GENEVA, CH.- The multilateral trade system is at a crossroads where failure to issue new rules that adapt to current trends and needs could erode and face negative consequences.

This is one of the arguments put forward by Luz María de la Mora, director of the Division of International Trade and Commodities of the United Nations Conference on Trade and Development (UNCTAD) , when she warns that “we are in a very profound economic transition . ”

“We want an orange (creative) economy, a blue economy (sustainable use, management and conservation of marine resources), a green economy (that reduces environmental risks). So all these economies are not fully reflected in trade rules today. And we need to find a way to get there,” he said in an interview with T21 within the framework of the World Trade Organization (WTO) Public Forum 2024, which is being held at its headquarters.

The international trade policy specialist explains that there is currently an environment of lack of credibility in trade and its results , given the inequality that still exists between developed and developing economies in terms of income, although she argues that this has not been generated by trade itself.

Rather, he says, the world has faced various situations such as financial crises that have resulted in greater polarization, higher cost of services, especially health, education and housing; and, most recently, the health crisis caused by Covid that generated an accelerated and prolonged process of inflation, along with imbalances between supply and demand.

“There were many macro imbalances and it would seem that the solution or the person responsible for all this is trade, because in the end these are global effects. We need, and from UNCTAD and the WTO as well, to put everything in its place, to carry out the analysis of what needs to be done and really put the trade issue, investment, but also the other policies, the public policies that have to do with the fiscal part, the financial part, transport, education, health (…) trade can be a very important development instrument, but countries have to be on board of that agenda, (however) countries do not have trade in their priorities,” he says.

At the Public Forum, the WTO itself sought to reinforce the message of the benefits that trade has generated for countries’ economies and the need to develop greater integration with the help of this organization. “Of course, the convergence that we saw with incomes between rich countries and poor countries was altered by the pandemic. And it took some parts of the world backwards,” WTO Director General Ngozi Okonjo-Iweala told reporters this week.

Luz María de la Mora, former Undersecretary of Foreign Trade at the Ministry of Economy in Mexico, stresses that UNCTAD’s current work is to strengthen multilateralism and generate dialogue , “so that countries can have better information, to be able to sit down and talk. Because without information, if you don’t have really good analysis, good data, good evidence, then you start with a false diagnosis. And right now there are a lot of myths.”

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GENEVA, CH.- Environmental disasters related to the effects of climate change have put the spotlight on the debate on the creation of more forceful global policies and responses to safeguard supply chains.

The most recent case was in Brazil, where heavy rains between April and May of this year caused severe flooding in Rio Grande do Sul , a state in the south of the country. In just four days, the expected rainfall for the entire season was recorded.

The consequences for the population were shocking, with more than 200 deaths recorded, more than half a million people displaced and more than 60,000 placed in shelters.

But there were also negative effects on trade and supply chains. At least 70% of the rice consumed nationwide, an important staple in the Brazilian diet, is produced in this part of the Latin American country, and at the time of the heavy rains, 20% of production was under water, with large volumes of unharvested grain being lost, including some reserves stored in silos.

Speculation was rampant and the price of rice rose by 30 to 50 percent. The response of Luiz Inácio Lula da Silva’s government was to reduce the import tariff on rice to zero , in order to supply itself mainly from neighbouring countries, causing annoyance to local producers but also disrupting trade in that region.

“Here’s the problem, sometimes governments facing natural disasters of this kind need to step away from their normal regulatory framework,” said Guilherme Patriota, Brazil’s ambassador to the World Trade Organization (WTO), who participated in the conference Towards trade, sustainability and supply chain resilience: lessons from recent climate emergencies , held at the Public Forum 2024 .

Brazil is not the only country that has had to deal with these bitter experiences. Pakistan , which was also hit by unusually heavy rains this year, presented a proposal at the last WTO Ministerial Conference calling for the creation of a response mechanism for such situations, which should focus on balancing supply chains and trade.

“(It is about) having a mechanism that provides countries with the means and the comfort to deal with these emergency situations,” said Patriota.

The Pakistani initiative highlights the common but differentiated responsibility of all countries in climate change, which is linked to global pollution from industrial activities. “But perhaps some countries should do more ,” said the Brazilian ambassador.

