In the second in our series of interviews with global trade agencies, Virginia Ginnane speaks to Philippe Isler, Director, Global Alliance for Trade Facilitation and Andrew Wilson, Permanent Observer to the UN at the International Chamber of Commerce about the impact of COVID-19 on global trade.
Here Philippe and Andrew focus on the WTO’s recent survey that highlights the value of improved access to trade-related information in the implementation of the Trade Facilitation Agreement and in easing the current challenges in moving goods around the world.
1. What is your response to the need for an improved implementation of trade-related information during the global pandemic? Where have you seen failures in its implementation?
Philippe Isler, Director, Global Alliance for Trade Facilitation, said:
The survey confirmed what we’ve seen on the ground – that improved access to trade related information and the better coordination of border agencies are key actions that governments can take to speed up the movement of goods across borders. In our experience, border agency cooperation is one of the parts of the TFA for which countries often request support with implementation. Additionally, the digitalisation of trade processes can play an important part in making trade related information more widely available and border agency coordination more effective.
2. What form should this improved implementation take for business around the world? How important is the role of technology in improving this implementation? Where in the process would technology be most valuable?
Andrew Wilson, Permanent Observer to the UN, ICC, said:
It’s clear that digitalisation of trade processes represents a significant opportunity to render global commerce more resilient. The business implications of the crisis have exposed the fragilities in the global trading system caused by its reliance on hard-copy paper documents.
There have been some indications that countries with digital customs systems – such as single windows – have faced fewer trade disruptions. Encouragingly, a small number of governments have implemented emergency reforms in response to the pandemic to remove legal requirements for trade documents to be presented in paper format. Countries must work to implement trade facilitation measures that make it more efficient to get goods across borders.
Philippe Isler, Director, Global Alliance for Trade Facilitation, said:
Countries that are working on TFA implementation should work with businesses to identify what needs to happen now to reduce trade frictions exacerbated by the pandemic and speed up the movement of goods across borders.
The movement towards digital processing by border agencies as a result of the crisis in many parts of the world, such as in Colombia for example, is very encouraging as it is central to the process of making information more available and more broadly making trade more efficient.
3. Looking at the impact of COVID-19 more broadly, what do you see are the major challenges currently for the global trade industry?
Philippe Isler, Director, Global Alliance for Trade Facilitation, said:
We have witnessed a number of phases in the space of a few weeks and months as the Covid-19 situation unfolded. From crisis management to recovery as we learned more about the possible impact in terms of disruption and timeframes. We are now in a situation where we are trying to harness this “new normal” with varying levels of success.
At the start of the crisis, many countries introduced export controls as a national protection measure while in many least developed countries, there have been long queues at the border due to new measures being rapidly introduced to combat the virus.
These are both also examples of trade facilitation challenges that are particularly important in the context of a potential Covid-19 vaccine, as vaccines frequently require refrigeration units and quick transit times, needing to cross borders quickly. We need to ensure that the processes at borders do not slow down or even stop batches of the vaccine from reaching the people who need them.
It is vital that donors and development partners, including international and regional organisations, continue to provide programmes to support developing and least developed countries in implementing the agreement. Crucially, this needs to be performed in a coordinated way.
4. How will these challenges for business change as the crisis continues into the future?
Andrew Wilson, Permanent Observer to the UN, ICC, said:
Until the acute phase of the pandemic is brought under control, business will need to anticipate periodic disruptions to cross-border trade flows. Uncertainty will likely remain the ‘new normal’, though governments can adopt simple measures – in consultation with local businesses – to mitigate customs bottlenecks, to more deeply embed developing and least developed countries in global supply chains.
5. What are the big solutions, the bold strategies for business to overcome these challenges, what are the paths ahead?
Andrew Wilson, Permanent Observer to the UN, ICC, said:
The crisis has emphasised the vital importance of trade facilitation – both from a resilience perspective and ensuring that trade can act as a vital lifeline for small businesses facing huge balance sheet strains in the wake of the pandemic. Big and bold measures aren’t necessarily what’s needed to strengthen the international commerce ecosystem in the wake of the pandemic – what really matters is reforms that make trade work for everyone, every day, everywhere.
Simply put, the TFA provides the tools needed to overcome all of the problems identified in the survey. Careful prioritisation of interventions is needed to deliver maximum return on investment of scarce resources in the wake of the pandemic.
In particular, we need to harness the impetus provided by recent disruptions to accelerate digital trade reforms – while also ensuring that these initiatives form part of a cohesive trade policy agenda. It’s vital that countries resist any backsliding once the immediate shock of the pandemic has passed.
Philippe Isler, Director, Global Alliance for Trade Facilitation, said:
It’s also incumbent on businesses to step up and work with governments to implement the TFA. Our experience shows that businesses’ wealth of knowledge about the barriers they face when trading, as well as their technical expertise, make them invaluable partners for governments when identifying how to implement trade facilitation measures on the ground.
Trade facilitation measures can reduce the cost of trade and spark competitiveness, productivity, innovation and growth, supporting developing and least developed countries in the post-virus period, and with future economic growth. In this way countries around the world, of all development levels, will be better prepared for any shocks on the scale of the current crisis. The Alliance stands ready to support future economic growth and stability by working with countries and business to deliver these reforms.
6. What are your predictions for the future of global trade from the point of view of the businesses you represent?
Andrew Wilson, Permanent Observer to the UN, ICC, said:
It’s arguably too early to say what the future of global trade will look like in the wake of the pandemic. The reality is that policy choices made in the coming months will ultimately determine the shape of global commerce – and, by extension, the trajectory of any future recovery – in the years to come.
The choice, from ICC’s perspective, is a simple one between resilience and retreat. Only the former will deliver a rapid recovery from COVID-19 that creates a trading system capable of weathering exogenous shocks and democratising the gains from global trade. If there is perhaps to be a silver lining from the crisis, perhaps governments will come to see the strategic importance of trade facilitation and commit to driving the implementation of common sense provisions they agreed to – under the TFA – almost seven years ago.
