Category: Trade

Reviving multilateralism, Trade

Reforming industrial subsidies usage through the WTO: process proposals

By Professor Peter Draper, Executive Director and Dr Naoise McDonagh, Lecturer, Institute for International Trade, The University of Adelaide

The distorting effects of state-owned enterprises (SOEs) and industrial subsidies on global market competition has become a topic of increasing importance for many World Trade Organization (WTO) members in recent years. There is growing pressure from key actors for WTO reform. The U.S., EU and Japan have jointly outlined a reform agenda for the WTO’s Agreement on Subsidies and Countervailing Measures (ASCM)1 , focusing on market distorting effects of state capitalism. China has offered a different reform agenda that seeks greater recognition of the role of subsidies in pursuing legitimate social and development goals, as outlined in a recent WTO communication. Subsidy usage is therefore a key development issue.

Continue reading “Reforming industrial subsidies usage through the WTO: process proposals”
Development Matters
Covid-19, Least developed countries, Trade

Lessons from LDCs’ responses to COVID-19: From crisis to opportunities?

By Ratnakar Adhikari, Executive Director, Enhanced Integrated Framework

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide. This blog is also a part of a thread looking more specifically at the impacts and responses to the COVID-19 crisis in Least Developed Countries (LDCs). 

shutterstock_1763747285
June 2020 : Staff members outside the Republican Hospital for Covid-19 Patients in Taiz, Yemen. Photo: Akramalrasny / Shutterstock.

Many least developed countries (LDCs) have not yet seen large numbers of COVID-19 cases – though there are notable exceptions such as Afghanistan, Bangladesh, Nepal and Sudan.

Yet, all LDCs are confronting severe economic disruptions – and a major fiscal squeeze – from the global demand shock, supply chain disruptions and, significantly reduced income from tourism and remittances. Domestic lockdowns to prevent the spread of the virus present unique challenges in countries with high poverty rates in which large sections of the workforce are informally employed.

At the same time, crises can come with opportunities for positive change, and the present crisis might offer this for LDCs, to undertake much-needed reforms that would place them on firmer footing as economic recovery takes hold. A few LDCs have done just that, examples of which are below. Continue reading “Lessons from LDCs’ responses to COVID-19: From crisis to opportunities?”

Development Matters1 Comment
Africa, Covid-19, Green transition, Natural Resources, Trade

Middle East and North Africa: The challenge of a long-term strategy for oil exporting countries

Building-better-covid19-banner

By Rahmat Poudineh, Senior Research Fellow and Director of Research, the Oxford Institute for Energy Studies

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

oil-refinary-shutterstock_1076038007
Oil refinery plant in Qatar

There is no single successful strategy to shield oil-exporting countries of the Middle East and North Africa (MENA) from the long-term risks of an oil price crash, exposing them to serious long-term challenges.

Diversification for example, works only when it reduces risk by pooling uncorrelated income streams and sectors. If countries diversify only into sectors that rely on hydrocarbon infrastructure and where relationships (tangible and non-tangible) exist across fossil and non-fossil fuel businesses, they cannot build resilience. On the other hand, if they diversify into substantively different areas that have little in common with their current primary industry, which is the core of their comparative advantage, they run the risk of not being competitive. Moreover, the cost of reducing the long-term risks and increasing resilience of their core sector is to accept lower expected return on existing hydrocarbon assets, for instance, by investing in measures that align their hydrocarbon sector with low carbon scenarios. This lowers the overall return but reduces the risk of disruption in the long run. Continue reading “Middle East and North Africa: The challenge of a long-term strategy for oil exporting countries”

Development Matters
Covid-19, Latin America and the Caribbean, Trade

Trading to avoid falling behind in the COVID-19 crisis: Lessons from Central America to boost prosperity

 By Rodrigo Méndez Maddaleno, Economist at Chief Economist Office, Central American Bank for Economic Integration (CABEI)

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

Trade-Central-America-shutterstock_1714688524
Panama City, Panama – container vessel leaving the Panama Canal. Photo: Shutterstock

If what and where you export matters, Central American countries need to upgrade the quality of their exports, produce new ones and dive into new markets.

Central American countries are open to international trade. Trade in the region represents 67% of GDP, more than the world’s average of 51%. Average tariff rates for the region have also shown a consistent decline since 2005 going from 7% to 5%. However, the region’s economic performance has not reflected this, with an average GDP per capita growth of around 2.5% in the 2000s, which means that income doubles approximately every 30 years. So why has there not been an economic take-off? What is missing in the region when it comes to trade and economic policy in general? These questions are even more relevant today, as COVID-19 and the global crisis are affecting the region and its major trading partners.

