International Trade – International World Of Business

Working together to help businesses reach attractive markets

wpdesigns — Wed, 04 Mar 2026 17:06:42 +0000

The Global Trade Helpdesk offers a comprehensive platform that simplifies market research for firms of all sizes. By teaming up with the International Federation of Freight Forwarders Associations (FIATA), the online tool now offers insight on which markets to sell to, and how to get products there.

As companies negotiate deals with buyers and explore new markets, one question quickly becomes decisive: can they get their goods to customers in the most suitable and affordable way? For exporters, especially smaller ones, logistics is more than a back-office function. It can determine whether an order is profitable, whether delivery deadlines are met, and whether a firm can compete on price and reliability in new destinations.

Transport costs and logistics are often among the largest and least predictable components of cross-border trade, typically representing 10–25% of total supply chain expenses for small exporters. When margins are thin, a small shift in freight rates, routing, paperwork delays, or last-mile delivery can erase profits or jeopardize a buyer’s confidence. That is why efficient logistics management is not just an operational task for small businesses, but a strategic tool: it helps maintain competitive pricing, ensures timely delivery, reduces risk, and lowers barriers to international market entry.

To make this challenge easier to tackle, the Global Trade Helpdesk has expanded its support for firms through a new partnership with the International Federation of Freight Forwarders Associations (FIATA). Through this collaboration, businesses can now connect with thousands of additional freight forwarders across more than 150 markets, helping exporters identify competitive logistics services that match their specific needs.

Freight forwarder information has been integrated directly into the Global Trade Helpdesk, strengthening the platform’s logistics component and improving access to more reliable service provider data. Using this multi-agency global platform, firms can assess economic attractiveness, evaluate market entry costs and regulations, identify niche markets and digital trade opportunities, and connect with key partners, including this new community of freight forwarders.

The Global Trade Helpdesk brings together information from 11 agencies and private-sector partners into a single search experience. It is available in eight languages: Arabic, Chinese, English, French, Indonesian Bahasa, Portuguese, Russian, and Spanish, making it easier for businesses to plan and execute exports.

‘Building on timely trade intelligence from the ITC Market Analysis tools, this practical data on freight forwarders is a strong complement towards firms putting their data-driven export strategies into action,’ said Julia Spies, Chief of Trade and Market Intelligence at ITC.

Stéphane Graber, Director General of FIATA, added: ‘Reliable logistics is central to turning trade potential into real commercial results. By integrating the international freight forwarding community into the Global Trade Helpdesk, we are helping small and medium-sized enterprises move from identifying opportunities to delivering on them, with greater transparency, stronger partnerships, and improved access to global markets. This significantly enhances the visibility and value of professional trusted freight forwarders worldwide.’

By pairing market intelligence with practical logistics connections, the platform helps SMEs move from opportunity to action with greater confidence.

EU appeals dispute panel report regarding duties on imports of biodiesel from Indonesia

Press Room Team — Sun, 28 Sep 2025 23:25:37 +0000

The European Union notified its decision to appeal the panel report in the case brought by Indonesia in “European Union — Countervailing Duties on Imports of Biodiesel from Indonesia” (DS618). WTO members were informed of the appeal at the Dispute Settlement Body (DSB) meeting on 26 September. The panel report was circulated to WTO members on 22 August 2025.

European Union — Countervailing Duties on Imports of Biodiesel from Indonesia

Indonesia expressed regret that the EU decided to appeal the panel’s findings before a non-functioning Appellate Body. The EU recalled that it had invited Indonesia to join the multi-party interim appeal arrangement (MPIA) so that both parties can preserve their rights to a binding resolution of trade disputes despite the blockage of appointments to the Appellate Body. The MPIA is a contingent measure to safeguard the right to appeal in the absence of a functioning Appellate Body.

Given the ongoing lack of agreement among WTO members regarding the filling of Appellate Body vacancies, there is no Appellate Body Division available at the current time to deal with the appeal in the dispute concerning countervailing duties imposed by the European Union on imports of biodiesel from Indonesia. Further information will be available within the next few days in document WT/DS618/5.

