SPEECHES — DG NGOZI OKONJO-IWEALA
Thank you very much your Excellency, Ambassador Molokomme, and thank you for the work you are doing in chairing this Committee. And I want to thank Willy and his team for the good work.
I am pleased to join you today to take stock of recent trade policy developments. The report I am going to present is a little bit long so I'll ask you to bear with me as it contains quite a bit of details, but I think you'll find them interesting. The actual report itself is quite long so this is a good attempt at a summary.
You will have seen my Report which was circulated to members on 13 July, in document WT/TPR/OV/W/15.
The Report looks at major developments in trade policy between mid-October 2020 and mid-May 2021. It includes dedicated sections on measures related to the ongoing COVID-19 pandemic. It will be followed later this year by my annual Report on developments of the international trading environment.
Let me give you some background. Since this exercise started in 2009, it has become an important factual transparency tool for members as Ambassador Molokomme outlined. As you are well aware, the contents of this Report have no legal effect on the rights and obligations of WTO members. The Report does not question the explicit right of members to adopt certain trade measures.
The continuing ambition of this exercise is to reinforce transparency and predictability in collaboration with our stakeholders, you the members.
Transparency and predictability reduce uncertainty and foster confidence. This is important in an institutional sense, since fostering predictability in international markets is one of the WTO's core functions. But it also matters for businesses and consumers, as well as policymakers.
The information included in the Report reflects inputs submitted by members and observers, as well as information from other official and public sources.
For this mid-year Report, 93 members replied to my initial request for information. This represents about 57% of the membership, covering almost 94% of world imports. I would like to thank all delegations that participated in this exercise, despite challenges related to the pandemic.
In accordance with the long-standing practice of the WTO Trade Monitoring Exercise in verifying information and measures with members, the WTO Secretariat has adapted to the urgency of the current context and implemented an ad hoc continuous real-time verification process for COVID-19-related measures. Many members have cooperated efficiently, confirming measures and providing official sources and additional information. However, participation in the verification process remains uneven. In several instances the Secretariat received only partial or late responses. We must endeavour to ensure that this exercise remains as accurate, inclusive and comprehensive as possible. The Secretariat remains available to help facilitate your participation.
Before going into the main findings of the Report, let us remind ourselves about its overall context: the COVID-19 pandemic, and the need to ensure a strong and inclusive economic and trade recovery.
This Report clearly suggests that trade policy restraint by WTO members has helped limit harm to the world economy. The Report provides ample evidence that members have, by and large, heeded the call to refrain from imposing trade restrictive measures on products and services necessary for combating COVID-19. WTO members deserve credit for this restraint.
Trade has been a force for good by enabling access to medical supplies. Despite the value of global merchandise trade shrinking by around 8% in 2020, trade in medical supplies increased by 16%, and personal protective equipment (PPE) by nearly 50%. However, some pandemic-related trade restrictions do remain in place, and the challenge is to ensure that they are indeed transparent and temporary.
The multilateral trading system has helped keep trade flowing, and provided members with a well-established platform for sharing information and experiences, and discussing trade-related policies they have taken in response to the pandemic. WTO committees have worked intensively to address COVID-19-related issues and their impact on international trade. I am firmly convinced that it is in our collective interest to remain committed to enhancing transparency — to give policymakers as well as businesses information to make informed decisions.
Turning now to recent developments in the global economy, world trade and output have recovered faster than expected since the second half of 2020 after falling sharply during the first wave of the pandemic. The WTO's most recent forecast expects the volume of merchandise trade to increase by 8% in 2021 and 4% in 2022.
Merchandise trade volumes surpassed pre-pandemic levels earlier this year. Commercial services trade has been slower to recover, weighed down by travel and transport restrictions.
As with overall economic output, trade performance is diverging significantly across regions, with unequal access to COVID-19 vaccines a major factor in the disparities. This is especially true for low-income countries, where barely over 1% of their populations has received even one dose, and are still struggling to obtain enough doses to inoculate more than a small fraction of their populations. Failure to ensure global access to vaccines poses a serious threat to the global economy and to public health.
Some of the most interesting findings in the Report deal with pandemic-related trade measures.
Since the outbreak of the pandemic, members have implemented 384 COVID-19 related trade measures in the area of goods. A total of 248 of these, or about 65%, were of a trade facilitating nature, mostly import tariffs and tax cuts on goods needed to fight COVID-19 such as PPE, disinfectants, medical equipment, medicines and oxygen.
The remaining 136 could be considered trade restrictive, and 84% of them - that is, 114 measures, were export restrictions.
The value of goods covered by COVID-19-related trade-facilitating measures implemented since the beginning of the pandemic significantly exceeded that covered by the restrictions - $291.6 billion to $205.8 billion.
Over time, WTO members have also repealed many of the pandemic-related measures; that is 54% of the restrictive measures and 21% of the facilitating measures.
More specifically, 57% of the 114 export restrictions had been repealed as of mid-May. About 50 such export restrictions remain in place — several of them, as we recently learned, with potential implications for vaccine ingredients and inputs.
Nevertheless, the trade coverage of trade-facilitating measures still in force ($179.6 billion) remains higher than that of restricting measures ($106.0 billion)
WTO members and observers continue to provide COVID-19 related economic support measures to mitigate the social and economic impacts induced by the pandemic. As of mid-May 2021, more than 1,500 COVID-19-related support measures had been implemented by WTO members and observers, of which 930 have been communicated directly to the WTO Secretariat.