To address this, it is important to analyse several aspects of Central American trade, such as export composition, main destination markets, and discuss what the region can do to improve its situation and boost economic growth and prosperity. Continue reading “Trading to avoid falling behind in the COVID-19 crisis: Lessons from Central America to boost prosperity”

Development Matters
Africa, Covid-19, Trade

Accelerating the response to COVID-19: what does Africa need?

By Annalisa Primi, Head, Structural Policies and Innovation, OECD Development Centre, and Stephen Karingi, Director, Regional Integration and Trade, United Nations Economic Commission for Africa (ECA), and with Lily Sommer, Wafa Aidi, ECA, Vasiliki Mavroeidi, Manuel Toselli, OECD development Centre

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

covid-19-africa-production-shutterstock_1685584516

Africa is at high risk. The most externally oriented economies, South Africa, Egypt, Morocco and Algeria account for 52% of the confirmed COVID-19 cases (32,979 as of April 28th). The continent lacks adequate healthcare systems. Hospital capacity is weak with 0.3 beds per 1,000 people in Senegal and 2.8 in South Africa, versus 6.5 in France and 8.3 in Germany. The continent is highly dependent on imports of medical supplies: 94% come from countries that have been hard hit by the pandemic, many of which are now limiting exports to ensure domestic provision of critical equipment. The pandemic magnifies the continent’s structural weaknesses, which make self-isolation and lockdown measures costly and hard to implement: 60% of the world’s poorest people live in Africa and the majority of the workforce is informal. The digital gap hampers telework and automation and governments are not able to mobilise investments at the scale needed to secure all citizens. African governments have taken important steps already, also building on lessons learnt in previous pandemic outbreaks. But the challenge is unprecedented: a global solidarity deal is needed. Continue reading “Accelerating the response to COVID-19: what does Africa need?”

Development Matters9 Comments
Covid-19, Trade

Don’t put export bans on medical supplies during COVID-19. Why trade should flow freely to the world’s poorest countries

By Violeta Gonzalez Behar, Head, Partnerships, Outreach and Resource Mobilization, Enhanced Integrated Framework, World Trade Organization

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
This blog is also a part of a thread looking more specifically at the impacts and responses to the COVID-19 crisis in Least Developed Countries (LDCs).


export-medical-covid19-tradeWith coronavirus spreading fast and now present in 185 countries, the pandemic has already reached some of the world’s poorest countries. We are all familiar with the headlines pointing to a shortage of masks, ventilators, gloves, gowns and face shields across countries. Fear and hoarding is only magnifying scarcity.

Amidst the uncertainty surrounding the availability of medical supplies, it may be tempting for governments to save supplies for their own citizens. And this is exactly what is playing out at the global level. Currently there are over 80 curbs on exports of essential COVID-19 medical supplies and medicines that have been introduced by 76 nations this year.

The consequences of such actions are already visible in countries like Italy, Spain, the United Kingdom and the United States. Now imagine how life-threatening this could be in the poorest countries, an example being the Central African Republic, where there are only three ventilators in the entire country. Continue reading “Don’t put export bans on medical supplies during COVID-19. Why trade should flow freely to the world’s poorest countries”

Development Matters1 Comment
Building resilience, Covid-19, Trade

Localisation of production: COVID-19’s medium-term impact

By Dr Linda Yueh, Economist at Oxford University, London Business School, and LSE IDEAS, and author of “The Great Economists: How Their Ideas Can Help Us Today”

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

shutterstock_465773663The immediate shock of the COVID-19 pandemic on world trade and investment is apparent in the latest report of the World Trade Organisation (WTO), which expects global trade to fall by an unprecedented 13 to 32 per cent this year.

The WTO points out that all regions will experience double digit declines in trade, which will be worse than during the global financial crisis a decade ago. The global trade body also stresses that there will “steeper falls in products with complex supply chains, such as electronics and automobile products.” This underscores that COVID-19 is both a “supply shock” and a profound demand shock. Finally, the WTO expects a recovery in trade volumes is possible in 2021, but it will depend on the extent of the pandemic and the effectiveness of policy measures to address the shock.

