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Info Service on WTO and Trade Issues (Nov22/08) Geneva, 15 Nov (Kanaga Raja) — Since 2020, the pace of implementation of new restrictions by WTO Members, in particular on the export side, has increased, first in the context of the COVID-19 pandemic and more recently in the context of the war in Ukraine and the food security crisis, the World Trade Organization has said. In its latest Trade Monitoring Report on G20 trade measures covering the period from mid-May to mid-October 2022, the WTO said that as of mid-October 2022, 52 export restrictions on food, feed and fertilizers, and 27 COVID-19-related export restrictions on essential products to combat the spread of the virus were still in place. Of these, 44% of export restrictions on food, feed, and fertilizers and 63% of pandemic-related export restrictions were maintained by G20 economies, it added. The WTO called on the G20 economies to set an example for others by rolling back export restrictions and ensure the free flow of trade. The report said that between mid-May and mid-October 2022, G20 economies introduced more trade-facilitating (66) than trade-restrictive (47) measures on goods (these numbers exclude measures related to the pandemic). Nevertheless, the pace of implementation of new restrictions by G20 economies increased during the review period, it added. The trade coverage of the trade-facilitating measures introduced (USD 451.8 billion) is higher than that of trade restrictive measures (USD 160.1 billion), it said. G20 economies must build on the momentum achieved at MC12 and demonstrate leadership to keep markets open and predictable to allow goods to flow to where they are needed the most, remove supply chain bottlenecks and get global value chains (GVCs) back to the dis-inflationary role that they have played in the past, said the report. The WTO said that its latest report comes at a time when the global economy faces multiple challenges. “The fight against the COVID-19 pandemic with new variants emerging continues. Despite some progress, access to vaccines is still lagging in some parts of the world.” At the same time, the severe humanitarian crisis caused by the war in Ukraine remains, said the report. The repercussions of the war are wide and manifold and include serious blows to energy security, food security and to the world economy at large, it added. ECONOMIC AND TRADE OUTLOOK According to the report, the medium-term outlook for trade has deteriorated after a series of related shocks hit the global economy during the review period, prompting the WTO to downgrade its projections for the next 18 months. Merchandise trade is now expected to slow in the second half of 2022 and to remain subdued in 2023 as the war in Ukraine, high inflation, and lingering side-effects from the COVID-19 pandemic weigh on global economic growth. The WTO expects world merchandise trade volume growth of 3.5% in 2022 (up slightly from the previous estimate of 3.0%) followed by a 1.0% increase in 2023 (down sharply from 3.4% previously). Import demand is expected to cool as growth decelerates in major economies for different reasons. In Europe, high energy prices stemming from the war in Ukraine will continue to squeeze household budgets and raise production costs in manufacturing, said the report. It said in the United States, tighter monetary policy is likely to reduce interest-sensitive spending on housing, motor vehicles and fixed investment. “China faces the prospect of further COVID-19 outbreaks and production disruptions coupled with weak external demand, while low-income countries face the possibility of food insecurity and debt distress due to rising import bills for fuels, food, and fertilizers.” Risks to the forecasts are mostly on the downside. Central banks are raising interest rates in a bid to tame inflation, but rapid tightening could trigger recessions in some countries, which would weigh on imports, said the report. Alternatively, it added, central banks might not do enough to bring down inflation, possibly necessitating stronger interventions later. High interest rates in advanced economies could trigger capital flight from emerging economies, unsettling financial flows. Escalation of the war in Ukraine could further damage economic confidence, while trade restrictions on food and other necessities could exacerbate inflation and ultimately reduce trade and GDP growth, the report cautioned. “Trade growth will slow sharply but remain positive in 2023 if the current forecast is realized, but all projections should be taken with a grain of salt given the unpredictable nature of the war and the shifting stance of monetary policy in leading economies,” said the report. The report said that if current assumptions hold, trade growth in 2022 could end up between 2.0% and 4.9%. The volume of trade in 2023 could contract by as much as 2.8% if downside risks materialize, and if not, it could rise by as much as 4.6%. Trade could also finish outside of these bounds if any of the underlying assumptions change. The war in Ukraine has pushed up prices for primary commodities, particularly fuels, food, and fertilizers, it said. Energy prices in September were up 47% year-on-year and 125% compared to January 2021. The increase was led by natural gas, prices of which rose 118% year-on-year and 433% since January 2021, it added. The 19% year-on-year increase in the price of crude oil in September is small compared to rise in natural gas, but it is still significant for consumers. Crude oil prices remain high, having risen 64% since January 2021, it said. In September 2022, European gas prices were more than eight times higher than their level in January last year, it noted. Prices in the United States nearly tripled over the same period, but they remained low compared to Europe (USD 7.76 per million Btu compared to USD 