Trade and development

Research on natural disasters and trade

A research project approved by WTO members in April 2018 has resulted in two studies looking into the impact of natural disasters on trade. The first study examines the economic and trade impact of natural disasters, with a particular focus on six disaster-affected countries: Dominica, Fiji, Nepal, Saint Lucia, Tonga and Vanuatu. The second study looks at the measures that governments can take under the scope of WTO agreements to support disaster recovery and to improve resilience to future disasters. The research was funded by the Permanent Mission of Australia to the WTO.

Overview

In April 2018, WTO members approved a research project aimed at examining the trade effects of natural disasters. The research focused on disasters arising from geological or geophysical hazards, such as earthquakes and volcanic eruptions, and hydro-meteorological hazards, such as droughts and flooding.(1)

The project combined desk study with field research in six disaster-affected countries: Dominica, Fiji, Nepal, Saint Lucia, Tonga and Vanuatu. The research is compiled in two studies.

Study 1 examines the frequency and distribution of natural disasters and analyzes their economic and trade effects, both at a macroeconomic and sectoral level. It provides in-depth analysis of the impacts of these disasters on each of the six countries covered by the field research. The study also includes summaries of the four symposia organized at the WTO on this topic.

Study 2, authored by Giovanna Adinolfi, Professor of International Law at the University of Milan, maps the economic and trade issues identified in Study 1 in the context of WTO agreements, highlighting that a wide range of actions can be taken to support recovery and resilience to future disasters under these agreements. 

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The study stresses there is significant potential to support preparedness for natural disasters, particularly in the area of trade policy, and to mitigate negative trade effects.

When hit by a disaster, WTO members frequently need urgently to approve temporary “derogations” from existing legislation to tackle trade issues. This is both time-consuming and costly for the government and the other parties concerned. Improving legislation in advance, such as adapting trade policy measures to take account of the consequences of natural disasters, would improve resilience.

The trading partners of disaster-affected countries can also give advance consideration to how to support recovery and reconstruction through their trade policy regimes. This may mean refraining from measures that would restrict the trade of the disaster-affected countries or taking positive action to facilitate the trade of a disaster-affected country by encouraging exports from that country.

Such actions should be informed by WTO disciplines to ensure that WTO members remain within their legal commitments. The report highlights these obligations and how they may inform measures to address the trade issues identified in the country research.

The report identifies measures that members can take as well as those they should avoid. It looks in particular at the measures that can be taken by a disaster-affected country in relation to the imports of goods and services as well as the measures that can be taken by the trading partner(s) of a disaster-affected country regarding the goods and services exported by that country.

WTO symposia

Four symposia on natural disasters and trade took place at the WTO as part of the research project.

Background

The number of natural disasters, such as droughts, has been on the rise in recent years (see Figure 1). The IMF has suggested that the economic damage resulting from natural disasters has grown from USD 70 billion per year on average in the 1990s to USD 113 billion per year since 2000. 

Figure 1: Natural disasters 1980-2018

Source:   Emergency Events Database

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Notes:

  1. The research was commissioned and published before the COVID-19 crisis. It does not examine the impact of this pandemic. back to text

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