WTO economies from mid-October 2020 to mid-May 2021 exercised trade policy restraint and refrained from an acceleration of protectionism that would have further harmed a world economy reeling from the COVID-19 pandemic, according to the director-general’s mid-year report on trade-related developments presented to members on 29 July.
The report calls on WTO members to ensure that markets remain open and predictable, and warns that failing to ensure wider access to COVID-19 vaccines could undermine the global economic and trade recovery.
Presenting the report to members, WTO Director-General Ngozi Okonjo-Iweala said the report clearly suggests that trade policy restraint by WTO members has helped limit harm to the world economy.
“However, some pandemic-related trade restrictions do remain in place and the challenge is to ensure that they are indeed transparent and temporary,” he said.
“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 the 12th Ministerial Conference (MC12).”
The report highlights that 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. Strong monetary and fiscal policy support from governments, and the arrival of effective vaccines against COVID-19, have been important factors in the rebound. Leading indicators point to a sustained expansion of merchandise trade in the first half of 2021.
Despite these relatively positive developments, the report draws attention to the serious threat that COVID-19 continues to pose to the global economy and to public health, as vaccine production remains insufficient, contributing to significant disparities in access across countries. This is especially true for low-income developing economies, which are struggling to obtain enough doses to inoculate more than a small fraction of their populations.
The report, which was reviewed at a meeting of the WTO’s Trade Policy Review Body, notes that since the outbreak of the pandemic, 384 COVID-19-related trade measures in the area of goods have been implemented by WTO members, of which 248 (65%) were of a trade-facilitating nature and 136 (35%) could be considered trade restrictive. Several of these measures, originally introduced in immediate response to the pandemic, have been extended during the review period (mid-October 2020 to mid-May 2021).
Export restrictions accounted for 84% of all restrictive measures recorded. The reduction or elimination of import tariffs and import taxes accounted for 60% of trade-facilitating measures taken, and several members reduced their tariffs on a variety of goods such as personal protective equipment (PPE), sanitizers, disinfectants, medical equipment and medicines/drugs. Some members and observers severely affected by successive waves of the pandemic have also eliminated import tariffs on certain goods necessary to fight COVID-19, such as oxygen, oxygen canisters, and active substances.
Measures implemented in response to the pandemic continued to be repealed. As of mid-May 2021, around 21% of COVID-19 trade-facilitating measures and 54% of the COVID-19 trade-restrictive measures had been terminated, suggesting a swifter roll back of trade-restrictive measures. The trade coverage of COVID-19-related trade-facilitating measures implemented since the beginning of the pandemic was estimated at USD 291.6 billion, while that of the COVID-19-related trade-restrictive measures stood at USD 205.8 billion. According to preliminary estimates by the WTO Secretariat, the trade coverage of the trade-facilitating measures still in force (USD 179.6 billion) remains higher than that of the trade-restrictive measures (USD 106.0 billion).
In response to the social and economic impacts induced by the pandemic, WTO members and observers continued to implement COVID-19-related economic support measures. Since the beginning of the pandemic, more than 1,500 COVID-19-related economic support measures have been put in place by 106 members and four observers. The unprecedented number of COVID-19 economic support measures put in place since the beginning of the pandemic far exceeds the activity seen in the wake of the global financial crisis.
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, fiscal and financial measures to support businesses and micro, small and medium-sized enterprises (MSMEs) as well as broader stimulus packages. Most of these measures appeared to be temporary in nature even if some implemented in the early stages of the pandemic have been extended in 2021.
Regarding measures unrelated to the pandemic, WTO members implemented during the review period 61 new trade-facilitating measures on goods and 70 new trade-restrictive measures. The estimated trade coverage of the import-facilitating measures introduced during the review period was USD 445 billion (down from USD 731.3 billion in the previous period), significantly exceeding the trade coverage of import-restrictive measures estimated at USD 127.1 billion (down from USD 440.9 billion in the previous period). This suggests a return to the regular trend identified since the beginning of the trade monitoring exercise in 2009. Deviation from this trend was the result of an escalation of bilateral trade tensions or, as reported in November 2020, a significant drop in the implementation of non-COVID-related trade policies observed in the second half of 2020.
Members also introduced 122 non-COVID-19-related measures affecting trade in services of which most were trade facilitating in nature. However, 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.
