TRADE AND DEVELOPMENT
A study on how natural disasters affect trade in goods and services was presented at the symposium. The speakers highlighted the vital role that imports play in disaster recovery and reconstruction.
While natural disasters can affect all WTO members, small economies tend to struggle with the effects due to pressure on their balance of payments and accumulation of reconstruction debt. Since 1980, the study finds, high-income countries have recorded the highest losses as measured in USD billion in asset damage, but such losses tend to be a far higher percentage of Gross Domestic Product (GDP) for small economies. In 2017, damage caused by Hurricane Maria was estimated at 225% of Dominica's GDP.
Speakers explained that natural disasters tend to reduce exports and increase imports of disaster-struck countries. Agriculture-exporting nations saw rapid contraction in external trade after natural disasters, and micro, small and medium sized enterprise (MSMEs) tended to suffer disproportionately.
Natural disasters impact global supply chains, particularly the participation of MSMEs. Just as a chain is as strong as its weakest link, problems along a production chain can quickly spread, reducing output. The impact of localized events can be felt across countries that were not directly touched by the disaster. For example, Thailand's 2015 WTO Trade Policy Review (TPR) mentions the impact on its economy of the Great East Japan Earthquake, and Japan's 2013 TPR discusses supply-chain disruption caused by floods in Thailand. Of the 172 TPRs of WTO members conducted between 2010 and September 2019, 31% make reference to natural disasters.
Research was also presented on the scope that exists under WTO agreements for members to take measures to reduce disaster risk and respond to disasters. For example, the WTO's Trade Facilitation Agreement seeks to streamline customs procedures and could help speed up and facilitate the entry of relief goods and equipment into affected countries. Customs was identified as a frontline agency in the disaster response phase due to its direct interface with international relief providers and humanitarian workers. Striking an appropriate balance between control and facilitation was among the challenges cited.
Other areas examined include the use of "green box" measures (domestic support for agriculture allowed without limits because it does not distort trade, or at most causes minimal distortion) to help farmers hit by hydro-meteorological hazards and using relevant international standards related to technical barriers to trade and sanitary and phytosanitary measures. A range of traded services were identified as important in reconstruction and building resilience. Government procurement was also cited as important for reducing future disaster risk.
Well-functioning and open markets were cited as crucial by the discussants, as was incentivizing future disaster risk reduction through risk-informed investment. Participants called for research results to be disseminated through targeted technical assistance and for a presentation of the results to be made at the next Ministerial Conference in Kazakhstan in June 2020.
The symposium was held as part of a WTO research project launched in April 2018 and approved by WTO members with funding by Australia. The panel included speakers from the University of Milan, the World Bank, the World Customs Organization, the United Nations Office for Disaster Risk Reduction and the WTO.
The programme of the event is available here. A summary report will be added shortly.