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WTO Fundamental to Economic Recovery and Sustainable and Inclusive Growth

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Asia-Pacific business leaders from the APEC Business Advisory Council (ABAC), meeting virtually this week, called on the region’s Trade Ministers to take the lead in a credible, relevant and strengthened World Trade Organisation (WTO) in the face of the COVID-19 pandemic.

“Globally, we face significant health and economic challenges. Fundamentally trade can and must be at the centre of tackling both the immediate crisis and of laying the groundwork for a return to growth. The WTO is core to that effort,” said ABAC Chair Dato’ Rohana Tan Sri Mahmood of Malaysia.

Dato Rohana explained that ABAC had issued a statement of support for a reformed WTO ahead of the meeting of APEC Ministers Responsible for Trade (MRT) taking place on 25 July. She said that ABAC had been deeply concerned at the levels of human suffering and severe economic contraction caused by the pandemic.

“Our message to Ministers is that global problems demand global solutions – and the WTO’s multilateral rules-based system must be at the heart of those solutions,” said Dato Rohana. “We are calling on APEC economies to lead a process of reform in the WTO to ensure that trade rules remain fit-for-purpose.”

She said that we need to liberalise trade in essential medical supplies and facilitate the movement of essential workers, so that for this and any future pandemics, those critical products and services can get to where they are needed most. Likewise, APEC economies should reaffirm their commitment to well- functioning agriculture markets, so that we do not add a food security crisis to the disruption of the pandemic.

“We also need to ensure that the WTO’s rules remain relevant and credible. It is imperative that we get the WTO’s dispute settlement system fully functioning again by appointing new members to the Appellate Body. We need more transparency around what economies are doing on trade. We must complete the unfinished business of the Doha Round, including by eliminating fisheries subsidies, making meaningful cuts to trade-distorting domestic support in agriculture and helping services and investment to work better,” she added.

Dato Rohana said that just as importantly, the WTO needed to stay responsive to modern business and social concerns. There is a need to review the rules in other areas to ensure that they are doing the job. The rules must also be updated for the digital age and support aspirations for sustainable and inclusive growth. That means substantive outcomes on e-commerce and a permanent moratorium on Customs duties on electronic transmission, tools to transition to a low-carbon economy by eliminating inefficient fossil fuel subsidies, and better ways for women and small businesses to succeed in trade.


ABAC STATEMENT ON THE WORLD TRADE ORGANISATION JULY 2020

The APEC Business Advisory Council (ABAC) is deeply concerned about the fundamental challenge to global wellbeing represented by COVID-19. We face a “crisis like no other”. The multilateral rules-based trading system, with the World Trade Organisation (WTO) at its core, has a key role to play in our response in both the short term to the pandemic and for longer-term economic rebuilding. ABAC urges APEC economies to lead work in the WTO both to enhance short-term responses, and for the longer-term strengthening of the multilateral rules-based trading system.

A strong commitment to a credible, relevant and strengthened WTO that reflects evolving business needs and models is crucial to help rebuild business and investor confidence and to improve the trade landscape in the age of COVID-19.

APEC economies should thus reaffirm their support for urgent reform of the WTO in the strongest terms. The process to appoint a new Director General must not be allowed to distract from the following critical tasks, but rather must contribute to achieving them:

1. Drawing on the lessons of COVID-19, reform WTO rules for better responses to crises

WTO rules for trade in goods and services can enable essential medical supplies, essential workers and food supplies to get to where they are needed most. APEC economies should lead an initiative in the WTO to enable economies to respond more effectively to crises, including by:

  • committing to the permanent elimination of tariffs and non-tariff barriers on a sectoral basis, covering an agreed list of essential medical supplies such as medical equipment, medicines and basic hygiene products such as hand sanitizer and personal protective equipment;
  • committing to measures to ensure that supply chains are resilient, even in times of crisis;
  • committing to removing barriers to the movement of essential personnel in times of crisis;
  • committing to shoring up trade in food and agriculture, by removing unjustified export restrictions and non-tariff barriers and strengthening value chains; and
  • enhancing transparency to make the trade and investment environment more predictable.

2. Work to strengthen the multilateral rules-based trading system

The WTO provides a crucial foundation for sustained prosperity. The Great Depression of the 1930s and the Global Financial Crisis of 2008 have shown that declining trade, worsened by protectionism, exacerbates the depth and duration of economic contraction. On the other hand, trade based on WTO principles of openness, non-discrimination, predictability and transparency can help to revitalise growth for the longer term, including for the most vulnerable.

i. Resolve the unfinished business from the Doha Round

Meaningful improvements are needed to the existing framework of rules, commitments and obligations to revitalise trade and achieve more sustainable and inclusive growth. APEC economies should take the lead in pressing for concrete outcomes, including on the following items of ‘unfinished business’ from the Doha Round:

