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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

Repurposing Current Policies Could Deliver Multiple Benefits for Farmers

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A new World Bank and International Food Policy Research Institute (IFPRI) report finds that repurposing current agricultural public policies could deliver multiple benefits for people, the planet, and the economy. ‘Repurposing Agricultural Policies and Support: Options to Transform Agriculture and Food Systems for Better Health of People, Economies and Planet’ reveals that investing in climate-smart innovations that both increase agricultural productivity and reduce greenhouse gas emissions could reduce overall emissions from agriculture by more than 40%, restore 105 million hectares of agricultural land to natural habitats, and reduce the cost of healthy foods, thereby also contributing to better nutritional outcomes. To achieve this, concerted action is needed, including support to low- and middle-income countries, facing fiscal constraints, to review current policies and prioritize green investments.

As experts and Ministers of Agriculture meet this week for the annual Global Forum for Food and Agriculture hosted by the German government, the report also notes that current policies only return 35 cents to farmers for every US dollar of public support. According to modeling conducted by the authors, redirecting about $70 billion a year, equivalent to 1% of global agricultural output, would improve economic efficiency and result in net gains to the global economy of about $2.4 trillion in 2040.

“Agricultural policies and public support programs are ripe for change. Policymakers are well-placed to scrutinize and rethink current policies and programs to better benefit farmers, increase food security, build resilience in the face of climate change, and reduce greenhouse gas emissions,” said Martien van Nieuwkoop, Director of the Agriculture and Food Global Practice at the World Bank.

Under a “business-as-usual” scenario, the report estimates that greenhouse gas emissions from agricultural production will double by 2040, with 56 million hectares of new land being used for agriculture between 2020 and 2040. However, there are important trade-offs for policymakers to consider as they seek to reform agricultural support policies to achieve better outcomes.

For example, the report finds that simply eliminating support would lower farm output and increase poverty while generating only modest climate gains. Making support conditional on more environmentally friendly but lower-yielding production methods can generate climate benefits, but would increase food prices and poverty, while expanding agricultural land use.

The most effective repurposing, therefore, requires policy incentives and public investment in technologies that both reduce emissions and enhance productivity to meet growing demand for food and ensure food security. These technologies include feed supplements that reduce livestock emissions while increasing productivity, and rice production systems that use less water and produce less methane, without compromising farmers’ incomes and yields.

International collaboration will be vital. “Everyone must come together to reset current policies if we are to address the threats of climate change and unsustainable food systems. Together we can build better food systems and progress towards shared development goals, if we start reforming our public policies now,” said Johan Swinnen, Director General of IFPRI and Global Director for Systems Transformation, CGIAR.

The World Bank is working with governments to rethink and transform food systems, including redirecting public support to produce better outcomes, foster innovation and enable sustainable growth. Building on policy analysis by IFPRI, the World Bank is helping several countries assess the trade-offs and benefits of different policy options, to identify the best path forward for reform.

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Finance

Centralized vs Decentralized Stablecoins: How they’re different

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Stablecoins are an essential part of the crypto world. It protects the traders and investors from market swings. Stablecoins have a pegged value like the U.S Dollar or any other currency. This helps in reducing volatility and works as digital money, which can easily be transferred from one exchange to another.

There are mainly two types of stablecoins available out there – Centralized stablecoins and decentralized stablecoins. Each of them has its own selling points. Hence to help you understand better, let me explain about centralized vs decentralized stablecoins.

So here we go:

What is a stablecoin?

A stablecoin is a digital asset that has a fixed price, mostly $1. This helps in removing holders from the swings of the market and offers secure and stable digital money to hold.

As per the definition by Themoneymongers.com “Stablecoins act as a midpoint between holding assets and withdrawing to the fiat currency. Also, they are effectively used for executing cross border payments.”

As their prices are pegged to a reserved asset like the US dollar, they help in reducing volatility compared to crypto coins like Bitcoin.

Centralized vs Decentralized Stablecoins

Now that you know what stablecoins are, it’s time to talk about centralized and decentralized stablecoins.

So here we go:

What is Centralized Stablecoins?

Centralized stablecoins are usually fiat collateralized off-chain. These stablecoins are usually connected with a third party custodian like a bank.

In centralized stablecoins, stability is achieved via 1:1 backing of tokens liabilities with the corresponding asset.

Some of the top examples of centralized stablecoins is Tether (USDT) and Coinbase (USDC). Apart from these, some of the new additions to the centralized stablecoins are TUSD, PAX, BUSD and GUSD.

These cryptocurrencies are essentially tokenized IOUs deployed onto a blockchain like Ethereum. Centralized stablecoins balance the supply and demand via minting and redemption mechanisms.

Under this model, users can mint stablecoins by depositing the equivalent fiat to the custodian, redeeming or burning the tokenized versions to retrieve fiat back.