The number of COVID-19 support measures put in place since the beginning of the pandemic is unprecedented, far exceeding the activity seen in the wake of the Global Financial Crisis. Most of these measures appear to be temporary in nature even if some early measures have been extended in 2021. Overall, the pace of new support measures has decreased during the most recent review period.
Support programmes by intergovernmental organizations, regional development banks, or through bilateral assistance have complemented governmental support measures. These programmes have come in the form of grants, loans, vaccination roll-out programmes or vaccine donations, as well as credit and funding arrangements to reduce debt vulnerabilities in low-income countries where the pandemic has created urgent financing needs.
With respect to trade in services, WTO members and observers implemented 147 COVID-19 related measures since the outbreak of the pandemic. Several have been terminated and the pace of new COVID-19-related services measures has trended downwards since the third quarter of 2020.
In the area of intellectual property, 71 IP-related measures were introduced by WTO members since the outbreak of the pandemic, including measures aimed at facilitating the development and dissemination of COVID-19-related health technologies, as well as at relaxing procedural requirements for administrative IP matters.
Before turning to measures unrelated to the pandemic, I want to stress the importance of regular monitoring for transparency and predictability, and to thank you for your cooperation and input. But I also want to say that we can and must do better — too many measures continue to go un-notified, despite members' commitment to notify all relevant measures.
Transparency, including on pandemic-related trade measures, will support our return to a strong, sustainable, balanced and inclusive growth, with strengthened supply chains, diversified global vaccine manufacturing capacity and equitable access to vaccines.
We will, of course, continue to monitor COVID-19 related developments, including in the year-end Trade Monitoring Report.
Now, let me turn to the other findings of the Report.
WTO members and observers also put in place regular measures unrelated to the pandemic, in the area of goods, services and intellectual property.
In the area of goods, the mid-October to mid-May review period saw more trade-restrictive measures (70) than trade-facilitating measures (61). However, the trade coverage of the new import-facilitating measures, at USD 445 billion, significantly exceeds the trade coverage of the import-restrictive measures, which is around USD 127 billion.
This suggests a return to the trend seen for several years after this monitoring exercise began in 2009, namely, that members introduced new trade restrictions every year, but also introduced trade-facilitating measures covering an even higher value of trade. This changed a few years ago amid escalating trade tensions among major economies, which saw a large jump in the coverage of trade-restricting measures. And then, when COVID-19 struck, the number of new non-COVID related trade measures fell sharply in the second half of 2020, as governments turned their attention towards the pandemic.
That said, the stockpile of import restrictions in force has continued to steadily grow since 2009, both in value terms and as a percentage of world imports. At the end of 2020, some 9% of world imports were affected by import restrictions implemented since 2009.
With respect to trade remedies, the Report shows that trade remedy initiations by WTO members, after peaking in 2020, fell to a record low during the review period. Not all trade remedy initiations lead to the imposition of duties, but trade remedy actions remain an important trade policy tool for WTO members, accounting for 67% of all non-COVID-19 related trade measures on goods recorded in the Report.
Members also introduced 122 regular, that is, non-COVID-19 related, measures affecting trade in services during the review period. Most of these were trade facilitating in nature, though some new policies appeared to be trade restrictive, including measures affecting communication and network enabled services, and policies pertaining to the screening of foreign investment in areas deemed strategic.
On other fronts, the Report provides evidence that members continue to use the SPS and TBT Committees' transparency mechanism to notify their SPS and TBT measures and discuss — and often resolve — specific trade concerns without having to go to litigation. It also outlines the numerous trade issues and concerns (other than SPS and TBT measures) that members have raised in WTO bodies.
On the positive side, this illustrates the value of regular WTO committees as constructive platforms for members to address such concerns. However, some of the concerns raised had already come up before, suggesting some issues remain persistently unresolved.
Finally, the Report covers several other important trade-related developments and discussions that took place during the review period, including fisheries subsidies, electronic commerce, investment facilitation, women's economic empowerment, domestic regulation in services and micro, small, and medium-sized enterprises (MSMEs). The Report also notes the continuing deterioration of trade finance markets in 2020.
These are some of the principal findings that I wanted to highlight today. Preparing this Report was challenging, but I believe the finished product demonstrates members' general commitment to transparency and the value we all see in enhancing transparency in the operation of international trade.
This Report underscores how the Multilateral Trading System has shown resilience despite the severity of the global health and economic crisis caused by the COVID-19 pandemic.
As a platform for transparency, the WTO has a central role to play in ensuring that supply chains are kept open — which is an essential part of increasing vaccine production and distribution on the scale needed to end the pandemic.
WTO members must show collective leadership, act to ensure that markets remain open and work together to achieve a successful outcome at MC12. These were some of the things asked of us when we had the vaccine manufactures.
So, let me again thank the large number of delegations that have responded to my request for information — including for COVID-19-related. I also want to thank my Secretariat team for their excellent work in putting this Report together, and in keeping our dedicated COVID-19 webpage regularly updated. Again, I want to thank the chairperson, Ambassador Molokomme, and all of you for your interest.
I look forward to your continued cooperation in further enhancing this mechanism so that the WTO continues to foster transparency and predictability in the global economy.
Thank you very much.