- International trade statistics: trends in first quarter 2021
- Goods barometer reveals strength of trade recovery, depth of COVID-19 shock
- Customs Valuation Committee sees encouraging increase in notification activity
- United States Urges WTO Members to Address Forced Labor on Fishing Vessels in Ongoing Fisheries Subsidies Negotiations
- Members of Trade and Gender Informal Working Group discuss women empowerment initiatives
G20 merchandise trade reaches record high in first quarter of 2021 while trade in services growth appears to moderate
Continuing the recovery initiated in the third of quarter of 2020, international merchandise trade for the G20 reached record levels in Q1 2021, as measured in seasonally adjusted current US dollars. Compared with the previous quarter, exports and imports increased by 8.0% and 8.1%, respectively.
With the exception of the United Kingdom, all G20 economies recorded positive growth in Q1 2021, with the depreciation of the US dollar and the related increases in commodity prices playing a role in the recovery from the COVID‑19 lows.
Prices of agricultural commodities, including cereals and vegetable oils, increased by over 10% in Q1 2021, while prices of metals are close to levels last observed in 2011. Argentina (exports up 33.3%), Australia (exports up 17.5%), Brazil (exports up 14.7%), and South Africa (exports up 17.3%), among the G20’s largest exporters of those products, have benefitted from the rising commodity prices.
Additionally, the nearly 35% increase in crude oil prices in Q1 2021 translated into the rising export values of Canada (up 10.8%), Russia (up 13.1%), and Indonesia (up 12.4%). Since energy products are a major import for most G20 economies, the price increases also resulted in higher import values in the same period.
Finally, the pandemic-related boom in purchases of electronics led to a surge in demand for semiconductors and integrated circuits. Along with several other factors, this led to supply failing to keep pace with demand, resulting in shortages and price rises. While higher trade in semiconductors partly contributed to total merchandise trade growth in the United States (exports and imports up by 5.7% and 5.3%, respectively), chip shortages affected, in particular, the automotive supply chains. A slowdown in shipments of vehicles and parts weighed on total merchandise exports from France (up 2.7%) and Mexico (up 0.4%), both markedly below the G20 average.
China, the G20’s largest merchandise trader, saw exports (up 18.9%) and imports (up 19.0%) soar in the first quarter of 2021. Chinese import growth was led by metals and metal ores, cereals and integrated circuits, while export growth was led by electronic products including integrated circuits, vehicles, and textiles (including face masks). In the European Union exports and imports grew by 3.8% and 5.0%, respectively.
The United Kingdom was the only G20 economy to record negative merchandise trade growth, both for exports (minus 5.7%) and for imports (minus 10.5%) in Q1 2021. The slowdown follows large increases in the previous quarter, when stockpiling was taking place in view of the exit from the EU Single Market.
G20 trade in services growth in first quarter of 2021
Based on preliminary information available for some G20 economies, services export and import growth for the G20 aggregate is estimated at around 4.4% and 2.5% for Q1 2021, respectively, measured in seasonally adjusted current US dollars.
According to available data, trade in services in Q1 2021 broadly reflects the trends observed in late 2020. While travel continued to be heavily restrained, the value of trade in transport services soared in Q1, reflecting the surge in both maritime and air freight rates which began in the second half of 2020. Trade in digitally deliverable services, such as telecommunications, computer and business services, continued to expand in Q1 2021, particularly in East Asia. Widespread increases in savings and higher volumes of transactions in financial products contributed to robust trade in financial and insurance services, especially in Europe and North America.
In Q1 2021, exports of services increased by 4.0% in Germany and 3.6% in France, with financial and insurance services, as well as transport, driving the overall increase. Imports increased by 3.6% in Germany and 6.6% in France. In the United Kingdom, exports increased moderately in Q1 (up 1.3%), while imports decreased by 3.3%.
Services trade in North America recorded a slowdown in Q1 2021 compared with the previous quarter. Exports from the United States and Canada grew by 1.0% and 1.6%, respectively, while imports showed slightly higher growth (up 2.4% and 3.0%, respectively).