John H. Jackson Moot Court Competition kicks off with webinar support on offer

Press Room Team — Fri, 26 Sep 2025 23:26:47 +0000

The Competition is a simulated hearing under the rules of the WTO dispute settlement mechanism involving exchanges of written submissions and oral pleadings before panelists on international trade law issues. The competition is organized by the European Law Students’ Association (ELSA) with the technical support of the WTO.

The WTO, the Advisory Centre on WTO Law (ACWL), and ELSA are partnering to support participants interested in this competition by organizing a series of webinars titled “Legal Mooting Masterclass.” These webinars will equip teams and their coaches with the information required to navigate the competition successfully.

The webinars will provide an overview of the competition, useful tools for research on WTO law, and tips on best practices for participating in the competition from experts from the WTO and ACWL.

Four sessions will be held on 6 October and 10 October at different times to accommodate participants around the world; the sessions require prior registration. For the webinar timings and registration form, click here.

Every year, the John H. Jackson Moot Court Competition provides hundreds of students across the globe an opportunity to address interesting and novel questions of WTO law, and to engage with WTO experts who serve as panelists and sponsors of the competition. Students who participate in the Moot Court Competition often go on to internships, graduate programmes, and careers in international trade law.

This year’s case, “Engeli – Measures Relating to Critical Minerals,” explores how WTO members can advance sustainable goals through local content rules, structure critical minerals partnerships, and address human rights concerns in the supply chain in a manner consistent with WTO rules.

Emerging Markets Show Resilience Despite Global Monetary Tightening

Press Room Team — Thu, 31 Oct 2024 23:28:14 +0000

Interest rates in the United States are at 20-year highs and the dollar has appreciated sharply against other world currencies. Given the dollar’s outsized role in international finance and trade—and if history is any guide—emerging markets have good reason to be concerned.

We know that rapid monetary tightening in the US and a strong dollar can lead to sudden capital flight and financial crises in the emerging world. The good news is that we have not seen an emerging market crisis.

Our latest External Sector Report shows that capital flows into emerging markets have recovered from a post-pandemic low. Net capital inflows into emerging markets—excluding China—rose to $110 billion, or 0.6 percent of GDP, last year. That’s the highest level since 2018.

As one would expect during a period of global monetary tightening, emerging markets have seen a decline in more volatile net portfolio inflows, but net inflows of foreign direct investment have been more stable.

China is an exception. It saw net capital outflows, including negative net FDI inflows over 2022-23. Some of this may reflect multinational firms repatriating earnings. But it may also reflect shifting expectations about Chinese growth and geoeconomic fragmentation.

The fact is most emerging markets have shown resilience amid global monetary tightening. This is partly because of stronger fundamentals. Indeed, many countries are now benefiting from more robust fiscal, monetary, and financial policy frameworks, as well as more effective implementation of policies and tools.

But this is only part of the story. These patterns in net inflows mask a retrenchment of global gross capital flows—declines in both gross inflows (foreigners buying fewer assets) and gross outflows (residents buying fewer assets abroad).

In 2022-23, global gross inflows declined from 5.8 to 4.4 percent of world GDP, or from $4.5 trillion to $4.2 trillion, relative to 2017-19, in line with global gross outflows.

The decline masks large differences across countries. The US accounted for 41 percent of global gross inflows—almost double its 23 percent share in 2017-19. Gross outflows from the US have similarly increased, from 14 to 21 percent of global gross outflows. Meanwhile, global gross flows into and from China dropped considerably over that period, and there was an even more drastic decline in gross flows for financial centers.

This may be evidence of increased financial fragmentation but could also partly reflect an unwinding of some tax or regulatory strategies by large multinational corporations in financial centers, whose share of global flows has declined drastically.

Amid shrinking global flows, emerging markets must double down on recent improvements to macroeconomic frameworks, more effective policies and stronger institutions that have helped them to ride out the prospect of higher-for-longer US interest rates.

Countries also have at their disposal a variety of tools to cope with the stresses created by capital flow volatility. The IMF’s Integrated Policy Framework can help calibrate the best possible policy mix—which can also help countries navigate this strong-dollar period.

