Recent developments in international trade and in the use of trade policy instruments Short courses for Permanent Missions in Geneva Organised by the Division on Technology and Logistics Delivered by the Division on International Trade in Goods and Services, and Commodities- Trade Analysis Branch Friday, 12 February 2016 1
Structure of this short course: - Introduce two publications - Trade Slowdown - Regional Trade Agreements - Discussion - Questions and Answers Objective: to provide better understanding of what is happening to international trade, and to provide some insights on trade agreements. 2
Paragraph 18(d) of the Doha Mandate of UNCTAD XIII provides that UNCTAD should continue to monitor and assess the evolution of the international trading system and its trends from a development perspective 3
Purpose of the two publications: Inform by providing factual information on the trends in international trade flows and on the use of trade policy instruments. Format/Content: Published once a year (fall) a) Thematic part b) Series of trade and trade policy indicators Data is presented in a very intuitive format. Target audience: Trade practitioners/policymakers. Non-technical. Feedback, comments, suggestions most welcome. 4
FORMAT: Highlights Indicators More detailed discussion 5
Geography of trade
Network analysis in the trade of parts and components (2004 vs 2014) 7
South-South Trade Intraregional with China Other South-South Percentage over total trade 0 20 40 60 80 East Asia Excl. China China Latin America South Asia Sub-Saharan Africa Transition Ec. W.Asia & N.Africa 2004 2011 2014 2004 2011 2014 2004 2011 2014 2004 2011 2014 2004 2011 2014 2004 2011 2014 2004 2011 2014 Source: UNCTAD calculations based on Comtrade data. 8
Export Market Share (2014) Export Market Share (2014) Developed 2014 Change to Developing 2004-2014 Developing 2004 Motor Vehicles Chemicals Animal Products Transport Equipment Paper Prod, Publishing Machinery Various Precision Instruments Food Products Rubber/Plastics Metal Products Vegetable Products Basic Metals Non-Metallic Mineral Tobacco, Beverages Petroleum Products Electrical Machinery Mining and Metal Ores Wood Prod, Furnitures Tanning Oils and Fats Office Machineries Textiles Apparel Comunication Equip. Oil, Gas, Coal Percentage 0 20 40 60 80 100 Source: UNCTAD calculations based on UN Service Trade database. Developed 2014 Change to Developing 2004-2014 Developing 2004 Royalties and license fees Financial services Insurance services Cultural and recreational svcs Other business services Communications services Transportation Computer and information svcs Travel Construction services Source: UNCTAD calculations based on UN Service Trade database. Percentage 0 20 40 60 80 100 9
Change in Export Competitiveness top 20 markets (since 2011) 10
Export sophistication gap (2014) Much more sophisticated (0.3 to 1) More sophisticated (0.05 to 0.3) Similar sophistication (-0.05 to 0.05) Less sophisticated (-0.3 to -0.05) Much less sophisticated (-1 to -0.3) 11
Overall export performance (since 2011) Top 20% 20% to 40% 40% to 60% 60% to 80% Lowest 20% No data 12
Importing Region Developed Countries East Asia Latin America South Asia Sub-Saharan Africa Transition Economies W.Asia & N.Africa Developed Countries East Asia Exporting Region Latin America South Asia Sub- Saharan Africa Transition Economies W.Asia & N.Africa 1.8 2.7 1.1 2.9 0.3 1.1 0.4-0.3 0.3 0.3 0.0-0.2 0.2-0.1 5.2 2.6 4.5 3.2 1.9 2.6 1.6-0.6-0.7-0.2-0.9 0.1 0.0-0.2 3.8 9.2 1.1 9.7 1.5 2.1 2.9-0.3-0.4-0.6-0.5-0.3 0.5-0.2 10.6 13.2 10.2 7.1 4.5 7.4 5.2 0.8 0.8-3.7-0.7-2.0 0.4-2.9 7.5 11.4 9.1 8.1 3.9 6.9 5.1-0.7-0.2 0.0 0.3-0.7-0.4-0.3 4.6 6.7 9.0 6.7 1.7 0.4 6.2-2.0-2.4-2.7-2.5-1.2 0.3-1.4 3.7 5.6 5.4 4.0 3.5 6.9 1.6-0.7-0.3-1.3 0.1-0.4 3.0-0.3 13
Multilateral Liberalization 2008 2014 MFN Tariffs (%) 0 5 10 15 20 Preferential Liberalization 2008 2014 Preferential Tariffs (%) 0 2 4 6 8 10 Agriculture Simple avg. Weighted avg. Agriculture Simple avg. Weighted avg. Manufacturing Simple avg. Weighted avg. Manufacturing Simple avg. Weighted avg. Natural Resources Simple avg. Weighted avg. Natural Resources Simple avg. Weighted avg. Source: UNCTAD calculations based on UN COMTRADE and UNCTAD TRAINS data Source: UNCTAD calculations based on UN COMTRADE and UNCTAD TRAINS data 14
Free trade and remaining tariffs Free Trade MFN Preferential Percent of total trade 0 20 40 60 80 Average Tariff on Non-Free Trade Simple Average Trade Weighed Percent 0 5 10 15 20 Agriculture 2008 2014 Agriculture Manufacturing 2008 2014 Manufacturing Natural Resources 2008 2014 Natural Resources Source: UNCTAD calculations based on UN COMTRADE and UNCTAD TRAINS data 15
Export restrictiveness (2014) Very Restrictive (more than 7.5%) Restrictive (5% to 7.5%) Average (2.5% to 5%) Almost Free (less than 2.5%) No data 16
True tariff water Most constrained (less than 5%) Very constrained (5% to 10%) Constrained (10% to 20%) Slightly constrained (20% to 30%) Not constrained (more than 30%) No data 17