Top 3 Centralized Stablecoins

Tether (USDT)

Tether is one of the most popular stablecoins available out there. It was launched back in 2014 as RealCoin. Also, the purpose of the coin was always to be worth one US dollar. The supply of the coin is limited by claimed dollar reserves.

It is also the largest stablecoin, and that’s why there was always a pressure on Tether to compile regular reports about its reserve. So it can prove that its value is always going to be the same as the US dollar.

However, the most recent report shows that just about ten percent is held in cash or deposit. Also, half of the USDT’s reserves consisted of ‘commercial paper’. Also, short term debt is issued by companies to raise funds.

TrueUSD (TUSD)

TrueUSD or TUSD is another popular coin that had a limited launch back in 2018. The stablecoin claims to conduct regular audits, and it is the first stablecoin which is fully backed by the USD dollar.

The audit of the stablecoin indicates that the supply is limited by the dollars they hold. Also, the daily churn/trade is relatively low.

Also, TUSD allows for DeFi and staking to earn returns from holdings. Plus, the stablecoin is partnering up with a bank for digital payments, and incubating ‘digital asset to DeFi’ projects.

Gemini USD (GUSD)

The Gemini Dollar (GUSD) is another popular stablecoin. This one is pegged to and backed by US dollars held in FDIC-insured bank accounts.

The funds of the stablecoins held in reserves are audited from time to time by the accounting firm, BPM LLP. The cryptocurrency was created by the popular crypto exchange Gemini, which was founded by Cameron and Tyler Winklevoss in 2014.

Also, the coin has received approval from the New York Department of Financial Services (NYDFS), and it was launched back in 2018.

What is Dcentralized Stablecoins?

Decentralized stablecoins are fully transparent and non custodial. No one can control decentralized stablecoins. Also, all collateral backing is visible to all as funds are on a publicly verified blockchain.

This allows the stablecoin to be trustless and secure with a single entity controlling the funds. Also, decentralized stablecoins can be divided into two parts- crypto-collateralized and algorithmic.

The centralized stablecoins are capable of increasing or decreasing their supply manually by minting or burning when needed. On the other hand, the algorithmic stablecoins utilize smart contracts or algorithmic markets operations controllers (AMOs), to automatically control the supply.

Top 3 Decentrlized Stablecoins

DAI Token

According to the MakersDAO’s white paper, Dai is generated, backed and kept stable by the use of Ethereum based currency deposited into MakerDAO’s vaults.

The deposited funds work as collateral whenever a user wants to withdraw their DAI currency. Also, because the cryptocurrencies are worth more than the U.S. dollar, MakerDAO can keep its stable coin pegged loosely to the U.S. dollar at a 1-to-1 ratio.

The theory of this was so good that in September 2018, a venture capital firm Andreesen Horowitz invested $15 million in MakerDAO.

EOSDT

EOSDT is a well-known cryptocurrency that operates on the EOS platform. The cryptocurrency has a currency supply of 2,642,505.29330823. It also refers to itself as a dollar pegged currency that leverages underlying EOS and BTC collateral and adds extra liquidity to the market.

Moreover, the coin is highly stable as the stability mechanisms are embedded in smart contracts to maintain a 1:1 parity with USD. Also, the coin is insured by the Equilibrium Stability Fund of 584,408.67 EOS ($ 1,332,451.76).

Defi Dollar (DUSD)

DeFi dollar is built as a stablecoin. The coin uses the primitives of DeFi to stay close to the Dollar. The coin gives the investors an opportunity to index varying stablecoins in its single token. Also, it protects users from any underlying risks.

Moreover, DUSD is collateralized by the Curve Finance liquidity provider (LP) tokens while also using Chainlink oracles to stabilize itself. Along with that, Curve is used for integrating the lending protocols and swapping tokens. This is another key step that stabilizes the token.

Furthermore, to offer you maximum safety, the token also offers you a staking mechanism. This adds an additional layer of protection to the token.

What can you do with stablecoins?

Minimize volatility:

As the value of cryptocurrencies like Bitcoin or Ethereum fluctuates a lot. There is no guarantee how the price of the coin will move. However, on the other hand, stablecoins are pegged to a more stable currency like the U.S. Dollar. This gives buyers and sellers certainty that the value of their holdings will not decrease unpredictably.

Trade or save assets:

There is absolutely no need to have a bank account to hold stablecoins. Also, they are pretty easy to transfer.

The value of stablecoins can be sent easily around the globe, including to places where the U.S. dollar may be hard to obtain or where the local currency is unstable.

Earn interest:

Most stablecoins offer you a staking mechanism. This allows you to earn interest easily. Plus, the interest rate is higher than what banks would offer. As a result, stablecoins are considered a good investment instrument.

Transfer money cheaply:

Transferring stablecoins is pretty cheap. As a result, people have already transferred millions of dollars worth of USDC and other coins with low transfer fees.