These types of initiatives are only just beginning to appear in the forums of multilateral organizations or in global conferences aimed at addressing the problem of climate change .

Daniel Ramos, legal officer and secretary of the WTO Dialogue on Plastic Pollution, said that three projects are currently being analyzed at the WTO that have to do with measures related to combating climate change through modifications in the way global trade is conducted.

He also indicated that just at the last Conference of the Parties (COP) of the United Nations , the “day of trade” was held, where the relationship that this activity has with climate change was raised and the efforts that must begin to be developed to trigger the necessary adjustments by nations in humanitarian assistance with respect to the supply of essential inputs .

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GENEVA, CH.- China has not missed the opportunity to come and deliver a clear message at the headquarters of the World Trade Organization (WTO) : “We will guide the future of economic globalization on the right path . ”

This statement comes from Hongbin Re, president of the China Council for the Promotion of International Trade (CCPIT) , one of the largest business chambers in the Asian country , who is actively participating in the WTO Public Forum .

No wonder. China has been gaining ground since joining this multilateral organization in December 2001. It is currently the world’s largest trader and trading partner for more than 100 countries ; it is also the largest export market for more than 40 countries and also the largest foreign market for multinational corporations such as Apple or BMW, among many others.

Hongbin Re did not forget to mention that economic globalization is taking on a new dimension, but the multilateral trade system is under threat , in a clear reference to the signs of trade protectionism that have recently been triggered.

For example, the European Union decided to adopt one of its largest trade defence measures in recent times in the middle of this year, with the increase of tariffs on electric vehicles manufactured in China from 17.4% to 37.6%, in addition to the existing 10 percent.

“We should open up, not close ourselves off. We should pursue integration, not decoupling. We will firmly uphold the multilateral trading system and guide the future of economic globalization on the right path,” said Hongbin Re, speaking at the session Resilient and Greener Supply Chains for Cross-Border E-Commerce during the Public Forum.

He also recalled that this week the Chinese government changed course by removing all restrictions on foreign investment in the country’s manufacturing sectors.

“We will foster a world-class business environment that is market-oriented, law-based and globally grounded, promote high-quality cooperation and build a new system for a top-level open economy. China’s rapid development will definitely create new opportunities,” said the representative of more than 100,000 Chinese companies.

Greener digital commerce

During the session on e-commerce, participants expressed concern about the rapid growth of this activity and its resulting pollution footprint in the world.

The United Nations Conference on Trade and Development (UNCTAD) has calculated, through data provided by 46 developed and developing countries, representing two-thirds of the world’s gross domestic product (GDP), that between 2016 and 2022, e-commerce sales increased from $17 trillion to $27 trillion , driven by the Covid pandemic.

The United States and China stand out here. In the same period, the former saw its e-commerce sales grow from seven billion to 11 billion dollars, while in China the amount tripled from 1.6 billion to 4.5 billion dollars.

As for cross-border e-commerce , it is estimated that of the 27 trillion dollars, only three trillion belong to this international activity.

The UNCTAD report also identifies that the gross value of goods traded on the world’s largest e-commerce platforms increased from $2.6 trillion in 2019 to $4.2 trillion in 2020, with only four platforms accounting for two-thirds of this value, three of which are of Chinese origin.

This has led to an excessive pollution footprint, which is why more urgent measures have been sought.

“Governments could set up regulatory frameworks and more incentives for sustainable business practices, and businesses can innovate and integrate them. Governments could regulate excess packaging and returns, promoting reusable and biodegradable materials, while businesses can do more to eliminate single-use plastics, avoid unnecessary packaging and implement fees and technology to reduce returns,” according to Torbjörn Fredrikkson, head of UNCTAD’s Division on E-Commerce and the Digital Economy, who also participated in the Public Forum session.

However, there is still greater concern not only about the solid waste that e-commerce generates every day, but rather the spectrum that concentrates the entire digital economy has caused an increase in the demand for electric energy.

From 2022 to 2026, global data center electricity consumption is expected to grow from 460 terawatt hours to 1,000 terawatt hours. This is more than the entire African continent produces in electricity in one year.

“This shows a bit of the magnitude of data centres in terms of consumption and electricity, so we need to think about how we make digital greener,” said the UNCTAD representative.

This situation forces all participants in the world to consider a greener value chain, although efforts have so far been incipient.

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