NTMs in World Trade, by Sector Frequency Index Coverage Ratio Percent 0 20 40 60 80 Agriculture Manufacturing Natural Resources SPS TBT Price Control Quantity Control Finance Export Other SPS TBT Price Control Quantity Control Finance Export Other SPS TBT Price Control Quantity Control Finance Export Other Source: UNCTAD calculations based on UN COMTRADE and UNCTAD TRAINS data 18
Real effective exchange rate Very strong appreciation (more than 20%) Appreciation (5% to 20%) No substnatial change (up to 5%) Depreciation (5% to 20%) Strong depreciation (more than 20%) No data 19
Trade Slow Down 20
Annual Growth Rate (%) Trade Elasticity Trade Slow Down Figure 1: World Trade Takes a Pause After a strong rebound global trade growth has been sluggish Figure 2: Trade Elasticity to Global Output Trade growth has become much less reponsive to output growth 35 GWP Growth Trade Growth Exports over GWP 20 2.5 30 10 2 25 0-10 1.5 20-20 1995 2000 2005 2010 2015 Source: UNCTAD calculations based on UNCTADSTAT data 1995 2000 2005 2010 2015 Source: UNCTAD calculations based on UNCTADSTAT data 1 21
Trade is an indicator of Globalization Globalization period: (1990-2008) Rapid growth in emerging markets Favorable geopolitics New production models Technology/Innovation Lower trade costs Commodities boom De-Globalization: (2011-?) change in some of these trends, other factors? reflects in trade patterns and trade policy responses 22
23
Intermediates Imports over Manufacturing Exports (%) Tariff (%) Number of Measures in Force Figure 4: Shrinking Chains Trade for unit of output in on a downward trend Figure 5: Contrasting Trade Policies Tariffs have gone down, non-tariff measures not so China Korea (Rep. of) Rest of East Asia 60 6 Non-Tariff Measures Applied Tariff MFN Tariff 3000 50 5 4 2500 2000 40 3 1500 30 2002 2006 2010 2014 Source: UNCTAD calculation based on COMTRADE data 2 1000 1995 2000 2005 2010 2015 Source: UNCTAD calculations based on UNCTAD TRAINS and WTO I-TIP data 24
Policy implications Trade opportunities influence development perspective of many developing countries. Substantial risk of retrenching / economic fragmentation (inequality across countries/migration) Historically de-globalization periods have not been good but there are areas where trade opportunities still are strong GVC model to other geographic areas/sector Regional integration (Africa) Services trade Small enterprises (e-commerce) Not only about trade policy or trade costs. Need a new trade and development agenda. 25
Trade Agreements 26
Preferential Trade Agreements Extremely important (more than 75%) Very important (50% to 75%) Important (25% to 50%) Relatively important (10% to 25%) Not important (less than 10%) No data 27
Deep Trade Agreements Extremely important (more than 75%) Very important (50% to 75%) Important (25% to 50%) Relatively important (10% to 25%) Not important (less than 10%) No data 28
PTAs in Force Percentage Trade Agreements Trade under PTAs Goods only Goods and Services Deep Ag. Bilateral Pref. Unilateral Pref. 150 50 40 100 30 50 20 10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: UNCTAD calculations based on WTO Regional Trade Agreements Information System 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: UNCTAD calculations based on WTO RTAIS and UN COMTRADE database 0 29
Motives of PTA Facilitate trade, foster economic integration, geopolitics. Advantages vs multilateral approach: Political economy (bilateral concessions, limits free riding) Deeper integration (required by parties, GCV) Self selected clubs (only interested parties, easier to find mutual ground) 30
Predicted Value of Trade among PTAs Members Chart 3: PTAs and Trade Potential Not all PTAs deliver high level of trade among members EU 30 28 PTAs create trade not as much as they facilitate trade 26 COMESA ECOWAS CIS MERCOSUR ASEAN NAFTA 24 Natural trading partners? 22 22 24 26 28 30 Observed Value of Trade among PTASs Members Source: UNCTAD calculations 31
Kilometers (000) Chart 2: Regional No More Geographical distance among PTAs' members has increased Simple Average Trade Weighted Average 2 1 2004 2006 2008 2010 2012 0 2014 Source: UNCTAD calculations 4 3 Types of PTAs: Regional (natural traders) Hub and Spoke (Bilateral) Mega Regionals (Rules) 32
Chart 4: Tariff Preferences Still Matter PTAs' members often have substantial tariff advantages vs non-members COMESA MERCOSUR CIS Agriculture Manufacturing Relative preferential margin to members (percentage) 0 2 4 6 8 10 12 PTAs still provide substantial tariff advantages ECOWAS ASEAN NAFTA EU Source: UNCTAD calculations 33
Share of World Population Chart 5: Mega-Regionals Mega-regionals are substantially larger in all dimensions About creating and harmonizing large TPP TTIP 12 markets COMESA ASEAN CIS EU NAFTA 9 6 Trade deals not = to free trade ECOWAS MERCOSUR Note: Size of Circles is proportional to intra-ptas trade 0 10 20 30 40 50 Share of World GDP Source: UNCTAD calculations 3 0 caution in assessing their impacts 34
Questions/comments: tab@unctad.org Alessandro.nicita@unctad.org Thank you