To read the full report from the Peterson Institute for International Economics, please click here.

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LDC exports to Canada in 2017 represented just under $4 billion, around one per cent of total Canadian imports (or, more colloquially, about two hours of Canada-U.S. trade.) Their importance lies in their sector specificity; the majority of manufactured exports are apparel. After the 2003 liberalization, Bangladesh and Cambodia became the second and third largest suppliers of apparel to Canada after China, as much an achievement in import diversification for Canada as in export growth for Bangladesh and Cambodia.

Between 2003 and 2017, Bangladesh’s year-over-year exports to Canada grew at an average rate of 22 per cent, Cambodia’s at 58 per cent, Laos at 17 per cent and Nepal at 10 per cent. On the other hand, Canada’s exports to Bangladesh grew six-fold between 2004 and 2018. Bangladesh is now Canada’s fourth largest importer of pulses.

The 2003 market opening was enabled by of a GATT/WTO rule that facilitates preferential arrangements for countries on the United Nations’ Least Developed Countries list; effectively, the world’s poorest countries. Canada’s initiative was a near-impeccable preferential arrangement. It grew trade in both directions between Canada and some low-cost exporters without the bother of negotiations for bilateral free trade agreements, and without significant trade diversion. Together with the EU liberalization (and subsequent liberalizations in several other countries), it contributed to both export-led growth and poverty reduction in some least developed countries.

Canada’s relationship with these LDCs could change shortly. Along with six developing island countries and mineral-rich Angola, Bangladesh, Myanmar, Laos and Nepal are scheduled for graduation from the UN/WTO list of least developed countries (three were eligible as far back as 2018), and Cambodia has begun to meet the criteria for graduation. Graduation could mean the loss of the preferential tariff treatment that contributed to a rapid increase in exports in the last 17 years. Of the countries that are about to graduate, or have been graduated, the developing island countries export very little to Canada. Angola’s mineral exports enter duty free anyway, but the remaining countries – Bangladesh, Myanmar, Laos, Nepal and at some point Cambodia – are now heavily integrated into the Canadian apparel market. Apparel has become the primary manufactured export for most of these countries. Graduation therefore could have consequences for Canadian consumers, and for economic growth and poverty reduction in the countries concerned. Later, we discuss this problem specifically with reference to Bangladesh.

The earliest date for graduation is 2021; the latest date so far is 2024. Canada may agree to Bangladesh’s request for a three-year deferral from 2021, particularly in light of COVID-19’s impact on the economy, or it could follow the EU, which is reportedly considering a phased-in graduation process of three years, 2021-2024. If LDCs graduate, they will be subject to the tariffs and rules of origin of Canada’s General Preferential Tariff (GPT). Graduation is not restricted to Canada and the EU. During the World Trade Organization’s Doha round of multilateral trade negotiations, several WTO members offered similar concessions; graduation from the LDC list will require WTO members to consider whether to extend or terminate preferential treatment for the graduating LDCs.

Canada can continue duty-free treatment – to grandfather the zero tariff and maintain LDC treatment for as long as it deems desirable. It is also in Canada’s interests to do so; the relationship with the Asian LDCs has been a win-win for both sides. Graduation could cost Canadian consumers and exporters alike and if both the EU and Canada graduate these countries, it could stall economic growth and poverty reduction efforts in the LDCs.

This paper maintains that while COVID-19’s impact makes a short-term deferral likely, it makes more sense to look long term at both the trade and development implications of graduation for both Canada and the LDCs. It recommends that Canada continue preferential treatment for an extended period of time or simply leave the low tariffs in place.

Fauzya Moore is an Ottawa-based consultant and writer. She has worked as a Senior
Economic Advisor at the various iterations of Global Affairs Canada, and also as a Senior Advisor on Governance at the Treasury Board of Canada. She is also a graduate of the Harvard Kennedy School (2009) where she held both a Fulbright scholarship and a fellowship from the Ash Centre for Governance and Innovation. She has worked in both the developed and developing world.

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If all were as it should be, I would not be joining this virtual meeting via a cell phone as the Wi-Fi is down in our area.

If all were as it should be, the person joining you today would be the first woman Director-General of the WTO since its founding 25 years ago, and for that matter the first woman Director-General of the multilateral trading system, created 73 years ago.

We can conclude, with the first wave of the pandemic having passed for some areas, and the second wave beginning here in Geneva, that the trading system is enduring despite the added stresses placed upon it.

The trading system performed better than expected during the second quarter with respect to merchandise trade, but there is limited comfort to be had in this statement.

