Trade policy restraint by G20 economies, as well as WTO members more broadly, prevented a destructive acceleration of protectionist trade measures that would have further hurt the world economy, according to the WTO’s latest Trade Monitoring Report. But WTO Director-General Ngozi Okonjo-Iweala cautioned that obstacles to trade remain in place and continue to undermine global efforts to increase and diversify the production of vaccines.
“The multilateral trading system has again proven its value. As was the case during the global financial crisis more than a decade ago, the system has been a solid and effective bulwark against any acceleration of protectionism as we face the worst economic and health crisis in generations. As the world struggles to overcome the enormous human, economic and social impact of the pandemic, we must not be complacent. Trade recovery will not be sustainable unless vaccine equity is assured,” said the Director-General.
“While the report’s findings indicate trade-restrictive measures are coming down, G20 economies have more work to do to ensure the free flow of the medical inputs and supplies critical to saving lives. Trade restrictions hamper our efforts to ramp up production, particularly in the developing world, and ensure the equitable distribution of vaccines. Vaccine policy is trade policy and we must do everything we can to prevent a resurgence of the pandemic, which would significantly jeopardize the global economic recovery. At this juncture, G20 leadership will be crucial in underpinning a return to strong, sustainable and inclusive growth.”
The 25th WTO Trade Monitoring Report on G20 trade measures comes as the world continues to battle the COVID-19 pandemic. The mid-October 2020 to mid-May 2021 review period covered in this report provides important insight into a number of areas as countries begin addressing the challenges of a post-pandemic economic recovery. In particular, the past several months saw international cooperation and coordination among nations and intergovernmental organizations increase and intensify.
The report indicates that trade has been a force for good during the pandemic by enabling access to medical supplies. Despite the value of global merchandise trade shrinking by more than 8% in 2020, trade in medical supplies increased by 16%, and personal protective equipment (PPE) by 50%. The report also notes that the multilateral trading system has kept trade flowing, with the WTO playing a central role in ensuring that supply chains are kept open and restrictive trade policies are avoided.
However, COVID-19 continues to pose a serious threat to the global economy and to public health. Production of vaccines has been slow and distribution uneven, contributing to significant disparities in access across countries, particularly for low-income developing economies, which are struggling to obtain enough doses to inoculate more than a small fraction of their populations.
In terms of numbers, G20 economies implemented 140 trade and trade-related measures in the area of goods since the outbreak of the pandemic – 101 (72%) of a trade-facilitating nature and 39 (28%) of a trade-restrictive nature. The reduction or elimination of import tariffs and import taxes made up 60% of trade-facilitating measures taken, and certain G20 economies reduced their tariffs on a variety of goods such as PPE, sanitizers, disinfectants, medical equipment and medicine/drugs. During the review period, three G20 economies temporarily eliminated their import tariffs on COVID-19 vaccines, thus bringing to ten the total of G20 members with zero rate most favoured nation (MFN) applied tariffs in this sector. Export bans accounted for more than 90% of all restrictive measures recorded.
G20 economies also continued to repeal measures implemented in response to the pandemic and, as at mid-May 2021, around 22% of COVID-19 trade-facilitating measures by G20 economies and 49% of the COVID-19 trade-restrictive measures had been terminated. The trade coverage of COVID-19-related trade-facilitating measures implemented since the beginning of the pandemic was estimated at USD 215.7 billion, while that of the COVID-19-related trade-restrictive measures stood at USD 135.7 billion. According to preliminary estimates by the WTO Secretariat, the trade coverage of the trade-restrictive measures still in force (USD 98.8 billion) was slightly higher than that of trade-facilitating (USD 96.5 billion), suggesting that in terms of trade coverage the roll back of the trade-facilitating measures was swifter than the roll back of trade-restrictive measures.
For products unrelated to the pandemic, G20 economies implemented 35 new trade-facilitating measures and 26 new trade-restrictive measures. The monthly average of trade-facilitating measures was the third-lowest recorded since 2012 and that of trade-restrictive measures the second-lowest since 2012. The estimated trade coverage of the import-facilitating measures introduced during the review period (USD 438 billion) significantly exceeded the trade coverage of import-restrictive measures (USD 123.89 billion), suggesting a return to the regular trend identified since the beginning of the trade monitoring exercise in 2009.
During the review period, the extension of COVID-related stimulus measures exceeded spending during the global financial crisis, but the pace of spending slowed down, and most measures appeared to be of a temporary nature. Since the beginning of the pandemic, G20 economies have communicated 618 COVID-19 support measures to the WTO, and another 290 measures were identified from public sources and governmental websites. These measures included grants, loans or stimulus packages targeting sectors of the economy heavily affected by the crisis, including agriculture, health, aviation, transport, tourism, education and culture, and also fiscal and financial measures to support businesses and micro, small and medium-sized enterprises (MSMEs). The WTO has been monitoring the support packages since the beginning of the pandemic with broad support by G20 economies and the WTO membership for transparency purposes.
The services sector in all G20 economies has been hit hard by COVID-19 and many of the measures affecting trade in services put in place early during the pandemic were extended to address the challenges which the sector continues to face. However, the rate of new services measures introduced by G20 economies since the third quarter of 2020 slowed significantly.
In addition, initiations of trade remedy investigations reached its lowest level after marking its highest peak in 2020. The monthly average of trade remedy initiations (15) was the lowest recorded since 2012.