Send internationally:

Stablecoins has a fast processing time and low transaction fees compared to sending traditional money. As a result, they are a good choice when it comes to sending money anywhere in the world.

 Final Words:

So that was all for what are stablecoins, why should you use them and the Centralized vs Decentralized Stablecoins difference. I hope this has answered all your doubts about stablecoins. In case there is anything else you wish to ask, drop a comment below.

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Health & Wellness

Learning Loss Must be Recovered to Avoid Long-term Damage to Children’s Wellbeing

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School closures have caused large and persistent damage to children’s learning and wellbeing, the cost of which will be felt for decades to come, according to a new report launched today by the Global Education Evidence Advisory Panel (GEEAP), co-hosted by the UK’s Foreign, Commonwealth & Development OfficeUNICEF Office of Research-Innocenti, and the World Bank.

Prioritizing Learning During COVID-19 presents the latest data on the impact of school closures on children. Estimates suggest that without urgent action, a Grade 3 child who has lost one year of schooling during the pandemic could lose up to three years’ worth of learning in the long run.

“Learning losses due to school closures are one of the biggest global threats to medium- and long-term recovery from COVID-19. The evidence tells us that schools need to reopen and be kept open as far as possible, and steps need to be taken in reintegrating children back into the school system,” said Abhijit Banerjee, co-chair of the GEAAP. Dr. Banerjee, who shared the 2019 economics Nobel Prize in part for his work in education, is one of the 15 education experts from around the world who produced the second annual GEAAP report.

The economic cost of lost learning from the crisis will be severe. A recent estimation predicts a USD $17 trillion loss in lifetime earnings among today’s generation of schoolchildren if corrective action is not urgently taken.

“While many other sectors have rebounded when lockdowns ease, the damage to children’s education is likely to reduce children’s wellbeing, including mental health, and productivity for decades, making education disruption one of the biggest threats to medium- and long-term recovery from COVID-19 unless governments act swiftly,” saidKwame Akyeampong, Panel co-chair.

Low- and middle-income countries and children from lower socioeconomic backgrounds have been the hardest hit, the report notes. Schools have, on average, been closed for longer than in high-income countries, students have had less or no access to technology during school closures, and there has been less adaptation to the challenges of the crisis.  Evidence is mounting of the low effectiveness of remote learning efforts. In Sao Paolo, Brazil, for example, Grade 5 students in remote classes learned nearly 75% less and were 2.5 times more likely to drop out. Emerging data on learning loss shows Grade 4 students in South Africa having lost at least 62% of a year of learning due to school closures, and students in rural Karnataka, India, are estimated to have lost a full year. The increase in education inequality that COVID-19 has created, across and within countries, is not only a problem in its own right; varied learning levels in the classroom makes it more difficult for teachers to help most students catch up, especially the most marginalized.

“While schools must be the first to open as restrictions are lifted, recovering the loss that children have experienced requires far more than simply reopening classrooms. Schoolchildren need intensive support to get back on track, teachers need access to quality training and resources, and education systems need to be transformed,” said Robert Jenkins, UNICEF Director of Education.

“Over 1.6 billion schoolchildren globally were shut out of school at the height of the pandemic, compounding the learning crisis poorer countries were already facing,” said Vicky Ford MP, UK Minister for Africa, Latin America and the Caribbean, ahead of the report launch today. “My priority in the coming year is to ensure as many children as possible globally get back to school and back to high-quality learning.”

The report identifies four urgent recommendations made by the Panel (GEEAP) to help prevent further loss and recover children’s education:

Prioritize keeping schools and preschools fully open. The large educational, economic, social, and mental health costs of school closures and the inadequacy of remote learning strategies as substitutes for in-person learning make it clear that school closures should be a last resort.

Prioritize teachers for the COVID-19 vaccination, and use masks where assessed as appropriate, and improve ventilation. While not prerequisites to reopening schools, the risk of transmission in schools can be sharply reduced when a combined set of mitigating actions, such as using quality masks and ventilation, are taken.

Adjust instruction to support the learning needs of children and focus on important foundational skills. It is critical to assess students’ learning levels as schools reopen. Targeting instruction tailored to a child’s learning level has been shown to be cost-effective at helping students catch up, including grouping children by level all day or part of the day.

Governments must ensure teachers have adequate support to help children learn. Interventions that provide teachers with carefully structured and simple pedagogy programs have been found to cost-effectively increase literacy and numeracy, particularly when combined with accountability, feedback, and monitoring mechanisms.

The expert panel also calls on governments to build on the lessons learned during school closures by supporting parental engagement and leveraging existing technology.

“We must continue to sound the alarm on the crisis in education and ensure that policy makers have clear evidence for how to recover the catastrophic learning losses and prevent a lost generation,” said Jaime Saavedra, Panel member and Global Director for Education at the World Bank.

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