Readying Regional Trade Agreements For Future Crises And Pandemic
Policy responses to the COVID-19 pandemic have heavily disrupted trade and supply chains, with many countries putting in place ad hoc trade-restrictive measures, seemingly without any concern about their effect on trading partners – at least during the early stages of the crisis. While such reactions to an unexpected global pandemic are understandable, they are certainly not optimal. They have highlighted the limitations of existing trade agreements, including over 184 regional trade agreements signed by economies in Asia and the Pacific, as well as the multilateral trade rules, in providing guidance on how to respond to emergency or crisis situations in a least trade-restrictive fashion.
Against this backdrop, in an effort to accelerate recovery from this crisis and better prepare for the future, ESCAP together with the United Nations Conference on Trade and Development (UNCTAD), the World Trade Organization (WTO), other United Nations regional commissions, as well as CUTS and other partners, launched a global Initiative on Model Provisions for Trade in Times of Crisis and Pandemic in Regional and other Trade Agreements in May 2020.
While the initiative is still on-going, a key deliverable in 2020 was the organization of a fully online global Policy Hackathon. Designed to gather innovative ideas on how to improve trade agreements and build back better, it started with a global call to trade experts from Governments, international organizations, civil society and private sector to submit written contributions within 50 days. Response to the call was beyond expectations, with more than 200 proposals submitted, resulting in over 60 final contributions by more than 130 (co-)authors, which went through reviews and evaluation by a core group of experts. All contributions are available in an Online Repository and a webinar series based on the best-quality contributions was held in November 2020.
Keeping in mind the need to preserve policy space in trade agreements, particularly for developing countries, to allow them to deal with crises and minimize trade disruptions, some key insights have emerged from this exercise:
Specific and comprehensive crisis-mitigation provisions matter for trade agreements. Dedicated provisions addressing trade in times of crisis/emergency could provide, for instance, a clear but flexible definition of “emergency situation”. Consideration could be given to agreeing on preliminary lists and criteria for “essential” goods and services for different types of crises, building on existing international instruments where available. Rules on export/import restrictions are particularly important to avoid severe shortage in essential goods and services. Special government procurement arrangements and emergency mutual recognition of technical regulations could play a key role.
Enhanced transparency and information-sharing provisions are fundamental. It is recommended to enhance transparency obligations, including timely disclosure of trade measures taken under emergencies and information concerning evolving crisis situations that may impact trade. Information-sharing mechanisms need to be in place, starting with the creation of regional (online) resource libraries and databases. Establishing and interconnecting trade information portals is one option, agreeing and designating in advance a regional emergency focal point is another.
Promoting digitalisation is essential for better crisis responses. Digitalisation has played a key role under the current COVID-19 crisis in keeping trade flowing with reduced physical contacts. Promoting digitalisation of trade can be done by enabling paperless trade e.g., mutual recognition of electronic documents and signatures, harmonizing e-identification systems, or enhancing cooperation on cybersecurity of trade control systems, all of which may be facilitated in Asia and the Pacific by becoming party to the United Nations treaty on cross-border paperless trade. Aid and training mechanisms for developing countries and least developed countries, and cooperation in building related infrastructure, should not be forgotten.
Sustainable development is both a solution and the ultimate goal. COVID-19 and its spread has been partly linked to unsustainable trade and production practices, and it is important for trade to build back better going forward. The norms and disciplines of trade agreements need to be aligned with the global imperative of the Sustainable Development Goals (SDGs). New and existing provisions could be geared towards addressing the core values of the Sustainable Development Goals, such as trade and the environment, labour, gender, structural transformation, including sectoral shifts that could occur during and following the crises. It would be useful to associate these provisions with provision of capacity building support and capacity acquisition, with progressive commitments taking into account the different level of development of countries. Direct reference to the Sustainable Development Goals, their targets or indicators may also be incorporated.
Thanks to the wealth of ideas and information gathered through this first policy hackathon and follow-up webinars, a practical handbook to support negotiators in developing provisions for trade in times of crisis and pandemic is under development. The handbook will be the basis for workshops later in 2021, with the hope that the inclusive approach taken so far will support agreements that can make trade ever more resilient and sustainable.