WTO: Global trade in the time of COVID

In the first in a series of interviews with global trade agencies, Virginia Ginnane speaks to World Trade Organization Counsellor, Sheri Rosenow about the impact of COVID-19 on global trade, with a message from the WTO’s former Director-General.

Here Sheri focuses on the WTO’s recent survey that highlights the value of trade-related information in easing the current challenges in moving goods around the world. And the former WTO Director-General forecasts the future for the rest of 2020 and beyond.

The WTO canvassed the views of many organisations in the global government and private sectors on trade-related processes in the COVID-19 climate in their recent survey.

1. What led the WTO to conduct this survey and what is your response to the findings?

We conducted this survey as the COVID-19 virus was first spreading around the world in order to find out how it was affecting the flow of goods across borders and to ascertain how implementation of the WTO’s Trade Facilitation Agreement (TFA) might ease the situation. 

The findings reinforced the belief of the WTO,  the International Chamber of Commerce (ICC) and the Global Alliance for Trade Facilitation that full implementation of the TFA would go a long way in helping WTO members cope with the COVID-19 crisis, put them in a better position for economic recovery after the pandemic, and to cope with future disruptions such as natural disasters.

Sheri Rosenow
World Trade Organization Counsellor, Sheri Rosenow

It was not surprising that the survey respondents recommended that enhanced access to information and border agency cooperation would have a positive impact on trade during the pandemic. Access to information is always important but especially when rules and processes are changing rapidly as they were when the COVID-19 crisis first began. 

Before the crisis, many members found that border agency cooperation was challenging because of the different agency mandates and methods of working.  But this cooperation is essential for a coordinated and effective response, both nationally and with neighbouring countries, to avoid duplication or conflicts as each agency urgently puts into place control measures to deal with a crisis.

2. How ideally could the implementation of trade-related information be improved?

This is what WTO members asked themselves when they negotiated the TFA.  As a result, the Agreement contains a number of provisions aimed at making import, export, and transit information more readily available.

In addition to requiring the publication of laws, regulations, duties and charges, import restrictions, and other information, the TFA requires border agencies to publish on the internet practical step by step descriptions of procedures.  These practical guides are especially important to help small and medium enterprises understand the process.  The Agreement also requires the establishment of enquiry points that can provide further information upon request.

A system of advance rulings allows importers to get binding information on how tariff and origin laws and regulations will be applied to their goods. 

The requirement for governments to hold regular consultations with the private sector helps traders have a better understanding of the rules and procedures and provides a forum for traders to provide their input.

Having these measures in place can put WTO members in a better position to make information easily accessible even in a climate of rapid change.

3. How important is the role of technology in improving this implementation? Where in the process would technology be most valuable?

Technology can enhance implementation of many of the provisions throughout the Agreement such as collecting data and identifying the risk level of goods for customs control, tracking trucks in transit, allowing for quick release of guarantees, exchange of information for customs cooperation, and mutual recognition of authorized operators at the regional level. 

The Agreement encourages members to have a single window that enables traders to submit the required documentation to one point of contact for distribution to all relevant government agencies.  It also requires, where practicable, the option of electronic payment of import and export customs duties and fees. 

Some respondents to the survey identified single windows and electronic payments as the provisions that would have the most positive impact during the pandemic.

Some countries expedited the implementation of electronic payment systems during the pandemic in order avoid disruption in the payment of duties and fees and to protect health and safety by avoiding personal contact. 

Some survey respondents mentioned that video conferencing with traders, brokers, and agents during the crisis was not only safer but also less burdensome than having to meet face to face.

4. Looking at the impact of COVID-19 more broadly, could you explain the role of the WTO Trade Facilitation Agreement Facility in dealing with the crisis?

The WTO Trade Facilitation Agreement Facility (TFAF) was created to help developing and least developed WTO members find the support they need to implement the TFA.  During the pandemic the Facility continues to offer training programs to WTO members through virtual platforms, and we will aim to expedite any new requests to our grant program. 

The Facility also offers a wealth of information through our website www.TFAFacility.org.  In response to the crisis, we created an online repository of trade facilitation and COVID-19 resources that were produced by approximately 30 partner organizations and associations.  We provide information on implementing support programs offered by our development partners and updated this to include information on changes in delivery during the pandemic.  We created a “How to Prepare Notifications” webpage that provides guidance and templates to assist members to complete the required notifications – including requests for extensions of their implementation deadlines for any delays caused by the crisis.  

And now, looking to the future …

WTO: Future forecast for global trade

Former WTO Director-General
Roberto Azevêdo

In a message from the WTO, former Director-General Roberto Azevêdo foresees an optimistic outcome for global trade – as long as complacency is kept at bay and markets are kept open to trade.

World trade fell sharply in the first half of the year, as the COVID-19 pandemic upended the global economy. WTO economists believe that while trade volumes will register a steep decline in 2020, they are unlikely to reach the worst-case scenario of a 32% contraction projected in April. The volume of merchandise trade shrank by 3% year on year in the first quarter according to WTO statistics. Initial estimates for the second quarter indicate a year on year drop of around 18.5% – this decline is historically low, the steepest on record. As things currently stand, trade would only need to grow by 2.5% per quarter for the remainder of the year to meet the optimistic projection of a 13% contraction in 2020. In fact, we do see signs that trade may have bottomed out during the second quarter of 2020.

The former Director-General said this is genuinely positive news but we cannot afford to be complacent. For output and trade to rebound strongly in 2021, fiscal, monetary and trade policies will all need to keep pulling in the same direction, he said, adding:

“Closing markets to trade for example, would mean uncertainty, supply shocks, weaker productivity and lower living standards. Keeping markets open to trade flows will do the opposite precisely, so it would help deliver the growth and job creation that we all want.” (23 June 2020)

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