Even as global trade might recover within a year, there are potential medium-term effects from the COVID-19 pandemic, notably, around supply chains and associated cross-border investment. It’s challenging to map out the impact of COVID-19. But the supply chain disruptions are on the back of a tense period of trade restrictions and during a time when additive manufacturing (i.e., 3-D printing) have contributed to an emerging trend towards greater localisation of supply chains.
Continue reading “Localisation of production: COVID-19’s medium-term impact”

Development Matters3 Comments
Africa, Trade

A Sceptics Guide to the African Continental Free Trade Area – and Why the Sceptics are Wrong…

ForumAfrica2019_Banner_Web 1140x137px_EN

By Andrew Mold, Acting Director, Office for Eastern Africa, Economic Commission for Africa, Kigali, Rwanda

This blog is part of a series marking the upcoming 
19th International Economic Forum on Africa 

Photo by Frans Van Heerden from Pexels
Photo by Frans Van Heerden from Pexels

Scepticism is never in short supply, generally speaking, and particularly in the era we are currently living through. This is often true when it comes to bold policy initiatives on the African continent. Yet I would argue that a lack of faith is certainly not warranted in the case of the African Continental Free Trade Agreement (AfCFTA).

Objections to the AfCFTA follow familiar lines. There are a series of misconceptions which underpin these objections:

“African countries all trade the same things”

Despite evidence of some diversification of exports occurring over recent decades, this is largely true; Africa is still heavily dependent on traditional export crops and commodities, reducing the scope for mutually beneficial trade. Yet this paints an excessively simplified view of trends in regional trade. Patterns of trade are changing rapidly. The traditional export market outside the continent of Africa (Europe, the United States and, increasingly, India and China) are of primary commodities, but the intra-regional component of trade is much more diversified, with high shares of non-traditional exports and manufactured goods, as illustrated by the case of the East African Community (EAC). Continue reading “A Sceptics Guide to the African Continental Free Trade Area – and Why the Sceptics are Wrong…”

Development Matters4 Comments
Africa, Food security, Human Development, Infrastructure, Policy, Trade

Nigeria’s border closure: Why it will not pay off

ForumAfrica2019_Banner_Web 1140x137px_EN

By Léopold Ghins and Philipp Heinrigs, OECD Sahel and West Africa Club Secretariat

This blog is part of a series marking the upcoming 
19th International Economic Forum on Africa

rice-bodija-market-IITA-flickr
Men offload rice at Bodija market, Ibadan, Nigeria. Flickr/IITA

It has been three months since Nigeria closed its land borders and to date there are few indications as to when they will open again. The country said it wants to reduce the smuggling of goods and stop illegal inflows of Asian rice and outflows of subsidised fuel. More fundamentally, Nigerian authorities justify the closure by the need to support the domestic agricultural sector and accelerate national productivity growth.

The closure is badly affecting livelihoods in local border economies. In Benin, communities in areas close to the Seme border near the sea, or further up north near the Owode border, largely depend on Nigerian markets for their sustenance. The sudden shutdown has caused thousands of smallholder farmers to lose their produce and default on credits. In the Dendi region (an area that spans across northern Benin, Niger and Nigeria), economic networks are strongly integrated across borders. Small traders that live on these networks have lost their principal sources of income. Continue reading “Nigeria’s border closure: Why it will not pay off”

Lia Beyeler1 Comment
Africa, Data, Employment, Food security, Gender, Women and Girls, Human Development, Infrastructure, Policy, Private Sector, Trade, Youth

The food economy can create more jobs for West African youth

By Léopold Ghins and Koffi Zougbédé, OECD Sahel and West Africa Club Secretariat 

Français suit

IMG_8554
Muhammad Sanyang, General Manager of MBK Farms, Banjul, Gambia.
© SWAC/OECD

Youth employment and job creation loom high on development agendas in West Africa. The issue is also a priority at the continental and international levels: decent work and youth empowerment are priority areas within the African Union’s Agenda 2063, and ‘youth and jobs in the Sahel’ will figure prominently amongst talks at the G7 Summit which begins this Saturday in Biarritz.

Such policy focus is necessary in view of the demographic realities in the region. Although unemployment is low overall, informality remains prevalent, and growing numbers of young people struggle to access attractive training or sources of income. West African economies need to create more and better jobs. Yet, from a policy perspective, how to support decent and inclusive job creation is not always clear. Trade-offs in public resource allocations across sectors and information gaps abound.

In this context, what and where are the opportunities for policymakers willing to address the challenge of decent job creation? Continue reading “The food economy can create more jobs for West African youth”

Lia Beyeler4 Comments