• Global trade saw a modest uptick in recent months, a function of extraordinary fiscal and monetary measures as well as the fact that trade restrictions have been confined to a limited number of sectors and products.
• The decline in world merchandise trade – still serious when last forecast at 9% -was better than our most optimistic outlook earlier in the year. 
• However, services trade declined by 30% over the 12 months to the second quarter of 2020, with travel and tourism hit particularly hard, and the present prospects are at best clouded.

So far, the trade recovery has been stronger on the supply side than on the demand side: a strong, sustained global recovery also requires robust demand. While there were some positive signs of this in the September data, the continuation of the incidence of COVID-19 infections and the measures taken to counter risks to health place the strength and timing of recovery of world trade in doubt.

• The global response to the pandemic has not yet succeeded in curbing either the threat to health or the ongoing damage to the global economy.
• It is far from clear that we will return to pre-pandemic trajectory at all, and not in 2021.
• Trade policy decisions, as well as other economic policy choices, will matter.

The bottom line –

• While the pandemic exposed some of the fragilities that come with economic interdependence, it has also revealed considerable strengths. For example, trade has been a key means of ramping up access to medical supplies.
• Value chains have shown a surprising degree of resilience: preliminary data suggest global trade in intermediate goods has fallen less sharply than trade in final goods – implying that value chains now account for a higher share of world merchandise trade than they used to.
• For the large-scale refrigeration capacity needed to roll out a future COVID-19 vaccine, it will not make sense to try to develop new national supply chains for specialized cold chain equipment. It would be more effective to leverage existing supply chains.
• Even the world’s most sophisticated economies rely on others for certain medical goods, not to mention agricultural products.
• While the trading system alone cannot solve the problems facing the world, it can assist in providing solutions.  Functioning well, the WTO can be a forum in which to bridge differences and build trust. 
• More trade, not less, will bring essential medical supplies, drugs, and soon, we earnestly hope, vaccines to where they are needed. 
• More trade, not less, will assure food security in the face of both the pandemic and severe climate events.
• More trade, not less, will play a key role in delivering economic growth as it has over the last seven decades.
• Closing off markets would only make us more vulnerable, and less prosperous.
• Broadly open international markets are essential and must be anchored in cooperatively determined rules.

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Ambassador Alan Wm. Wolff is Deputy Director-General of the World Trade Organization

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This report is the fifth in what is now an annual update on the state of sustainable markets. It shares the latest data on area, production volume and producers for 14 major standard-setting organizations focusing on eight commodities and forestry.

Features of the current market context are continued growth, expanding coverage of agricultural land and dominance in some sectors of single-sector standards, as outlined below. Among the focal points of this year’s report.

Highlights

The big four: cotton, cocoa, oil palm and coffee

• In 2018, cotton continued to have the largest certified area, followed by cocoa, oil palm and coffee.
• For cocoa, the certified area was at least 3.2 million hectares and reached a global share of the total cocoa area of at least 27%, with 25% of the global cocoa area UTZ-certified. In 2018, at least 5.9 million hectares or at least 18% of the global cotton area was certified, with 13% by BCI alone. Certified oil palm (2.9 million hectares) accounted for at least 15% of the global oil palm area, almost all of which was RSPO-certified. Certified coffee (2.2 million hectares) accounted for at least 21% of the global coffee area, with 13% certified by 4C alone.

Certified area continues to grow and standard compliance gains ground

• In the five-year period from 2014–2018, the certified area of all agricultural commodities covered in this report grew by at least half (+52%). Cotton experienced the highest growth rate of its certified area, which almost tripled (+173%). This was followed by cocoa, which almost doubled in area (+90%), as well as a notable growth in sugarcane and tea area (+75% and +57%, respectively).
• The selected agricultural commodities experienced an accelerated one-year area growth in 2016–2017 (+18%) that then flattened in 2017–2018 (+6%). While cotton and oil palm expanded by more than 10% (cotton: +14%; oil palm: +13%), all other commodities experienced single-digit growth except for sugarcane and coffee, for which a decline was recorded (coffee -13% and sugarcane -2%).
• In 2018, the selected agricultural standards certified at least 8% of the global area of the selected agricultural commodities. Four standards certified at least 27% of the global cocoa area. The coffee sector also boasted a high compliance rate, with at least 21% of the global coffee area certified. At least 18% of the global cotton area and at least 16% of the global tea area were certified by a standard.

