Building better together: Towards resilient trade policy and multilateral trading system

29 Sep 2021 07:30h

Event report

The moderator, Mr Rashid S. Kaukab (Executive Director, CUTS International), began by noting that the COVID-19 pandemic has been the greatest challenge in the history of humanity, but it has simultaneously showed us the ingenuity of humanity. The session dealt with two significant questions. First, what have been the challenges in this transformational moment in history? And, second, how can we make the best of the transformation to build a better future?

COVID-19 causes a ripple effect, particularly in the developing world, said Mr Pradeep S. Mehta (Secretary General, CUTS International). The economies of both the rich and the poorer parts of the world have shrunk and so governments are returning to a ‘tax more, spend more’ doctrine. However, such a policy is unrealistic for LICs. He stressed that ‘the need of the hour is large scale restructuring like a Marshal Plan for the developing world’. Agreeing that help is needed, H.E. Ambassador Usha Dwarka-Canabady (Ambassador, Permanent Mission of the Republic of Mauritius to the UN) added that the overarching problem is the lack of solidarity. For example, Ambassador Dwarka-Canabady provided images of vaccines in garbage cans in the developed countries, unused and expired, while 90% of Africans have yet to receive a first dose. Access to vaccines is limited, while intellectual property rights have not been waived. The argument is that Africa lacks the know-how, the medical staff, or production capacities, but, according to Ambassador Dwarka-Canabady, the first step in breaking the cycle would be to share the know-how through technology transfers. She also highlighted the food security issue, since food exports have been halted in the developed countries.

Concerning the economies of the Western Balkans, South Caucus, and Central Asia, Ms Elisabeth Tuerk (Director, Economic Cooperation and Trade, United Nations Economic Commission for Europe) noted that they are often omitted from discussions. Most of these countries are land-locked, so restrictions on imports and exports have caused significant challenges. As well, they do not have diversified economies, which makes them vulnerable. The services and tourism sector, along with the informal sector have been hit particularly hard. Remittance flows stopped and foreign direct investment plummeted by more than 50% in certain countries. Micro-, small- and medium-enterprises suffered a hard blow with the increase of debt, deteriorating living conditions of workers, and social distancing—making informal work impossible.

Sharing the concern for economic issues, Mr Kåre Johard (Policy Officer, European Commission) focused on the other side of the development partnership, the perspective from the European Union. He highlighted that development community assistance has been at a record time high; several initiatives from multilateral and regional banks have suspended debt services payments. At the internal EU level, the pandemic has provided incentive to member states and financial institutions to be more coordinated, leading to the mobilisation of 45 billion euros in aid. Johard reported that in a couple of weeks, the annual Aid for Trade progress report will be published.

The discussion then turned to proposals for making the best out of the transformational challenges of the pandemic. Solidarity and resilience are inherently intertwined and, as discussants noted, the WTO should play a bigger role in strengthening resilience. Mehta remarked that 20 years ago the world dealt with the AIDS health crisis and certain mechanisms, like the vaccine intellectual property rights waivers, are still available and should be used. In addition, the global trade is changing, with shortening of supply chains, providing an opportunity for countries to build domestic trade. The WTO can be revived and provide tools for such regional transformations. Also, Ambassador Dwarka-Canabady emphasised that the WTO, not the WHO, is at the core of vaccine distribution, but a systemic lack of coherence and coordination among institutions hinders efforts in distribution. Turk called for more effective efforts in different UN agencies coming together on specific topics; for example, for a project in multimodal transport and trade connectivity, thus working against food shortages and more efficient delivery.

Johard shared that the EU and the partners have also learned some lessons in trade facilitation and creative thinking about rapid handling of personal protective equipment and essential goods like food. The moment for strengthening domestic capacities and being less vulnerable to global market prices and export restrictions is now. This is essential to building better for the future. Another aspect is learning new ways of doing and making Aid for Trade more bottom-up and better able to detect specific constraints in different contexts. Inclusiveness, but also sustainability, are the values that have to be embedded in this trade transformation too.

