Global free trade is at a critical juncture, and policymakers must stand up for further integration while preventing severe and long-lasting consequences for those left behind, three leading international bodies have warned.

In a thinly veiled rejection of policies put forward by the U.S. president, Donald Trump, the International Monetary Fund (IMF), the World Trade Organization (WTO) and the World Bank urged politicians to defend the current rules-based system of global trade.

Failure to do so risked a repeat of the calamities that followed the Great Depression and the Second World War, when widespread protectionism hampered the global recovery, they said.

Christine Lagarde, the IMF’s managing director, said global trade had served as the engine of global growth and prosperity and was a powerful tool to raise growth and improve living standards. While academic evidence shows deals have helped to double trade in the long run, the IMF, WTO and World Bank recognised that liberalisation had also led to job losses.

Trade agreements have grown sharply in number and scope over the past three decades, increasing from about 50 in 1990 to around 280 in 2015.

The organizations said this had helped to boost exports dramatically, lower prices and increase choice for consumers around the world, lifting real incomes and helping poorer families. They said trade had reduced the cost of living for a typical high income family by about a quarter.

For low-income families, which typically spend a greater share of income on goods such as food and clothing, the reduction was as much as two thirds.

The organizations warned that a departure from the status quo would inflict damage on an already fragile recovery and take years to unwind.

They urged policymakers to “lift up those who have been left behind” through robust safety nets to help people adapt to technological change in an era where developments threaten millions of jobs.

Ms Lagarde said: “Actions are needed to mitigate negative effects from trade such as job losses, especially in the manufacturing sector, and to deal with economic hardships that are concentrated and persistent in certain regions despite growth at the national level.”

A separate analysis by the IMF highlighted that real pay growth had not kept pace with productivity increases since the 1980s, putting the share of the economic pie represented by wages and benefits on a downward trend in many countries.

The IMF estimated that technological change and globalisation had contributed to three quarters of the 3.7 percentage point decline in the labour share of income over the period.

“In advanced economies, labour income shares began trending down in the 1980s, reaching their lowest level of the past half century just prior to the global financial crisis of 2008-09, and have not recovered materially since,” the IMF said in a pre-released chapter of its world economic outlook.

“As the global economy continues to struggle with sub-par growth, an increasing recognition that the gains from growth often have not been broadly shared has strengthened a backlash against economic integration and bolstered support for inward-looking policies,” it said.

The IMF, WTO and World Bank stressed there was no “one-size-fits-all” solution to mitigating the impact of automation and globalisation on advanced and emerging economies. They said policies should focus on helping workers to adapt to change by providing training, making workers more mobile, helping them to look for jobs and ensuring there was a robust safety net that made work pay.

The organizations described the current framework of global trade, where countries commit to a set of rules that are enforced by the WTO, as “a key strength of the global economy”.

Mr Trump has threatened to tear up this trading rulebook, and while the report did not mention the new US administration directly, it said: “At the present juncture, stronger rules-based trade integration is critical to share trade benefits more widely, in terms of more and better jobs, and to drive broad-based global growth.”

The Daily Telegraph