How to bridge the sustainability skills gap across global value chains

Press Room Team — Sun, 29 Sep 2024 19:48:04 +0000

Supply chains are critical to helping the world achieve the UN Sustainable Development Goals by 2030.
For organizations all along these value chains, the question should no longer be about whether to invest in sustainability, but rather how to ensure workforces and upstream suppliers are prepared to drive sustainability initiatives forward.
Organizations can use three priorities – skills investment, public-private collaboration and refocusing on long-term value creation – to help address the sustainability skills gap in global supply chains.

Supply chains are critical for achieving the Sustainable Development Goals (SDGs) – the supply chains for eight industries including food, fashion and freight account for more than 50% of global emissions.

And while recent research from the World Economic Forum and Kearney shows 66% of surveyed business leaders prioritize sustainability credentials over price when selecting suppliers, 94% of companies say they lack the necessary people power to implement their environmental, social and governance (ESG)agendas effectively. To reach critical 2030 sustainable development targets, companies may need to train as many as 150 million people with sustainability skills.

Bridging this skills gap will be essential to transforming supply chains to be more inclusive and sustainable.

Which sustainability skills will transform supply chains?

As organizations use more climate-resilient technologies and circular practices, workforces need the necessary skills to drive sustainability in supply chains. This need spans the entire value chain, from the initial sourcing of raw materials to the final product reaching the consumer. The question is no longer whether companies should invest in sustainability, but rather how they can ensure their workforce and upstream suppliers are prepared to drive sustainability initiatives forward.

A recent publication Skills for Sustainable Supply Chains by the United Nations Industrial Development Organization (UNIDO) highlights that collaborative skill development, particularly with upstream suppliers, will accelerate sustainability performance in the supply chain.

The report says workforces along the supply chain need training in how to minimize environmental impact, safely handle hazardous materials, mitigate climate change, promote resource efficiency, prevent biodiversity loss and regenerate nature. Other essential sustainability training should cover social dialogue, collective bargaining, health and safety standards, and promoting workplace gender and social inclusion.

How to bridge the sustainability skills gap

It will take a collective effort from all stakeholders, including governments, financial institutions, businesses and educational institutions, to address the sustainability skills gap in global supply chains. They can use three priorities to counter this growing divide:

1. Invest in reskilling and upskilling

Investment must be scaled up in both technical and soft skills to improve sustainability performance. This includes not only training workers in new technologies and sustainable practices, but also fostering an organizational culture that embraces sustainability and encourages innovation and collaboration.

Helping public and private actors to attract – and measure – more sustainable investments is key to this transformation of global value chains.

2. Scale-up collaboration between public and private sectors

Public-private partnerships provide a structured approach to harnessing all kinds of resources for skills development. The focus here should be on providing early-stage skills and industry-relevant training, while ensuring scalability of results that cannot be achieved with in-company training alone.

3. Enact a paradigm shift

Organizations must shift their focus from short-term profits to long-term value creation. In this new paradigm, sustainability and operational excellence would be more ingrained than ever before, with sustainability driving performance enhancements and financial returns.

To enable this shift, empowering employees and upstream suppliers with sustainability skills must be seen as a strategic business opportunity that generates long-term value for all actors in the value chain.

“

Bringing sustainable and ethical products and services to the market will only be possible if smallholders, suppliers, producers, leading firms and states along global supply chains are all equipped with the right skills.”— Gerd Müller, UNIDO

“Global supply chains create millions of jobs and are key to economic growth and poverty reduction,” UNIDO Director General Gerd Müller says. “Bringing sustainable and ethical products and services to the market will only be possible if smallholders, suppliers, producers, leading firms and states along global supply chains are all equipped with the right skills. I am committed to fair globalization, in which neither workers nor our shared natural environment are exploited, but are rightly seen as valuable, essential contributors, providing the foundation upon which all our lives are based.”

Sustainability upskilling in action

To close the skills gap and scale sustainability across the value chain, public-private collaborations should focus on reskilling current workers, upskilling suppliers and preparing future generations to meet the demands of a green economy.