The moderator, Mr Rashid S. Kaukab (Executive Director, CUTS International), began by noting that the COVID-19 pandemic has been the greatest challenge in the history of humanity, but it has simultaneously showed us the ingenuity of humanity. The session dealt with two significant questions. First, what have been the challenges in this transformational moment in history? And, second, how can we make the best of the transformation to build a better future?

COVID-19 causes a ripple effect, particularly in the developing world, said Mr Pradeep S. Mehta (Secretary General, CUTS International). The economies of both the rich and the poorer parts of the world have shrunk and so governments are returning to a ‘tax more, spend more’ doctrine. However, such a policy is unrealistic for LICs. He stressed that ‘the need of the hour is large scale restructuring like a Marshal Plan for the developing world’. Agreeing that help is needed, H.E. Ambassador Usha Dwarka-Canabady (Ambassador, Permanent Mission of the Republic of Mauritius to the UN) added that the overarching problem is the lack of solidarity. For example, Ambassador Dwarka-Canabady provided images of vaccines in garbage cans in the developed countries, unused and expired, while 90% of Africans have yet to receive a first dose. Access to vaccines is limited, while intellectual property rights have not been waived. The argument is that Africa lacks the know-how, the medical staff, or production capacities, but, according to Ambassador Dwarka-Canabady, the first step in breaking the cycle would be to share the know-how through technology transfers. She also highlighted the food security issue, since food exports have been halted in the developed countries.

Concerning the economies of the Western Balkans, South Caucus, and Central Asia, Ms Elisabeth Tuerk (Director, Economic Cooperation and Trade, United Nations Economic Commission for Europe) noted that they are often omitted from discussions. Most of these countries are land-locked, so restrictions on imports and exports have caused significant challenges. As well, they do not have diversified economies, which makes them vulnerable. The services and tourism sector, along with the informal sector have been hit particularly hard. Remittance flows stopped and foreign direct investment plummeted by more than 50% in certain countries. Micro-, small- and medium-enterprises suffered a hard blow with the increase of debt, deteriorating living conditions of workers, and social distancing—making informal work impossible.

Sharing the concern for economic issues, Mr Kåre Johard (Policy Officer, European Commission) focused on the other side of the development partnership, the perspective from the European Union. He highlighted that development community assistance has been at a record time high; several initiatives from multilateral and regional banks have suspended debt services payments. At the internal EU level, the pandemic has provided incentive to member states and financial institutions to be more coordinated, leading to the mobilisation of 45 billion euros in aid. Johard reported that in a couple of weeks, the annual Aid for Trade progress report will be published.

The discussion then turned to proposals for making the best out of the transformational challenges of the pandemic. Solidarity and resilience are inherently intertwined and, as discussants noted, the WTO should play a bigger role in strengthening resilience. Mehta remarked that 20 years ago the world dealt with the AIDS health crisis and certain mechanisms, like the vaccine intellectual property rights waivers, are still available and should be used. In addition, the global trade is changing, with shortening of supply chains, providing an opportunity for countries to build domestic trade. The WTO can be revived and provide tools for such regional transformations. Also, Ambassador Dwarka-Canabady emphasised that the WTO, not the WHO, is at the core of vaccine distribution, but a systemic lack of coherence and coordination among institutions hinders efforts in distribution. Turk called for more effective efforts in different UN agencies coming together on specific topics; for example, for a project in multimodal transport and trade connectivity, thus working against food shortages and more efficient delivery.

Johard shared that the EU and the partners have also learned some lessons in trade facilitation and creative thinking about rapid handling of personal protective equipment and essential goods like food. The moment for strengthening domestic capacities and being less vulnerable to global market prices and export restrictions is now. This is essential to building better for the future. Another aspect is learning new ways of doing and making Aid for Trade more bottom-up and better able to detect specific constraints in different contexts. Inclusiveness, but also sustainability, are the values that have to be embedded in this trade transformation too.