59.10). The report said European purchases of natural gas from other countries to supplement reduced supplies from the Russian Federation have also pushed up the cost of liquified natural gas (LNG) in Asia, where the price of LNG has risen 141% since January 2021. European gas prices moderated in September (down 15.6% compared to August) but they remain high by historical standards. Oil prices have also receded from their recent peak (down 25% since June), possibly indicating weaker global demand rather than an improved supply situation, it added. “Food prices in US dollar terms have also risen sharply due to the fact that the Russian Federation and Ukraine are both major suppliers of grains and fertilizers. This has raised food security concerns, especially in low-income countries that tend to spend a large fraction of household income on food.” Many currencies have also depreciated against the US dollar in recent months, making imports of food and fuels more expensive in national currency terms, said the report. The WTO said that the forecast of 3.5% for world merchandise trade volume growth in 2022 is slightly stronger than the previous estimate of 3.0% from April 2022, with the difference mostly explained by statistical revisions and greater availability of data. The Middle East is expected to record the strongest export growth of any WTO region in 2022 (14.6%), followed by Africa (6.0%), North America (3.4%), Asia (2.9%), Europe (1.8%) and South America (1.6%). In contrast, CIS (Commonwealth of Independent States) exports should decline by 5.8%. The Middle East should also have the fastest trade volume growth on the import side (11.1%), followed by North America (8.5%), Africa (7.2%), South America (5.9%), Europe (5.4%), Asia (0.9%) and CIS (-24.7%). TRADE-RELATED DEVELOPMENTS A total of 192 trade measures were recorded for the G20 economies during the review period. This figure includes measures facilitating trade, trade remedy measures and other trade and trade-related measures, i.e., those that can be considered as trade-restrictive, but excludes measures taken in response to the COVID-19 pandemic, the WTO said. During the review period, 66 new trade-facilitating measures were recorded for G20 economies. This represents 34% of the total number of measures recorded. The monthly average of 13.2 trade-facilitating measures recorded for the period is the second-highest recorded since 2012, it added. Fifty-one import-facilitating measures (77% of all trade-facilitating measures) were introduced by G20 economies during the review period, of which 14 were related to food, feed, and fertilizers. The reduction or elimination of import tariffs continues to make up the bulk of trade-facilitating measures, the WTO said. On the export side, it said 15 measures were introduced (23% of all trade-facilitating measures) by G20 economies, mainly reductions of export duties and the elimination of quantitative restrictions. Out of these, five were related to the food, feed, and fertilizers. “The trade coverage of the import-facilitating measures introduced during the review period was estimated at USD 360.7 billion, i.e., 2.1% of the value of G20 merchandise imports (1.6% of world merchandise imports).” The HS chapters within which most of the import-facilitating measures were taken include precious stones and metals (HS 71) (16.5%), mineral fuels and oils (HS 27) (10.2%), machinery and mechanical appliances (HS 84) (7.8%), and electrical machinery and parts thereof (HS 85) (7.4%). The trade coverage of the export-facilitating measures introduced during the review period was estimated at USD 91.1 billion, i.e., 0.5% of the value of G20 merchandise exports (0.4% of world merchandise exports). The HS chapters within which most of the export-facilitating measures were taken include mineral oils and fuels (HS 27) (59.3%) and vegetable oils (HS 15) (29.7%). Overall, the trade coverage of the import- and export-facilitating measures implemented by G20 economies during the review period was estimated at USD 451.8 billion, said the report. During the period under review, 79 trade remedy actions (17 initiations and 62 terminations) were recorded for G20 economies, accounting for 41% of all trade-related measures recorded in its report, said the WTO. Anti-dumping continues to be the most frequent trade remedy action, accounting for 94% of all initiations and 87% of all terminations during the review period, it added. After reaching its highest peak in 2020, the average number of trade remedy initiations during the review period was down to 3.4 per month, the lowest since 2012, while the monthly average of 12.4 trade remedy terminations recorded is also the lowest recorded since 2017, said the report. “Trade remedy actions taken during the review period included mainly initiations of investigations on man-made filaments (HS 54) (46.6%) and iron and steel (HS 72) (40.0%).” The trade coverage of all trade remedy investigations initiated during the review period was estimated at USD 0.5 billion, i.e., 0.003% of the value of G20 merchandise imports (0.002% of world imports). The report said that for terminations, the trade coverage was valued at USD 3.2 billion (0.02% of the value of G20 merchandise imports and 0.01% of world imports). It said a total of 47 new trade-restrictive measures were recorded for G20 economies, representing 24% of the total number of measures recorded. “On the import side, 25 measures were recorded (53% of all restrictions), of which 8 were implemented on food, feed, and fertilizers. Most of the import restrictions recorded during the review period were increases of import tariffs and stricter import procedures.” On the export side, 22 export restrictions (47% of all restrictions) were captured during the review period. Most of these are quantitative restrictions, followed by increases of export duties. Out of these, 16 export