Organic is the leading standard in terms of total area certified, but growth is faster for others

• Organic is the biggest sustainability standard in terms of both area and product variety. In 2018, 71.5 million hectares of agricultural land were certified as organic (including areas in the process of becoming organic-certified), representing 1.5% of agricultural land worldwide.
• In 2018, after organic, five of the selected agricultural standards for the first time achieved a land coverage of around 4 million hectares each. Among these, Rainforest Alliance certified the largest area (4.5 million hectares), followed by BCI (4.2 million hectares), GLOBALG.A.P. (3.9 million hectares), UTZ (3.9 million hectares) and RSPO (3.7 million hectares).
• In 2014–2018, all of the standards covered in this report grew in their compliant areas, most of them double-digit, and some even triple-digit. CmiA saw the greatest jump, with its certified area tripling in size (+204%), followed by RTRS and BCI, whose certified area expanded by 172% and 160%, respectively.
• In 2017–2018, five of the 12 agricultural standards experienced double-digit area growth, with Rainforest Alliance achieving the highest growth rate (+29.5%).

To download the full report, please click here.

Meier, C., Sampson, G., Larrea, C., Schlatter, B., Voora, V., Dang, D., Bermudez, S., Wozniak, J., and Willer, H. (2020). The State of Sustainable Markets 2020: Statistics and Emerging Trends. ITC, Geneva.

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In May 2020, China exported more face masks than any other product. According to China’s customs data, the Asian economy exported more than $14 billion of “not elsewhere classified made up textiles”. This is a few billion more than China’s best monthly exports on its traditionally strongest products: portable computers ($9.9 billion in July 2020) or cellphones ($8.3 billion in July 2020).

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Over the past seventeen years, exports from several LDCs to Canada have grown and diversified, changing the profile of Canada from a traditional market for unprocessed minerals and raw food to a destination for imports of low cost, labour intensive manufactured merchandise. Bangladesh and Cambodia now rank after China as highest exporters of apparel to Canada, several others show continued growth in exports to the Canadian market.

Canada supports the LDCs in many ways including a large military and development presence in Afghanistan, in rebuilding Haiti, in promoting economic growth in Bangladesh and Ethiopia and so on. Further reducing or eliminating tariffs on LDC exports, particularly for small exporters to Canada is an important part of this work, but it is often a forgotten issue.

Critics of the LDC liberalizations may argue that just a few LDCs benefitted; supporters will maintain that tariff reductions usually benefit just a few countries. Both are right; more could be done to help LDC exporters in the 47 LDCs take advantage of the Canadian market, which is now wide open to them. More could be done to enable small exporters and producers benefit from the LDCT.

But in the absence of multilateral initiatives to open advanced country markets to first tier manufactures from the poorest countries, and with the failure of the Doha Round of Multilateral Trade Negotiations, the results of the LDCT liberalizations are a credible, and important contribution to development through trade.

To download the full paper, please click here.

Fauzya Moore is an Ottawa-based consultant and writer, a graduate of Harvard’s Kennedy School, and former senior advisor on trade and development in Canada’s Department of Foreign Affairs, Trade and Development.

© Fauzya Moore, 2020

The post Trade and Development: Canadian Tariffs and the Least Developed Countries appeared first on WITA.

To download the full report, please click here.

Uri Dadush is a non-resident scholar at Bruegel, based in Washington, DC and a Senior Fellow at the Policy Center for the New South in Rabat, Morocco. He is also Principal of Economic Policy International, LLC, providing consulting services to international organizations as well as corporations. 

Abdelaaziz Ait Ali is a resident Economist who joined OCP Policy Center after five years’ experience at The Central Bank of Morocco.

Mohammed Al Doghan is an Associate Professor at King Faisal University

Muhammad Bhatti PhD, MBA, is an assistant professor in the College of Business, King Faisal University, in Hofuf, Saudi Arabia. 

Carlos Braga works in the fields of international economics, macroeconomics scenarios, corporate strategy and international agencies (World bank, IMF, WTO, OCDE, UN).

Abdulelah Darandary is an Economist and researcher at KAPSARC. He primarily works on the KAPSARC Global Energy Macroeconometric Model (KGEMM) project.

Anabel González is host of the Peterson Institute’s Trade Winds virtual event series.

Niclas Poitiers joined Bruegel as a research fellow in September 2019.

2020 © All rights reserved

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I. The first section provides a snapshot of the importance of trade in the economy – the economy’s ranking in world merchandise trade and trade in commercial services.

