Because of COVID-19 all the countries have been badly suffering in many ways. One is of areas is International Trade. In this regard, based on the “Financing for Sustainable Development Report 2021” which is a joint product of the members of the Inter-agency Task Force on Financing for Development , United Nations, the points have been presented so that academicians, researchers and others can get an idea how international trade can serve as an engine for development. I am straight away presenting the facts and figures from the Report. Key messages and recommendations are presented below:
A) Important Messages:
1) The COVID-19 crisis temporarily put the brakes on the contribution of trade to the Sustainable Development Goals, such as poverty alleviation, food security, and decent jobs. The unprecedented fall in tourism, for instance, drastically reduced external earnings of many developing countries, in particular Small Island developing States (SIDS) and least developed countries (LDCs). The impact of the drop in tourism is particularly severe on those with precarious jobs such as women, youth and migrant workers. With regard to LDCs, it is unlikely that the Sustainable Development Goal (SDG) target 17.11 was met (i.e., doubling their share in world exports by 2020).
2) Reigniting global trade is indispensable for achieving an inclusive and sustainable recovery from the COVID-19 crisis. Global trade was a major transmitter of demand andsupply shocks across the globe. But the crisis also highlightedthe fundamental importance of trade in making essentialgoods and services available to people in need.
3) Life-saving vaccines and medical supplies still bypass many countries. Only a tiny fraction of vaccines and othermedical supplies to fight the pandemic have reached LDCsand other low-income countries. COVID-19 vaccine productioncan be extended by localizing more production in developingcountries. The international community should continue efforts to keep markets open to ensure equitable flows of essential goods and services in times of crisis.
4) The multilateral trading system helped maintain transparency on trade measures during the COVID-19 crisis. The multilateral trading system could not preventthe initial proliferation of temporary protectionist measuressuch as export restrictions on essential medical supplies.However, the system supported a steady shift from the use oftrade-restrictive measures in the early stage of the pandemicto the use of trade-facilitating measures, such as temporaryelimination of import tariffs on essential supplies, in the latterhalf of 2020.
5) Still, the COVID-19 crisis prompts us to review the multilateral trading system, regional trade and investment agreements, and trade policy through the lens of an inclusive and sustainable recovery. The existing multilateraland regional trade agreements can be transformed to help countries pursue trade-led economic recovery in a manner that leaves no one behind. Reforms are urgently needed to make the multilateral trading system responsive to sustainable development priorities. This calls for addressing, inter alia, the functioning of the dispute settlement system and reaching agreements on key issues under negotiation, such as fisheries subsidies. Multilateral and regional trade agreements and international investment agreements can be continually modernized with a view to enhancing their contribution to sustainable development including public health, climate change, circular economy, decent jobs, and gender empowerment, particularly in times of crisis.
6) Making trade more inclusive also requires addressing trade finance gaps that disproportionately affect small businesses and countriesnot fully integrated into global supply chains or the international financialsystem. Increasing coordination between multilateral development banks and the private sector can help fill trade financing needs, particularly those of small businesses in developing countries.
7) The digital divide within and across countries persists. Rapid progress of digital technologies and e-commerce has become an effective tool for economic recovery. But the digital divide prevents equitable sharing of benefits from the digital economy and e-commerce. In addition, digital trade platforms have raised concerns about anti-competitive practices by dominant market players, as well as vulnerabilities of consumers to unfair and fraudulent business practices. Governments and development partners should increase investment in infrastructure and technology and knowledge transfer to eliminate the digital divide.
B) Developments in international trade: Trends in world trade:
1) The COVID-19 pandemic brought great disruption to international trade in
2020. World trade in 2020 contracted by about 9 per cent from the previous year,
with trade in goods declining by 6 per cent and trade inservices declining by 16.5
per cent. Following a significant fall in the firsthalf of 2020, trade rebounded
strongly in the third quarter, thanks largelyto recovery in trade in goods. Trade in
services continues to lag substantiallybelow average.