  • the elimination, as quickly as possible, of ‘fish subsidies’ that contribute to illegal, unregulated and unreported fishing and the destruction of global fish stocks;
  • a meaningful cut in trade-distorting domestic support in agriculture, to drive better outcomes for markets, for food security, for development and for the environment; and
  • improvements to rules for the domestic regulation of services, to enhance the ability of the sector to drive economy-wide productivity gains and create jobs.

ii. Fully functioning dispute settlement is fundamental to the multilateral trading system

The WTO dispute settlement system has resolved over 400 disputes, and forestalled many more. Every economy will be worse off if this system cannot operate to its fullest extent. APEC economies should:

  • support the urgent appointment of a full slate to the WTO Appellate Body; and
  • engage constructively to implement necessary reforms to the Appellate Body

recognising that some economies have joined the Multi-Party Interim Appeal Arbitration Arrangement as a temporary option to settle appeals.

iii. Initiatives to reflect the evolution of trade will revitalise the multilateral trading system

WTO rules must better reflect modern business and societal concerns. APEC economies should:

  • commit to enhanced transparency, to demonstrate that the system remains fair and balanced for all and to promote predictability in international trade;
  • drive agreement on substantive outcomes in the WTO negotiations on the trade-related aspects of e-commerce, to enhance the key role of digital technologies as a dynamic enabler of trade, including in response to the pandemic;
  • seek agreement to a permanent moratorium on Customs duties on electronic transmissions, to avoid stifling innovation and growth in the digital economy;
  • advance work on investment facilitation with a view to facilitating flows of investment;
  • support the initiative to eliminate inefficient fossil fuel subsidies, consistent with a commitment to transition to a low-carbon economy, in response to climate change;
  • support other initiatives that encourage more inclusive participation in trade, including by women, small businesses and young entrepreneurs, who have been disproportionately affected by COVID-19; and
  • encourage greater involvement of the international business community in WTO processes, that would enhance transparency and improve predictability in the trade environment.

APEC economies should ensure that all of these outcomes are consistent with WTO principles and are designed with a view to serving as building blocks to multilateral outcomes in the future. Global challenges demand global solutions. The APEC Business Advisory Council and the wider Asia-Pacific business community fully supports APEC’s leadership in this most critical area. 

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Development

ADB Calls for Just, Equitable Transition Toward Net Zero in Asia and Pacific

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Asian Development Bank (ADB) President Masatsugu Asakawa today called for countries in Asia and the Pacific to take bold action to address climate change while ensuring fair and equitable economic growth amid the coronavirus disease (COVID-19) pandemic.

“The task of addressing climate change is not only urgent, but also inextricably linked to an inclusive and lasting recovery from the pandemic,” said Mr. Asakawa at the Indonesian Ministry of Finance–ADB 2021 International Climate Conference. “With shared commitment and international cooperation, we can make the transition to net zero and achieve climate resilience, so that our region emerges stronger than before.”

The one-day virtual conference attracted about 800 people from the public and private sectors, development partners, think tanks, and academia to discuss international good practices that can help ADB developing member countries transition to low-carbon, resilient economies and pursue a green, resilient, and inclusive recovery from the COVID-19 pandemic.

The event highlighted Indonesia’s commitment to meeting its nationally determined contributions (NDCs) under the Paris Agreement, as well as steps it has taken to support the development of a low-carbon, resilient economy.

“Indonesia has mainstreamed climate change into our National Medium-Term Development Plan 2020–2024 and established a national Action Plan, both on mitigation and adaptation,” said Indonesian Vice Minister of Finance Suahasil Nazara. “In the near future, we will use this recovery phase post-COVID-19 pandemic to pursue our climate and sustainability agenda.” Indonesia will chair the G20 in 2022.

Asia and the Pacific is responsible for more than half of global greenhouse gas emissions. Recent analysis predicts that global energy-related CO2 emissions will grow by nearly 5% in 2021, as demand for coal, oil, and gas rebounds. About 80% of the growth in coal demand is expected to come from Asia.

The Paris Agreement aims to keep the rise in global temperatures to well below 2°C, preferably to 1.5°C, compared to pre-industrial levels. ADB’s sovereign operations will be fully aligned with the goals of the Paris Agreement by 1 July 2023 and its nonsovereign operations by 1 July 2025. ADB will scale up investments in adaptation and resilience to at least $9 billion from 2019 to 2024 to support Asia and the Pacific’s recovery from the COVID-19 pandemic. The measures will contribute to ADB’s commitment to deliver $80 billion in climate finance between 2019 and 2030.

Mr. Asakawa said ADB will support Indonesia’s transition toward a low-carbon, resilient economy and help the country meet its NDC targets. Strengthening resilience is one of the three focus areas in ADB’s country partnership strategy for Indonesia. That includes climate change mitigation and adaptation and green recovery, as well as disaster risk management and finance.

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Human Rights

UNSC calls for ‘immediate reversal’ of Turkish and Turkish Cypriot decision on Varosha

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The United Nations Peacekeeping Force in Cyprus (UNFICYP) controls the buffer zone between the opposing sides. UN Photo/Eskinder Debebe

The Security Council said in a statement released on Friday that settling any part of the abandoned Cypriot suburb of Varosha, “by people other than its inhabitants, is “inadmissible”. 

