Trade

Reforming industrial subsidies usage through the WTO: process proposals

Development Matters Reviving international co-operation, Trade , ,

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.

A lack of reform may lead to growing use of subsidies by developed and advanced developing countries with deep pockets in ways that ultimately widen the economic gap between countries. This is because many developing economies will not have the capacity to leverage subsidies to build their industrial bases.

Continue reading →

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

Development Matters Covid-19, Least developed countries, Trade , ,

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 →

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

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

 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 →

Driving Africa’s industrialisation on the back of COVID-19

Development Matters Africa, Building resilience, Covid-19 , , ,

By Toyin Abiodun, Industry and Trade Advisor, Rwanda, Maudo Jallow, Industry and Trade Analyst, Ghana and Jonathan Said, Head of Inclusive Economic Growth, Africa, Tony Blair Institute

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.

Africa-industrialisation-COVID-19
Photo courtesy of the Tony Blair Institute

Leer en español

Africa imports a net of $232 billion worth of manufactured goods every year, while it exports a net of $174 billion worth of raw commodities. Although Africa’s economy grew on average by 5.5% per year over the past fifteen years,  manufacturing has remained a fixed share – still accounting for only 10 per cent of GDP.

The impact COVID-19 is having on global supply chains and on global trade, and the immense economic pressure this is placing on Africa – not least in the availability of medical equipment, but also food and other goods – signals the importance of industrialising the continent. While COVID-19 is creating a major economic and health crisis, it also presents an opportunity to grab this agenda by the horns and accelerate Africa’s industrialisation.

Evidence from across the continent suggests this is possible. Many products that are imported to the continent – ranging from machinery to textiles to pharmaceuticals to processed food and medical equipment – are already produced competitively in Africa. For example, Kenya and Uganda have a thriving pharmaceutical industry, Ethiopia and Senegal have expanded their textiles industry in recent years, while Morocco and South Africa are major car producers. 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 Matters Covid-19, Trade , , ,

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 →

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

Development Matters Africa, Trade , , , ,

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 →

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

Development Matters Africa, Food security, Human Development, Infrastructure, Policy, Trade , , , , , , , , , ,

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 →

Taking gender in trade more seriously

Development Matters Gender, Women and Girls, Trade , , ,

By Ann Linde, Minister for Foreign Trade, Sweden

This blog is part of a special series marking the 3 July 2019 launch in Geneva of the joint OECD/WTO publication Aid for Trade at a Glance

AFT coverThe 2030 Agenda strengthens the prominence of international trade as both a goal of and a means to sustainable development. It also recognises the importance of Aid for Trade. Sweden, for one, is highly dedicated to these commitments and supportive of the Aid for Trade initiative. Additionally, as the Foreign Trade Minister of the world’s first officially feminist government, I use the WTO’s and EU’s free trade agreements as well as Aid for Trade as important platforms for pushing forward the gender equality agenda.

Continue reading →

Three trade challenges for LDCs to converge and eradicate poverty

Development Matters Building resilience, Development finance, Gender, Women and Girls, Least developed countries, Trade , ,

By Anabel González, Nonresident Senior fellow at the Peterson Institute for International Economics; Former Costa Rica Minister of Trade, World Bank Senior Director for Trade & Competitiveness, and World Trade Organization Director for Agriculture

This blog is part of a special series marking the 3 July 2019 launch in Geneva of the joint OECD/WTO publication Aid for Trade at a Glance 

AFT coverBangladesh is preparing to graduate from the category of least developed countries (LDCs). Robust multi-year economic growth of more than 6-7% has helped this South Asian nation make remarkable progress in reducing extreme poverty from 44.2% in 1991 to 13.9% in 2017. In parallel, life expectancy, literacy rates and per capita food production have increased significantly. Rapid growth enabled Bangladesh to reach the lower middle-income country status in 2015; it now aspires to become an upper middle-income country by its 50th anniversary in 2021. Trade has been at the heart of this success story (see Figure 1). Exports of textiles and garments are driving integration into the global economy, with new products becoming part of the country’s export basket. Will Bangladesh be able to continue to rely on trade for increased growth? Will conditions remain for other LDCs to follow?

Continue reading →

How can the new African free trade agreement unlock Africa’s potential?

Development Matters Africa, Trade , , , ,

Print

By Professor Landry Signé, David M. Rubenstein Fellow in the Global Economy and Development Program and the Africa Growth Initiative at the Brookings Institution, Distinguished fellow at Stanford University’s Center for African Studies, Chairman of the Global Network for Africa’s Prosperity, and author of “Innovating Development Strategies in Africa: The Role of International, Regional and National Actors.”

Learn more about this timely topic at the upcoming
18th International Economic Forum on Africa

Africa-TradeAfrica has an opportunity to show leadership on the world stage through strength in unity, as the rest of the world retreats from multilateralism and increases protectionism. For the first time in recent history, with the African Continental Free Trade Area (AfCFTA), Africa could wholly embrace intra-African relations, global trade, structural transformation and sustainable development. But for the agreement to succeed, businesses, which make up the backbone of the deal, need to be aware of their potential gains and be actively involved in its implementation, working alongside governments and regional institutions that are ultimately responsible for speeding up the process.

The challenges to African trade have been immense: Africa only represents 2.4% of total global exports. Intra-African trade only represents 15% of total African exports (compared to 58% and 67% for Asia and Europe, respectively), even if the regions of Eastern and Southern Africa are outperforming Central Africa.

The AfCFTA, launched with signatures from 44 African countries in March, has the potential to open up the free movement of goods, services and people, building the capacity of African businesses. If successfully implemented, the AfCFTA could generate a combined consumer and business spending of USD 6.7 trillion by 2030, accelerate industrial development, expand economic diversification, and facilitate quality job creation — including for youth (72% of poverty rate), women (majority of small-scale traders), and small and medium-sized enterprises (SMEs) (about 80% of regional employment).

But all this will depend on how well businesses are able to engage in the deal’s implementation. These are a few things they need to know:

Continue reading →