2) Developing regions except East Asia have faced large and prolonged trade shocks under the COVID-19 pandemic. All regionsexperienced declines in both exports and imports during the first threequarters, with deep declines in the second quarter followed by sharp butincomplete recoveries in the third quarter. West Asia/North Africa and South Asia have experienced export declines of over 40 per centcompared to the previous year in the second quarter. Trade among developingcountries (South-South trade) also declined, but at a less pronouncedmagnitude. Impact on LDCs, both in terms of exports and imports, appearsto be less pronounced than on other developing countries.
3) The COVID-19 crisis has highlighted the vulnerability of the landlocked developing countries due to their dependence on their transit neighbours. The introduction of cross-border restrictions aimedat combating the spread of COVID-19 by neighbouring transit countriesaffected the smooth flow of imported essential goods and services toLLDCs, including medical and pharmaceutical products and food. This highlightsthe importance for LLDCs and their transit neighbours to enhancecross-border collaboration by ensuring coordinated interventions betweennational border agencies during COVID-19.
4) The energy sectors, such as oil, gas, coal and other petroleum products, experienced the largest trade fall. These sectors experienceda drop of more than 35 per cent for January to September comparedto the previous year. Steep declines in trade were also observed in the automotive sector, the apparel sector, and the metals and ores sectors.
5) Trade in essential medical supplies bounced back in the second quarter of 2020, but supplies were mostly absorbed by wealthier countries. In May 2020, exports of essential medical supplies from China,the United States of America and the European Union, representing abouttwo thirds of world exports of these products, increased by over 70 percent from the previous year to reach $46 billion per month. However,only a tiny fraction of such medical supplies have reached low-income countries. Between April and August 2020, each citizen of ahigh-income country received, on average, an additional $10 per month inmedical supplies. The number was about $1 per person in middle-incomecountries, and was a mere $0.10 in low-income countries.
6) The massive fall in international trade in goods negatively affected the price of commodities. The decline of the UNCTAD CommodityPrice Index in 2020 in the second quarter of 2020 was comparableto the declines experienced in 2015 and 2016. When fuelsare excluded, year-on-year changes are much more muted.
7) The crisis may have accelerated the reconguration global value chains in favour of shorter and more flexible supply chains. Companies are expected to increasingly favour resilience over efficiency (characterized by small inventories and just-in-time delivery) and thus diversify their suppliers and shorten their supply chains. This may affect the export interest of developing countries over time.
8) The unprecedented fall in tourism drastically reduced external earnings of SIDS and LDCs. Tourism has been a major component of servicesexports of many developing countries. International tourist arrivalswere down by 700 million, or 70 per cent, in the first eight months of 2020compared to the same period in 2019. This translates into a staggering estimated loss of $1.1 trillion in export revenues from international tourism in 2020.5 SIDS, where tourism accounts for up to 80 per cent of total export revenues, were particularly affected. Loss in tourism has a knock-on effecton other economic sectors that supply the goods and services travellersseek while on vacation, such as food, beverages and entertainment. It isestimated that for every $1 million lost in international tourism revenue,a country’s national income could decline by $2 million to $3 million.According to this estimate, employment of unskilled workers in theworst-affected countries, such as Thailand and Jamaica, could be reducedby about 25 per cent if two thirds of inbound tourism expenditure is eliminated.
Before conclusion, António Guterres, Secretary-general of the United Nations, may be quoted here “Investment alone, however, is not enough. To address the systemic nature of global risks including climate change and pandemics, we must reform our institutional and policy architecture, strengthen multilateralism, and create new platforms and networks for global cooperation.
The United Nations has a critical role in supporting the mobilization of resources for sustainable development, set out in my 2018 strategy for financing the 2030 Agenda. We will continue to use our convening power to urge collective action to provide resources at scale to developing economies.
This report sets out further recommendations and analysis, drawing on policy options developed in 2020 through the high-level events on Financing for Development in the era of COVID-19 and beyond. It will inform discussions within the United Nations and with our partners in 2021. I urge all governments and other stakeholders to meet the expectations of those we serve with unity, solidarity and coordinated multilateral action”.
Dr Shankar Chatterjee, Hyderabad,