The presidential statement approved by all 15 Security Council members, upheld that “no actions should be carried out in relation to Varosha, that are not in accordance with its resolutions”. 

“The Security Council condemns the announcement in Cyprus by Turkish and Turkish Cypriot leaders on 20 July 2021 on the further reopening of part of the fenced-off area of Varosha”, the statement continued. 

‘Deep regret’ 

“The Security Council expresses its deep regret regarding these unilateral actions that run contrary to its previous resolutions and statements.” 

The statement calls for “the immediate reversal of this course of action and the reversal of all steps taken on Varosha since October 2020.” 

The statement followed a closed-door briefing earlier in the day by the outgoing UN Special Representative, Elizabeth Spehar

The Mediterranean island has been divided between Greek Cypriot and Turkish Cypriot communities for 47 years, and a Security Council resolution of 1964 recommended the establishment of a peacekeeping force to maintain law and order and help end inter-communal strife.  

According to news reports, on Wednesday, Greek Cypriot leaders appealed to the Council over plans by Turkish Cypriot authorities to revert a 1.35 square-mile section of Varosha, from military to civilian control, and open it for potential resettlement. 

The self-declared Turkish Republic of Northern Cyprus (TRNC), which is backed by Turkey, made the initial announcement a day earlier, that part of the suburb would come under civilian control.  

Guterres statement 

On Wednesday, the UN Secretary-General António Guterres expressed his deep concern over Wednesday’s announcements by Turkey and Turkish-Cypriot leaders, on re-opening Varosha, and said that the UN’s position “remains unchanged and is guided by the relevant Security Council resolutions”.  

In a statement issued by his Deputy Spokesperson, Farhan Haq, Mr. Guterres called on all sides “to refrain from any unhelpful actions and to engage in dialogue to bring peace and prosperity to the island through a comprehensive settlement”. 

“The Secretary-General has repeatedly called on all parties to refrain from unilateral actions that provoke tensions and may compromise the ongoing efforts to seek common ground between the parties towards a lasting settlement of the Cyprus issue”. 

‘Just settlement’ 

The Security Council statement concluded with a reaffirmation of its commitment “to an enduring, comprehensive and just settlement, in accordance with the wishes of the Cypriot people, and based on a bicommunal, bizonal federation, with political equality”. 

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Africa Today

Partnership with Private Sector is Key in Closing Rwanda’s Infrastructure Gap

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The COVID-19 (coronavirus) pandemic has pushed the Rwandan economy into recession in 2020 for the first time since 1994, according to the World Bank’s latest Rwanda Economic Update.

The 17th edition of the Rwanda Economic Update: The Role of the Private Sector in Closing the Infrastructure Gap, says that the economy shrank by 3.7 percent in 2020, as measures implemented to limit the spread of the coronavirus and ease pressures on health systems brought economic activity to a near standstill in many sectors. Although the economy is set to recover in 2021, the report notes the growth is projected to remain below the pre-pandemic average through 2023.

Declining economic activity has also reduced the government’s ability to collect revenue amid increased fiscal needs, worsening the fiscal situation. Public debt reached 71 percent of GDP in 2020, and is projected to peak at 84 percent of GDP in 2023. Against this backdrop, the report underlines the importance of the government’s commitment to implement a fiscal consolidation plan once the crisis abates to reduce the country’s vulnerability to external shocks and liquidity pressures.

“Narrowing fiscal space calls for a progressive shift in Rwanda’s development model away from the public sector towards a predominantly private sector driven model, while also stepping up efforts to improve  the efficiency of public investment,” said Calvin Djiofack, World Bank’s Senior Economist for Rwanda.

According to the Update, private sector financing, either through public-private partnerships or pure private investment, will be essential for Rwanda to continue investing in critical infrastructure needed to achieve its development goals. The analysis underscores the need to capitalize further on Rwanda’s foreign direct investment (FDI) regulatory framework, considered one of the best in the continent, to attract and retain more FDI; to foster domestic private capital mobilization through risk sharing facilities that would absorb a percentage of the losses on loans made to private projects; and to avoid unsolicited proposals  of public–private partnership (PPP) initiatives; as well as to build a robust, multisector PPP project pipeline, targeting sectors with clearly identified service needs such as transport, water and sanitation, waste management, irrigation, and housing.

While the report findings establish clearly the gains of public infrastructure development for the country as whole, it also stressed that these gains tend to benefit urban and richer households most.

 “Rwanda will need to rebalance its investment strategy from prioritizing large strategic capital-intensive projects toward projects critical for broad-based social returns to boost the potential of public infrastructure to reduce inequality and poverty,” said Rolande Pryce, World Bank Country Manager for Rwanda. “Any step toward the Malabo Declaration to allocate 10 percent of future infrastructure investment to agriculture, allied activities, and rural infrastructure, will go a long way to achieving this goal.

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