Services exports from Korea (up 3.3%) and China (up 22.7%) continued to record solid growth in Q1 2021, following robust expansions in Q4 2020. Imports also increased in China (by 3.9%), with telecommunications and computer and business services continuing their expanding trend which began in Q3 2020. Conversely, Korean imports declined (minus 2.4%).
In Q1 2021, exports of services from Australia and Japan contracted by (minus) 1.3% and (minus) 0.1%, respectively, partially owing to weak exports of travel. On the other hand, imports increased by 7.9% and 3.0%, in both cases driven by higher purchases of freight transport services.
Exports of services from Brazil, Turkey and Russia recorded double-digit growth in Q4 2020 and continued to expand markedly in Q1 2021 (up by 9.1%, 13.1% and 6.0%, respectively).
Global merchandise trade is continuing to recover in 2021 following a steep but brief pandemic-induced drop in the second quarter of last year, according to the latest WTO Goods Trade Barometer released on 28 May.
The Goods Barometer is a composite leading indicator for world trade, providing real-time information on the trajectory of merchandise trade relative to recent trends. The barometer’s current reading of 109.7 is nearly 10 points above the baseline value of 100 for the index and up 21.6 points year-on-year, reflecting both the strength of the current recovery and the depth of the COVID-19 shock last year.
In the latest month, all of the barometer’s component indices were above trend and rising, highlighting the broad-based nature of the recovery and signalling an accelerating pace of trade expansion.
Among the barometer’s component indices, the biggest gains were seen in export orders (114.8), air freight (111.1) and electronic components (115.2), all of which are highly predictive of near-term trade developments. The strength of the automotive products index (105.5) may reflect improving consumer sentiment, since confidence is closely linked to sales of durable goods. This is also true of agricultural raw materials (105.4), which are mostly made up of wood intended for housing construction. Finally, the strong showing for container shipping (106.7) is more impressive in light of the fact that sea shipments held up well during the pandemic and had less ground to make up as a result.
The latest barometer reading is broadly in line with the WTO’s current trade forecast issued on 31 March, which predicted an 8% pickup in the volume of world merchandise trade in 2021 following a 5.3% decline the previous year. The relatively positive short-term outlook for trade is marred by regional disparities, continued weakness in services trade and lagging vaccination timetables, particularly in poor countries.
Global trade has been recovering since the second quarter of 2020, when the spread of the COVID-19 virus prompted lockdowns in many countries and triggered a steep drop in world trade. The volume of merchandise trade was down 15.5% year-on-year in Q2, when lockdowns were in full effect, but by the fourth quarter trade had surpassed the level of the same period in 2019.
While quarterly trade volume statistics for the first and second quarters of 2021 have not been released yet, they are expected to show very strong year-on-year growth, partly due to the recent strengthening of trade and partly as a result of the trade collapse last year. However, COVID-19 continues to pose the greatest threat to the outlook for trade, as new waves of infection could easily undermine the recovery.
The full Goods Trade Barometer is available here:
At the meeting of the Committee on Customs Valuation on 27 May 2021, WTO members noted encouraging progress on customs legislation notifications over the past few months. Members also advanced work on preshipment inspection (PSI), with a view to concluding the fifth triennial review of the PSI Agreement at the next Committee meeting in October 2021.
The chair of the Committee, Carlos Guevara of Ecuador, shared with members the current status of notifications as well as the status of questions and responses regarding customs valuation legislation (G/VAL/W/232/Rev.13). He stressed the encouraging increase in notification activity. Since the last Committee meeting in October 2020, customs legislation notifications had been received from Afghanistan, Colombia, Mongolia, Saint Kitts and Nevis, the Solomon Islands and the United Kingdom.
In addition, responses to the checklist of issues had been notified by Colombia, Israel, Namibia, Paraguay, Tonga and the United Kingdom, while responses to questions had been circulated from Honduras, the Kyrgyz Republic, Rwanda, the Solomon Islands and Togo. In addition, the Committee had received and circulated additional questions and responses from the European Union.
To date, 108 members have notified their national legislation on customs valuation and 75 members have notified responses to the checklist of issues. Twenty-nine members have not yet made either of these two notifications.