II. The second section is dedicated to Merchandise Trade indicators (customs-based statistics) – information on total trade flows broken down by broad product category and major origins and destinations. This section provides statistics on top exported and imported agricultural and nonagricultural products at the HS 4-digit level according to the definitions of the WTO Agreement on Agriculture and WTO Non-Agricultural Market Access (NAMA products).

III. The third section deals with Trade in Commercial Services – information on total trade flows (Balance of Payments based statistics) broken down by main service item and major origins and destinations. It also contains information on inward and outward FATS sales. This section provides detailed trade statistics for transport, including its breakdown by mode of transport, travel, other commercial services and goodsrelated services.

IV. The fourth and last section covers Industrial Property Indicators – annual number of applications for patents, trademarks, and industrial designs in the name of residents and non-residents of the reporting economy.

To download the full report, please click here.

Published by the World Trade Organization
© World Trade Organization 2020

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Copyright @2020 The Trade Partnership / Trade Partnership Worldwide, LLC. All right reserved.

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This report provides GTIPA members’ perspectives on their nations’ three most-significant trade priorities for the year ahead. This document aims to deliver a succinct snapshot of what to expect in the coming year regarding trade policy priorities for these countries. The volume compiles briefs from Argentina, Australia, Bangladesh, Chile, Colombia, Germany, Italy, the Philippines, Poland, South Africa, the United Kingdom, and the United States. It also offers specific examples and recommendations that countries can seek to adopt to advance their trade policy agendas.

As stated in GTIPA’s Shared Statement of Principles, trade and cross-border investment are key drivers of global growth, which play a central role in increasing the social and economic prosperity of citizens worldwide. Whether it comes to improving health, protecting the environment, or ensuring Internet connectivity, trade in goods, service, and data enable countries’ GDP growth and improvements in quality of life and standards of living. If crafted effectively, trade policies can attract both foreign and domestic investment, spur innovation, foster competitiveness, and increase access to broader global markets.

The trade policy priorities of the countries listed in this report can be grouped as follows:

1. Promoting trade openness.

2. Bolstering programs to help exporters/importers.

3. Tending to domestic concerns/priorities.

4. Enhancing multilateralism and the global trade order.

5. Addressing country-specific trade priorities (such as with regard to the United States or China).

On the first topic, almost every country listed expanding trade agreements as a priority for the year ahead. From ratifying the CPTPP in Chile (and encouraging the United States to accede to it), to joining the AfCFTA in South Africa, to leading an open-market orientation in Germany, to confirming an agreement with the EU in Argentina, countries here reiterate their interest in deepening trade ties and taking advantage of the benefits afforded by free-trade mechanisms.

In the same context, efforts to help exporters and importers are also at the top of the list. The UK and Colombia support unilateral tariff liberalization, with Colombia expanding it to curtailing non-tariff barriers as well. Diving deeper into Latin America, Argentina proposes reducing withholding taxes on exports of goods and services, while Chile eyes diversifying its destination markets for exporters and  helping its firms identify new opportunities to export into international markets.

The report also includes policies focused on domestic considerations. For instance, Bangladesh proposes diversifying into new products and improving its labor-market conditions. Chile roots for modernizing its infrastructure and commercial offices, while Poland seeks to refurbish its trade diplomacy apparatus. Italy and the Philippines bet on strengthening their MSME and startup ecosystems. Lastly, South Africa registers protecting its investment act and securing property rights.

In addition, enhancing global trade regimes also occupies a key spot among next year’s priorities. Italy and the UK would seek new opportunities to enhance multilateralism and plurilateralism. The U.S. submission focuses on reforming its strategic trade engagement with the WTO and with like-minded trade partners, as well as building a global digital trade framework through new trade policies and agreements. From a regional perspective, Poland and Italy raise the issue of the Digital Single Market and barriers to services trade within the EU.

Lastly, European nations such as Germany and Italy list confronting U.S. protectionist policies while containing China’s aggressive trade policies as strategic priorities for the year ahead. Regardless of the outcome of the U.S. elections, the America-first approach and the China threat remain top-of-mind for countries from the old continent. Affected by Brexit, the UK would seek opening avenues with the United States via a bilateral agreement. It’s worth mentioning that the effects of the COVID-19 pandemic underpin every issue highlighted in this report.

Most importantly, this series of briefs is intended to help global trade policymakers identify issues affecting countries’ economic growth potential and to help them anticipate trends, adapt to changing legislation or regulatory frameworks, and promote common causes across countries.

To download the full report, please click here.

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