Sean Doherty, Head, International Trade and Investment, World Economic Forum and Kimberley Botwright, Community Lead, Global Trade and Investment SI, World Economic Forum are the authors of this article which formed part of The Davos Agenda.
- The new director-general at the World Trade Organization (WTO) will have a raft of challenges on their desk – here are our suggestions for one task a month to focus on this year.
- The time is ripe for a global conversation about best-practices for industrial policy and sustainable recovery from COVID-19.
- Countries should align on trade actions to support climate ambition before they gather at year’s end to advance the Paris Agreement.
The next director-general of the WTO faces Herculean challenges. Hercules succeeded at his tasks in the end by trying new tactics, so perhaps fresh approaches should be tried for trade too. The World Economic Forum’s trade community has thoughts on 12 almost impossible tasks to tackle in 2021.
Dealing with Brexit has shown how difficult and important it is to get trade paperwork and systems understood and working properly. The same holds true worldwide, not least in poorer nations. A committed global push on trade facilitation, building on the WTO agreement in force since 2017, would spark more economic growth than eliminating all the tariffs in the world. Trade facilitation is also critical for vaccine delivery.
Digital trade and e-commerce have been a lifesaver through the pandemic. Yet we have to find a way to give access to more people, confidently share data abroad and connect e-payment systems across borders. The WTO e-commerce negotiations should be finalised, while more advanced options exist in the Digital Economy Partnership Agreement, to help consumers and budding entrepreneurs navigate digital borders.
Fears around shortages of food and medical supplies gripped societies in 2020. Export restrictions were brought in and local production advocated. Rather than slide into protectionism, the case should be made for supply chain resilience through diversity of supply, coupled with improved transparency into the production and stocks of critical goods. New TradeTech can help manage supply chain visibility and risk.
A helpful response to the COVID-triggered economic downturn has been government involvement in their economies, through subsidies, procurement, publicly owned businesses and other means. But if maintained too long, some of these could have harmful cross-border spill-overs and delay recovery. The time is ripe for a global conversation about best-practices for industrial policy and sustainable recovery. Ending harmful fisheries subsidies would be one way to start.
More than 130 countries have been working through the OECD/G20 on updates to international tax rules. These would help reduce avoidance, build confidence in tax systems and head off disputes. Much focus has been on corporate and digital taxes, but there is also scope for action on VAT or sales tax schemes as well as co-operation on wealth taxes.
Many complaints about trade injustice come down to a sense of unfair competition, not least in the digital world. By empowering competition policy co-ordination and best practice on an international scale, the risks of exploitative or exclusionary behaviour would be reduced, while innovation could flourish.
In this traditional travel month, the fate of families separated by sudden border closures and the labyrinthine nature of visa processes for many will be more acute. People have fewer rights to travel internationally than boxes do. Stepping outside traditional trade policy limits, and addressing the need for fair and transparent rules for post-pandemic travel, a program for e-visas and travel rights would give trade a human face. Not to mention support cross-border education, tourism and other services that were pummelled in 2020.
Global foreign investment has been falling for the last five years, but is a great way to spread knowledge and is essential for development. Delivering on the WTO’s investment facilitation talks could, as with their trade counterpart, remove the frictional barriers that impede investment, particularly by smaller firms.
Re-using, repairing, re-purposing and re-cycling can cut waste and resource use. But only 8.6% of today’s production uses recyclables and few reverse supply chains are able to function cross border, limiting economies of scale. September’s World Circular Economy Forum is a chance to help responsible circular production strategies work internationally, for plastics, electronics and more.
With vaccine roll-outs having hopefully reached many of the world’s most vulnerable populations, intellectual property and drug-pricing conversations may simmer. To prepare for coming health challenges, robust conversations must be had about securing affordable access and supporting innovation, likely through a mixture of policy responses.
As countries gather in Glasgow to advance the Paris Agreement on Climate Change they should align trade tools with climate ambition. Tariffs could be lowered on products helpful for tackling emissions and trade in green services made easier. Fears of carbon leakage as a reason for inaction should be neutralised, whether through emissions trading system links, border adjustments or other means.
Time to work on the institution of the WTO itself. Keeping the WTO viable for global deliberation and mediation will help limit inevitable tensions. It has room to grow as a hub and clearing house for best practice, information sharing and regional deals beyond its current role.
This article was originally published on the World Economic Forum: The Davos Agenda 2021: https://www.weforum.org/agenda/2021/01/here-are-12-nearly-impossible-tasks-for-trade-in-2021/