Under Article 22 of the Customs Valuation Agreement and the Decision on “Notification and circulation of national legislation in accordance with Article 22 of the Agreement”, WTO members must submit the complete texts of their national legislation on customs valuation in one of the three official WTO languages. They should also inform the Committee of any changes in their laws and regulations relevant to this Agreement and in the administration of such laws and regulations.
Under the standing agenda item of preshipment inspection (PSI), the Committee addressed four issues: the status of notifications, questions and responses regarding notifications, information on PSI programmes and the fifth triennial review of the PSI Agreement.
Members took note of the compilation of PSI notifications. Since the last meeting, notifications had been received from Afghanistan, the Central African Republic, Montenegro and Ukraine. The current status of all PSI notifications is contained in the updated document G/PSI/N/1/Rev.5.
With regards to the fifth triennial review of the PSI Agreement, the chair anticipated this exercise could be concluded at the next Committee meeting in October. The WTO Secretariat will be requested to produce a factual report for the Committee’s consideration.
The Office of the United States Trade Representative submitted a proposal to the WTO bringing attention to the use of forced labor on fishing vessels. The proposal urges WTO Members to help address this global problem in the ongoing negotiations to curb harmful subsidies to fishing activities that may be associated with the use of forced labor, such as illegal, unreported, and unregulated fishing.
“Forced labor harms the lives and well-being of fishers and workers around the world and it must be eliminated,” said Ambassador Katherine Tai.
In addition to the human cost, forced labor gives fishing vessels who engage in the practice an unfair cost advantage. It also exacerbates overfishing and the depletion of the world’s oceans. Recognizing the link between forced labor and the harmful subsidies that may also go to these vessels is an important step in tackling this pervasive problem.
The U.S. proposal also calls for WTO Members’ explicit recognition of the forced labor problem and the need to address it, and proposes additional transparency with respect to those vessels or operators that use forced labor.
Members of the Informal Working Group on Trade and Gender exchanged information on national experiences and approaches to increasing the participation of women in trade at a meeting on 28 April. Members highlighted the importance of training, data collection and mainstreaming gender considerations in trade negotiations and policy design as among key practices to ensure women reap the benefits of trade.
In line with the Informal Working Group’s work plan, members at their second meeting of the year focused on sharing national and regional initiatives to address challenges faced by women traders as potential guidance for others.
Ecuador reported on the trading experience of the Association of Waorani Women of the Ecuadorian Amazon, who make cacao and palm fibre products in order to shift away from the unsustainable hunting of wildlife. Turkey presented its export training and networking programmes for women and young entrepreneurs, noting that 92% of training participants were encouraged to include export activities in their business plans afterwards. Canada shared its experience applying gender-based analysis to trade agreements to help negotiators and policymakers assess how diverse groups of women and men would be impacted. Mauritius reported on its experience securing the welfare of women avocado farmers in agricultural negotiations as well as efforts by the government and development partners to assist women entrepreneurs.
The United Nations Conference on Trade and Development (UNCTAD) relayed findings from its gender impact analysis of economic integration in the East African Community and Southern Common Market. The Economic Commission for Latin America and the Caribbean (ECLAC) reported on the trade impact of COVID-19 on women, noting that 57% of working women in Latin America are employed in sectors with higher risk of economic disruption compared to only 41% of working men.
Members also heard suggestions from the Co-Chairs — Botswana Ambassador Athaliah Lesiba Molokomme, El Salvador Ambassador Ana Patricia Benedetti Zelaya and Iceland Ambassador Harald Aspelund — on a contribution of the Group at the 12th Ministerial Conference, which will take place in the week of 29 November. Following the meeting, on 30 April, the Co-Chairs issued a proposal for a “framework to deliver an ambitious ministerial outcome on trade and gender for MC12 and beyond” (INF/TGE/W/3). Members intend to discuss the issue further at the next meeting on 23 June, where they will also focus on considering the concept and scope for a “gender lens” and how it could apply to the work of the WTO.
The group was established in September 2020 (WT/L/1095/Rev.1) as the next phase of an initiative launched at the 11th Ministerial Conference in 2017 in Buenos Aires, where the “Joint Declaration on Trade and Women’s Economic Empowerment” was signed. Currently 127 members and observers support the Declaration.