome administrative procedures and logistics bottlenecks are equivalent to an additional tariff of 50 percentage points. Investing in ports, transportation, and digital infrastructure, as well as reforming customs processes, can quickly enhance competitiveness.

Furthermore, industrial policies need to be more strategic and transparent, align with WTO rules, and pay attention to the rapid growth of services trade. Finally, EMDEs should support a rules-based multilateral system, because the reduction in trade costs brought about by WTO-related reforms boosts GDP in low-income countries by more than 30%.

Conclusion: Setting Sail for a New Phase of Globalization

The "rollercoaster ride" of global trade has not stopped, but the track is changing. Protectionism and geopolitics have heightened volatility, but they have also fostered greater adaptability among businesses. The rise of emerging markets, the revival of regional agreements, and the regional restructuring of supply chains together outline the contours of a new globalization.

The World Bank points out that global trade remains a powerful engine of growth. For EMDEs, the key lies in how to keep this engine running and benefit a broader population through strategic openness, infrastructure investment, and multilateral cooperation. The future of trade is not simply deglobalization, but a more cautious, more flexible, and deeper reglobalization.

(This article is recreated based on data and viewpoints from the World Bank report "Global trade's rollercoaster ride," with all facts and figures sourced from the original report.)