The WTO and the World bank jointly launched a new policy note entitled “The role of trade in developing countries’ road to recovery” on 19th January 2022.  The policy note captures the positive role of trade in reducing poverty, providing food security, and securing a recovery from the Covid 19 pandemic.

The report suggests that policymakers have not paid much attention to trade measures as a tool for climate policy. However, existing tariff structures and non-tariff barriers are biased toward high carbon-intensive industries, thus implicitly subsidizing CO2 emissions. If countries were to remove this bias by imposing similar tariffs and NTBs on low and high carbon intensive industries, global CO2 emissions would fall, while global real income would slightly increase. Tariffs on agricultural products remain relatively very high. For example, the average tariff on food products in Turkey is 50 percent, in India it is 33 percent, in Morocco it is 29 percent, and Kenya has an average tariff on agricultural products of 25 percent.

Non-tariff trade measures can also be a major barrier to trade and influence trade and food purchasing decisions. The capacities to define appropriate sanitary and phytosanitary standards and conduct testing and conformity assessments are very weak in many developing countries. This often leads to barriers to trade and ineffectual policies. For example, a recent World Bank study shows that current systems for the regulation of aflatoxins in grains in East Africa entails high costs that limit cross-border trade.

Delays at borders and ports also increase trade costs and cause a significant amount of food to be wasted. Reducing cross-border trade costs would drive a stronger trade recovery especially among developing countries. Estimates suggest that travel and transport costs account for in general more than one quarter of differences trade costs depending on the sector, while trade policy barriers and regulatory differences account for at least 10 percent and up to 20 percent of trade costs in all sectors.

Developing and Least Developed Countries, whose structural trade finance gaps were high even before the pandemic, are experiencing important difficulties in accessing trade credit.

Trade will continue to play an important role in advancing poverty reduction while supporting economic recovery. But the growth of trade remains uneven. It has been a phenomenal driver of poverty reduction over the past 30 years and participation in GVCs has been a force for job and wealth creation. The recovery cannot be as inclusive as it ought to be because vulnerable groups such as women and the poor are underrepresented in booming sectors such as digitally supplied services, and overrepresented in struggling sectors such as tourism.

Trade has been a major contributor to prosperity and poverty reduction although some countries in some regions have benefited more than others. The value of trade comes from its potential to create better jobs, increase all incomes, provide a greater choice of products, and help secure a more sustainable future. New technologies are creating trade opportunities, but it is important to ensure low-income countries have the capacities to benefit.

Following two world food price crises in 2008/9 and 2010/12, investments by the G20 countries in food information systems have increased the quality of information available to policymakers and may have tempered the use of export restrictions on food during the COVID pandemic.

While trade results in carbon emissions, it is fundamental to the solution to climate change in terms of facilitating the transition to low-carbon growth and supporting adaptation to rising temperatures and changing precipitation patterns. Trade is also critical to recovery from increasingly frequent extreme weather events.

Better information on global markets and more transparency could help avoid panic-driven policy measures and contribute to more informed and coordinated responses that avoid price surges. While better information and effective monitoring are important steps in underpinning confidence, it is necessary to clarify and better discipline the appropriate use of export restrictions during crises.

The full report can be found here : Role of Trade in COVIDv3 (worldbank.org). Link to the event launch which features speakers such as WTO DG and ministers from Bangladesh, Colombia and Kenya Can be found here: https://www.youtube.com/watch?v=cM3YgmBwkoc&feature=youtu.be