restrictions were introduced on food, feed, and fertilizers, said the report. “The number of export restrictions recorded by the Trade Monitoring Exercise has increased significantly since 2020, first with restrictions referring to the COVID-19 pandemic and more recently in the context of the war in Ukraine and the food security crisis,” it added. The monthly average of 9.4 trade-restrictive measures recorded during the review period is the highest since 2012, it said. The trade coverage of the import-restrictive measures implemented during the review period was estimated at USD 113.7 billion, i.e., 0.7% of the value of G20 merchandise imports (0.5% of world imports). The main sectors affected (HS chapters) were precious metals and stones (HS 71) (51.4%), electrical machinery and parts thereof (HS 85) (11.2%), machinery and mechanical appliances (HS 84) (9.9%) and vegetable oils (HS 15) (9.5%). The trade coverage of the export-restrictive measures implemented during the review period was estimated at USD 46.4 billion, i.e., 0.3% of the value of G20 merchandise exports (0.2% of world exports), said the report. The HS chapters within which most of the export-restrictive measures were taken include vegetable oils (HS 15) (64.2%), and cereals (HS 10) (20.7%). Overall, the trade coverage of the import- and export-restrictive measures implemented by G20 economies during the review period was estimated at USD 160.1 billion, it said. The report also said since the outbreak of the COVID-19 pandemic, G20 economies have introduced 201 trade and trade-related measures in the area of goods, of which 122 (61%) were of a trade-facilitating nature and 79 (39%) could be considered trade restrictive. During the review period, four new COVID-19 measures on goods were communicated by three G20 economies (Brazil, European Union, and United Kingdom), mainly consisting of reductions of customs duties to mitigate the effects of supply shocks caused by the pandemic. “The trade coverage of the COVID-19 trade-facilitating measures implemented since the outbreak of the pandemic was estimated to amount to USD 297.7 billion, and that of trade-restrictive measures at USD 179.5 billion.” The WTO said that about 72% of trade-facilitating measures taken by G20 economies to combat the effects of the pandemic are reductions or eliminations of import tariffs and import taxes. “Certain G20 economies reduced their tariffs on a variety of goods such as personal protective equipment (PPE), sanitizers, disinfectants, medical equipment, and medicine/drugs. In many cases, the tariff reductions were also accompanied by exemptions from VAT and other taxes.” Extensions, often more than once, of some measures were implemented, while other measures have simply remained in force, said the report. Out of the 79 restrictions recorded, 75 (95%) are export-related measures, 77% of which have been already phased out, it added. It said by mid-October 2022, 17 export restrictions by G20 economies are still in place according to information either identified by the Secretariat or received from delegations and subsequently verified. “G20 economies continued their gradual lifting of export restrictions targeting products such as surgical masks, gloves, medicine, disinfectant, and food products. Other trade and trade-related measures taken in the early stages of the pandemic are also being rolled back.” The report said the trade coverage of the restrictive measures implemented in response to the pandemic but which have been terminated as of mid-October 2022 amounted to USD 57.5 billion, and that of trade-facilitating to USD 171.1 billion, according to WTO Secretariat estimates. The report said although the number of the pandemic-related trade restrictions that are still in place has decreased, their trade coverage remains important (20 import and export restrictions – USD 122.0 billion) compared to that of trade-facilitating measures (58 import and export measures – USD 126.6 billion). The war in Ukraine has severely impacted a global economy confronted with multiple interlinked crises, including those related to food, energy, and climate change, compounding the aftermath of the COVID-19 pandemic, the report further said. It said since the outbreak of the war in late February 2022, the WTO Secretariat has identified 72 trade-restrictive measures introduced by 26 WTO Members and 5 Observers on essential agricultural commodities, of which 66 applied to food and feed (90%) and 6 targeted fertilizer exports (10%). As of mid-October 2022, 20 of these export restrictions had been phased out, bringing the number of restrictions in force to 52, of which, 23 were export restrictions maintained by G20 economies. Since the beginning of the war in Ukraine, import-facilitating measures on food, feed, and fertilizers have been also introduced, said the report. “As of mid-October 2022, 59 import-facilitating measures on various agricultural products were recorded for 56 Members and 2 Observers.” Import-facilitating measures mainly focus on essential agricultural products, including vegetable oils, cereals, rice, meats, and poultry as well as fertilizers. These measures came in the form of reduction of import tariffs, increases of import quotas and introduction of tariff free quotas. Other measures include exemptions from value added taxes and the lifting of import permit requirements, said the report. The report also said that the most recent data (January-June 2022) show a decrease of 32% in the number of anti- dumping investigations initiated by G20 economies compared to the previous six-month period (July-December 2021). It said the most recent data (January-June 2022) show a significant increase in the number of countervailing duty investigations initiated by G20 economies compared to the previous six-month period (July-December 2021). +
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