AI’s impact on global trade-Telangana Today

For AI to truly revolutionise global trade, inclusivity must be at the heart of its governance

By Jadhav Chakradhar, Arun Kumar Bairwa

In a world increasingly defined by connectivity and technology, artificial intelligence (AI) has emerged as a transformative force, reshaping industries and economies on an unmatched scale. Beyond its contributions to healthcare, education and entertainment, AI is now perched to redefine the very fabric of international trade. It promises to reduce costs, enhance efficiency and open new opportunities for global economies. However, with great potential comes significant challenges, compelling global cooperation and thoughtful regulation.

The recently released World Trade Organization (WTO) report, Trading with Intelligence: How AI Shapes and Is Shaped by International Trade, examines AI’s impact on global trade. It outlines the dual nature of AI as a driver of innovation and economic growth while raising ethical, regulatory and societal concerns. This editorial examines the report’s findings to highlight AI’s opportunities and challenges in trade, urging stakeholders to act responsibly, particularly the WTO.

Game Changer

AI has transformed international trade by automating processes, optimising logistics and enhancing service delivery. The report outlines how AI tools, such as predictive analytics and machine learning, transform supply chains, reduce search costs and minimise language barriers. Take, for instance, customs and border operations. AI-powered systems can predict risks, detect anomalies and automate compliance checks, significantly reducing bottlenecks. Dubai Customs’ AI initiatives, such as automated refund systems and remote inspections, exemplify how technology can enhance efficiency while cutting costs. Globally, such tools enable developing economies and small businesses to overcome trade barriers, paving the way for more inclusive economic participation.

Revolutionising digitally delivered services creates new trade categories while boosting productivity across industries. Generative AI, for example, can enhance the performance of consultants or call centre workers by offering real-time insights and solutions, democratising access to expertise and levelling the playing field for developing nations.

Challenges on Horizon

Yet, AI’s potential to reshape trade is not without risks. The report points out several concerns: the growing “AI divide” between developed and developing economies, the ethical dilemmas of data usage and the potential for regulatory fragmentation. One pressing issue is the concentration of AI development and control in a few countries and corporations, primarily in advanced economies. This has created disparities in AI adoption, exacerbating inequalities in trade opportunities. High-income countries enjoy greater productivity gains, while low-income nations struggle to keep pace due to limited digital infrastructure and regulatory capacity. Addressing this gap is crucial to ensure AI’s benefits are equitably distributed.

In India, uneven digital infrastructure hampers widespread AI adoption, particularly in rural areas

Moreover, AI’s dependence on vast amounts of data presents unique challenges. Data privacy, intellectual property (IP) rights and ethical concerns around algorithmic biases require urgent attention. For example, biased AI systems can perpetuate discrimination, disadvantaging specific businesses or regions in trade. Additionally, the opacity of AI systems — often described as ‘black boxes’ — complicates accountability, raising questions about trust and reliability.

Role of WTO

Amid these complexities, the WTO emerges as a crucial platform for promoting global cooperation and facilitating the sustainable growth of AI-driven trade. It plays a pivotal role in ensuring that no country is left behind in reaping the benefits of technological advancements in international commerce. The organisation’s role in promoting convergence, transparency and inclusiveness is indispensable. The report advocates for the WTO to help minimise regulatory fragmentation by encouraging the adoption of international standards for AI.

As countries develop their own AI policies, the risk of conflicting regulations grows, potentially stifling innovation and trade. A coordinated approach could prevent these inefficiencies, enabling businesses to navigate global markets seamlessly. Additionally, the WTO’s agreements on intellectual property, trade in services and technology transfer provide a framework for supporting AI development. For example, the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement can help strike a balance between incentivising innovation and ensuring broad access to AI technologies.

Inclusive Governance

For AI to truly revolutionise global trade, inclusivity must be at the heart of its governance. The WTO report emphasises the importance of supporting developing economies through capacity-building initiatives, technical assistance and designed policies. Programmes like Aid for Trade and the Enhanced Integrated Framework could be leveraged to help these economies strengthen digital infrastructure, enhance skills and improve regulatory readiness.

From optimising resource use to reducing supply chain emissions, AI can drive greener trade practices. However, the environmental costs of AI — including its energy and resource consumption — cannot be ignored.

Charting Path

This requires deliberate and collaborative action. While adopting AI in trade is inevitable, its outcomes depend on today’s decisions. Policymakers, businesses and international organisations must work collectively to harness AI responsibly, balancing innovation with ethical imperatives. This involves addressing the AI divide by strengthening digital infrastructure, improving skill development and adopting innovation in developing economies to promote equitable access and benefits. Additionally, promoting transparency through establishing international standards for AI governance is crucial to ensure that systems remain explainable, accountable and fair.

Multilateral collaboration, mainly through platforms such as the WTO, is essential to traverse cross-border challenges related to data flows, intellectual property rights and regulatory alignment. Finally, prioritising sustainability is imperative, leveraging AI to support greener trade practices while proactively mitigating its environmental footprint.

The WTO report aptly notes that AI is a “global issue” that demands global solutions. In this defining moment for trade and technology, the world must embrace AI not as a challenge to be feared but as an opportunity to be harnessed.

India in AI-driven Trade

India has made significant advancements, but uneven digital infrastructure hampers widespread AI adoption, particularly in rural areas. Strengthening internet connectivity, ensuring affordable technology access, and investing in digital literacy are essential for empowering businesses, especially MSMEs. Another challenge lies in data governance and privacy. AI’s reliance on vast datasets requires a robust regulatory framework. India’s evolving data protection laws and cross-border data flow policies must align with global standards to balance data-driven innovation with privacy protection and prevent trade disruptions.

Skills gaps also pose a barrier. Despite India’s large talent pool, workforce upskilling is necessary to meet the demands of AI-driven industries. Initiatives like Skill India must prioritise AI-focused training to prepare workers for emerging opportunities in trade and technology. Inclusivity is equally important. Accelerated AI adoption risks marginalising small businesses and low-skilled workers. Policymakers must ensure AI benefits are widely shared by providing targeted support for vulnerable sectors and communities.

To address these challenges, India must foster a policy environment conducive to AI innovation. Participation in global platforms like the WTO can help shape international AI standards and ensure India’s interests are represented. Incorporating AI provisions in bilateral and regional trade agreements can also boost competitiveness in global markets. Initiatives like Make in India and Digital India should focus on supporting AI startups, incentivising research and development, and promoting public-private partnerships.

(Jadhav Chakradhar is Assistant Professor, Centre for Economic and Social Studies [CESS], Hyderabad. Arun Kumar Bairwa is Assistant Professor, Indian Institute of Management, Amritsar)