Trade Policy at Work

Building Better Together: Towards Resilient Trade Policy and Multilateral Trading System

This session explored how, beyond immediate responses to Covid-19 recovery, national governments and the global community could ensure that the trading system is better prepared for systemic shocks in the future, while minimising their negative impact on development. After exploring the immediate needs and capacity situation of developing and least developed countries, panelists reflected on lessons learnt on the role key players can play in building back better, including development partners and international institutions like the WTO.

Among the main questions addressed during the session were: What are the main challenges for developing countries posed by the pandemic and the response measures? What are the immediate needs of developing and least-developed countries? How has the development partners responded to the pandemic to help developing countries? What should be the key priorities for building better together? What role can the WTO play in this regard? What are the expectations of developing countries and LDCs from the WTO, development partners and other international organisations?

What challenges did the pandemic pose to developing countries?

“This is an unprecedented situation in human history”, noted Pradeep S. Mehta, Secretary General of CUTS International. Developing countries’ economies have been severely affected by the pandemic, owing to their limited capacity to withstand shocks. Around the world, governments have seen their revenues and budget shrink due to Covid-19 response efforts and the economic downturn.

According to him, the need of the hour is a large-scale restructuring, a kind of Marshall Plan for the developing world. This could be financed through a Tobin Tax, by taking a decimal percentage on financial flows while not affecting firms in any major way.

Providing an African perspective, Ambassador Dwarka-Canabady of Mauritius regretted that “Solidarity in action is missing at the time when we need it most. As a striking example, vaccine doses have been left expired and unused, while 90% of Africans remain to get their first dose”. She recalled that accessibility to vaccines in Africa is a key challenge, stressing that this could be partly addressed through adopting an IP waiver for their production. This should be complemented by upscaled efforts to democratise vaccine production and delivery in developing countries, through facilitating know-how and technology transfer.

She also emphasised that ensuring food security in these challenging times requires urgent action, starting with allowing vulnerable countries to launch new food stockholding programmes. Such new programmes are however excluded from the current WTO peace clause. In addition, knowledge and technology should be effectively transferred in support of food diversification, e.g. for the adoption of climate-resilient crops.

According to Elisabeth Tuerk, Director of Economic Cooperation and Trade at UNECE, Central Asian countries and transition economies have also been hard hit by the crisis. In fact, these are often landlocked and therefore: (i) are often dependent on services which were highly affected; and (ii) their trade could less easily transit through other countries due to increased restrictions. Enhanced trade facilitation was hence deemed critical in building back, ideally by leveraging digitalization to move away from slow paper-based procedures.

How have development partners supported response to these challenges?

Kåre Johard, Policy Officer, European Commission, reported that exports of developing countries to the EU decreased by EUR100 billion during the Covid-19 year. According to a survey to be released in the upcoming Aid for Trade progress report of the EU, over half of the respondents reported that the pandemic had a negative impact on the delivery of Aid for Trade.

Nevertheless, development partners have been relatively fast to step up and responded reasonably well. In fact, 2020 was an all time high in terms of official development assistance provided, and international institutions took several initiatives to ease debt service payments, support stimulus packages etc. Finance was also made available to small businesses through several programmes, as exemplified by the support provided to Ukraine for the establishment of a Covid-19 business clinic.

Besides this, various UN agencies also joined hands on a series of Covid-19 response projects. This included UNECE projects on transport and trade connectivity, social protection, MSMEs, financial resilience etc.

For building better together, what should be the key priorities and lessons learnt?

The recent experience has shown the key role that trade facilitation can play in recovering faster from the pandemic. For instance, border agencies successfully experimented green lanes and fast-tracking systems for key items like food, personal protective equipment and vaccines. Conversely, lack of speedy procedures in some places led to food waste at the border during the pandemic. In addition, stronger Aid for Trade efforts should be directed to services sectors like tourism and logistics which were severely impacted.

Learning lessons from the crisis, delivery methods would benefit from more bottom-up approaches, as opposed to traditional top-down ones. Aid for Trade delivery should also adopt an ecosystem approach, integrating all key dimensions including health, trade, environment and gender equality.

What role can the WTO play?

There is no doubt that trade is going to play an important role in building back better, and the WTO provides an important public good moving forward. For it to fully play its part, the dispute settlement system will need to be revived, and its regular committees effectively leveraged. Pradeep S. Mehta also recalled that 20 years ago, the Doha ministerial adopted the TRIPS and Health declaration which already provides a WTO framework to build upon in the current situation.

However, Ambassador Dwarka-Canabady warned that the WTO cannot fix the situation alone, and that greater international coordination and coherence should be promoted with the WHO and other institutions which should pool their information together and avoid duplication of efforts. Working together will be especially important to achieve much needed transfer of unpatented technology for small businesses, including women-owned ones.

In a nutshell

Proposing key takeaways from the discussions, Rashid S. Kaukab, Executive Director of CUTS International Geneva, summarised that; “For developing and least developed countries worldwide, the global community needs to work together towards ensuring people’s health, food and economic security. This would entail adopting an ecosystem approach where all parts of the international governance structure have an important role to play.”

The global community should take advantage of this transformational moment to transform in a positive way, and with solidarity. For instance, technology transfer should be ensured to address the digital divide that many of these countries face. Such collaborative efforts towards better resilience would require not only making available larger more resources through Aid for Trade, but also using them better by adopting more bottom-up approaches involving businesses and vulnerable communities.

The WTO has a vital role to play in building back better, by revitalising itself to sustain its relevance and remaining at the centre of the system to respond to the great challenges of our time towards a better world for all.

On the panel were Pradeep S. Mehta, Secretary General, CUTS International; H.E. Mrs U. Dwarka-Canabady, Ambassador, Mauritius Embassy and Permanent Mission to the United Nations in Geneva; Kåre Johard, Policy Officer, European Commission; and Elisabeth Tuerk, Director, Economic Cooperation and Trade, United Nations Economic Commission for Europe (UNECE). The session was moderated by Rashid S. Kaukab, Executive Director, CUTS International, Geneva.

Reporting by Julien Grollier