Digest Content
- World Trade Report 2020 – Government policies to promote innovation in the digital age
- DDG Wolff: “WTO reform is both necessary and feasible”
- EIF launches virtual campaign to help ramp up trade in least-developed countries
- WTO to host first Trade for Peace Week
World Trade Report 2020 – Government policies to promote innovation in the digital age
In recent years, a growing number of governments have adopted policies aimed at supporting the transition towards a digital economy. The World Trade Report 2020 looks at these policy trends and at how trade and the WTO fit with them.
Trade and trade policies have historically been important engines for innovation. In particular, the multilateral trading system has contributed significantly to the global diffusion of innovation and technology by fostering predictable global market conditions and by underpinning the development of global value chains. As data become an essential input in the digital economy, firms rely more on intangible assets than on physical ones, and digital firms are able to reach global markets faster without the amount of physical investment previously necessary in other sectors. Success in the digital economy will depend on openness, access to information and communication technology (ICT) goods and services, collaboration on research projects, and the diffusion of knowledge and new technology.
The World Trade Report 2020 shows that international cooperation can play a significant role in making the pursuit of digital development and technological innovation more effective, while minimizing negative spill-overs from national policies. The WTO agreements, reached a quarter of a century ago, have proved to be remarkably forward-looking in providing a framework that has favoured the development of ICT-enabled economies across all levels of development. Further international cooperation at the WTO and elsewhere would enable continued innovation and reduce trade tensions, helping international markets function more predictably. Published in 2020:
https://www.wto.org/english/res_e/booksp_e/wtr20_e/wtr20_e.pdf
DDG Wolff: “WTO reform is both necessary and feasible”
Speaking at the “1+6” roundtable meeting presided by Chinese Premier Li Keqiang on 24 November, Deputy Director-General Alan Wolff urged WTO members to begin serious engagement on improving the WTO, arguing there was enough common ground to reach major new agreements. He also called on China to participate actively and contribute positively to planning far-reaching WTO reforms. In a separate press statement, DDG Wolff said all WTO members should contribute to improving the WTO, but that the largest trading nations have greater capacity to influence outcomes.
WTO Members have in recent years struggled to find solutions to challenges facing the organization. The negotiating function of the WTO is largely dormant. And WTO dispute settlement is not functioning as intended.
The fundamental reasons for the WTO’s problems are political and diplomatic in nature. They are the kinds of problems that leaders are chosen for their ability to solve – in China as well as in the WTO’s 163 other Members.
All WTO Members, regardless of size, have a valuable contribution to make to improving the WTO. At the same time, the largest trading nations have greater capacity to analyse, to propose, to influence outcomes.
China has the ability to play a major role in the shaping of world trade. Whether it is about disciplining fisheries subsidies or limiting the use of trade distorting domestic support for agriculture, China is essential to any viable solution to these problems, as are its major trading partners.
While over three-quarters of world trade is conducted under the terms of the WTO, the institution’s rulebook is out of date for the modern digital economy. Fortunately, this gap is being addressed in a joint initiative on e-commerce, in which China and a broad coalition of trading nations are participating. These negotiations must result in broad and meaningful rules essential to foster continuing growth of the global economy.
China has shown leadership in being a co-initiator of an important discussion on tackling plastics pollution. It is a supporter of the WTO accessions process and cotton development assistance.
I urge China broaden its engagement in the WTO, to be more active on a broader range of new agreements that would improve the outlook for all nations. There are areas of common ground, despite what UN Secretary General has termed “geostrategic tensions”. These notably include general agreement that
• Trade should facilitate essential goods and services to combat the pandemic.
• Trade policy become a means to spur a global economic recovery.
• Trade should play its part in dealing with climate change.
As a country that has experienced spectacular growth since it joined the WTO nearly two decades ago, China has experienced first-hand the benefits of the multilateral trading system. Now that system needs its support, working with others.
Fundamental WTO reform is both necessary and feasible. China should lead, participate and contribute positively to planning far-reaching WTO reforms.
EIF launches virtual campaign to help ramp up trade in least-developed countries
The Enhanced Integrated Framework (EIF) launched a digital campaign in October aimed at encouraging businesses in least-developed countries (LDCs) to share how the COVID-19 pandemic is affecting their participation in global value chains. Twelve businesses from 12 LDCs have shared their experiences so far.
The campaign, entitled #PowerUpTrade, will run until the end of 2020 and will give entrepreneurs in LDCs an opportunity to explain how the crisis has directly affected their businesses by disrupting global value chains. The objective is to raise awareness of the bottlenecks and successes of traders in the world’s poorest countries and to reflect on ways to improve the inclusiveness of global value chains.
The pandemic has shown that crises affecting the multilateral trading system can have knock-on effects on companies and workers in LDCs across the world. This is due to the limited resilience of LDCs to issues affecting supply chains, markets, harvests and logistics.
The EIF is the only multilateral partnership dedicated exclusively to helping LDCs use trade as an engine for growth, sustainable development and poverty reduction. It is a unique global partnership between LDCs, donors and partner agencies, including the WTO, which work together to build trade capacity in LDCs.
WTO to host first Trade for Peace Week
The WTO will host the first edition of the Trade for Peace Week from 30 November to 4 December 2020. Ten virtual panel sessions will explore the nexus between trade and peace, with the focus on fragile and conflict-affected countries in accession which want to use trade and economic integration to promote sustainable and inclusive peace.
In announcing the Trade for Peace Week, Deputy Director-General Alan Wolff noted: “The 2030 Agenda for Sustainable Development recognizes international trade as an engine for inclusive economic growth and poverty reduction that contributes to the promotion of sustainable development. This in turn can facilitate building and maintaining peace. The connection between trade and peace is the raison d’être for the creation of the rules-based multilateral trading system that led to economic recovery and prosperity after the devastation from World War II.”
Currently, 23 countries are in the process of joining the WTO, and over a half of them suffer from a fragile situation from years of conflicts. Launched in 2017, the Trade for Peace initiative aims to assist fragile and conflict-affected (FCA) countries through WTO accession, with the emphasis on institution building based on the principles of non-discrimination, predictability, transparency and the rule of law. Based on experiences of former FAC countries, WTO accession can help set the conditions to move out of a state of fragility or conflict into a state of stability, economic well-being and peace.
Each session is organized in collaboration with a partner with distinct expertise and experience which can make a unique contribution to the trade for peace debate. A broad range of topics relevant to trade and peace are covered, including the use of technology, the role of business, empirical work, job creation, and challenges in the times of COVID-19. Some sessions will have a special focus on countries or a region involved in WTO accession, such as Iraq, Libya, Somalia, Yemen and the Horn of Africa.