South and Southeast Asia Forum: COVID-19 impacts on Trade and Development

The second informal South and South-East Asia Forum meeting of this year’s “Business and Trade Connection” project discussed the COVID-19 impacts on Trade and Development in South and Southeast Asian countries.

The meeting started with some introductory remarks by Rashid S. Kaukab, Executive Director, CUTS International Geneva, who briefly outlined the main objectives of the meeting. Leslie Sajous, Programme Officer, CUTS International Geneva then took the floor to thank the participants for taking the time to join the meeting, amidst their full agenda.

Cyann Staub, Intern, CUTS International Geneva, gave a brief summary of the note’s main finding on the “COVID-19 impacts on Trade and Development in South and Southeast Asian countries”. COVID-19 widely impacted trade and economies in the last year. Quite unexpectedly, trade among developing countries was slightly more resilient than overall trade. Developing countries’ export declined by about 17 per cent in the second quarter of 2020 and only 5 per cent in the third quarter. The lower drop in developing countries’ trade could largely be due to trade resilience of East Asian countries. Those countries overall performed better. But they were still strongly affected by the crisis.

The sectors and sub-groups of the population which were more affected in the sub-region are: (i) Textile and garment industries, which suffered from three main shocks, i.e. one on the inputs for production, one on the supply of workers, and one on the demand from buyers; (ii) Tourism industry – due to the travel restrictions in place during the pandemic, very few are those that could travel, leading to a reduction in tourism, foreign currency loss from the decline in tourist inflows, and numerous job losses; and (iii) Horizontal impacts – MSMEs are the type of firms the most affected by the crisis. Their small means and informality do not allow them to be protected against such crises But the worse situation happens when we mix the two most affected subgroups of the population: MSMEs and Women. Indeed, women-led MSMEs have suffered more in terms of revenue losses, etc. It is therefore important for governments to target women-owned MSMEs specifically in their recovery plan.

Some recommendations to get involved at the WTO in trade-related debates revolving around the recovery from the COVID-19 pandemic: (i) discussions about trade-restrictive measures are happening as part of discussions under the Agreement on Agriculture, the TBT Agreement, and the SPS Agreement; (ii) discussions on access to vaccines are going on under the TRIPS Agreement; and (iii) in order to learn more about how to target vulnerable groups, Informal Working Groups on MSMEs and on Gender are both discussing the impact of COVID-19 in their meeting.

The floor was then opened to the participating delegates to get their views on the points presented earlier. The regional note was greatly appreciated by the delegates, who recognized that all important areas have been captures. Several mentioned that their country is now severely hit by a third wave of contamination, often happening after several lockdowns, which already had detrimental effects on the trade of goods and services at national and regional levels. Countries have developed and implemented several types of policy responses to provide targeted support, including stimulus packages, to deal with the crisis. However, it was mentioned that in most cases the support was more targeted towards larger firms, with fewer responses to be provided to MSMEs. This could be explained by the informality of most MSMEs. The delegates mentioned that the sectors mostly affected by the crisis are textiles, agriculture and tourism; with very detrimental effects on employment. Unfortunately, those sectors are often mostly constituted by MSMEs, and employ women primarily. Finally, they mentioned that a quick and sustainable recovery will depend on the vaccine programmes to be implemented in the region.

In the second part of the meeting, delegates were invited to reflect on the preparations towards MC12, and some of their priority topics were mentioned: LDC graduation, MSMEs, agriculture (domestic support, food security and livelihoods, public stockholding, export restrictions, etc), fisheries subsisdies, TRIPS waiver, AB/WTO reform, etcbesides the ones already communicated by the beneficiaries on previous occasions.

To conclude the meeting, Rashid S. Kaukab thanked the participants for their precious inputs. He briefly explained the upcoming activities, with two studies upcoming related to MSMEs and agriculture. The next meeting will be scheduled in late August/early September 2021 with a focus on the preparation for the twelfth WTO Ministerial Conference. Meanwhile, CUTS will remain in touch with all participants and looks forward to continuing to work in a collaborative manner. Delegates are also welcome to approach CUTS staff bilaterally as needed.