For example, the World Economic Forum’s Centre for Advanced Manufacturing and Supply Chains has collaborated with UNIDO and the University of Cambridge on a series of industrial policy workshops. These events mapped workforce development needs from each sector, identifying the following needs:

Sustainability skills development should be a priority for public and private sector organizations.Image: The New Era of Industrial Strategies: Tackling Grand Challenges through Public-Private Collaboration (May 2024)

Through initiatives like the Learning and Knowledge Development Facility, funded by the Swedish International Development Cooperation Agency, UNIDO also partners with manufacturers such as the Volvo Group, HP, FESTO, Nokia, Hitachi, Komatsu and Epiroc to modernize vocational education and training systems in industrializing countries. Such initiatives foster cooperation and knowledge exchange across sectors to bridge critical skills gaps.

Companies committed to bridging the sustainability skills gap across their value chain can also play a key role in training their own suppliers. The World Economic Forum’s Industry Net Zero Accelerator recently identified 12 opportunities to tackle Scope 3 emissions (those emitted by others in an organization’s value chain), including “Bridge knowledge and technical expertise gaps.” If companies share strategies, knowledge, and technical support with suppliers, they can align on sustainability goals.

For example, electronics company Agilent Technologies has a supplier management programme for Scope 3 emissions, by far its largest source of greenhouse gas (GHG) emissions. It currently provides Agilent suppliers with the highest GHG emissions and lowest ESG performance ratings with resources, knowledge sharing, a supplier code of conduct and progress tracking tools. Agilent is now working on embedding emissions requirements into its procurement process and delivering training programmes for all of its suppliers.

Scope 3 emissions typically account for more than 70% of a company’s carbon footprint, so it’s critical that sustainability skills strategies consider all stakeholders across the value chain. By taking an expansive view, organizations can collaborate to drive the transformation of the entire supply chain and support global efforts to meet critical 2030 sustainable development targets.

Moving from roads to rivers: The tremendous potential of inland water transport

Press Room Team — Fri, 23 Aug 2024 00:58:51 +0000

As growing economic activity continues to boost the demand for freight transport, what if there was a way to move goods around that didn’t involve putting more trucks on the road and creating more congestion? What if we could carry large quantities of grain, minerals, containers, and other commodities from production centers to ports and other transit hubs for export? What if we could achieve all this with lower logistics costs and lower carbon emissions?

While it may sound ambitious, this vision could certainly become reality. But it requires one major shift: countries will need to transfer a portion of freight traffic from roads to inland waterways such as rivers, lakes, and canals.

Inland waterways make up about 5% to 10% of inland freight traffic in the US, the European Union and China, with trucking being the dominant mode globally. Yet in many parts of the world, they could play a much bigger role in the transport chain. Imagine the potential of famous rivers such as the Mississippi, the Rhine, the Mekong, the Brahmaputra, the Yangtze, the Nile and the Amazon, and many more inland waterways.

The potential benefits are hard to overstate. When done right, inland water transport (IWT) provides a unique chance to make transport:

Greener: Greenhouse gas emissions from heavy trucking have been growing rapidly, and can sometimes account for up to 40% of a country’s transport emissions. Shifting more cargo onto IWT would be a powerful way to buck the trend, with IWT emitting up to six times fewer emissions than trucks per ton-km.
Cheaper: One major advantage of IWT is that it consolidates cargo on large vessels instead of individual trucks. In fact, an IWT vessel can carry a few hundred containers, equivalent to a few hundred trucks. This allows for substantial economies of scale, resulting in transport costs per ton-km that can be several times less than that of trucking.
Safer: Although carrying cargo via IWT may require longer lead times compared to trucking, the risk of a serious collision or other incidents is considerably lower on the water. As a result, some studies have found IWT to be up to 50 times safer in terms of fatalities per ton-km.

Building on this, the World Bank has been working with client countries across several regions to unlock the potential of IWT and make it an integral part of the broader transport system. Our efforts to boost IWT have focused on several key priorities:

Financing: Channelling adequate financing toward IWT has been an uphill battle. In emerging economies, transport budgets are often constrained and roads usually claim the lion’s share. Even in countries that are blessed with extensive waterway systems, the IWT sector is underfunded and typically receives only a small fraction of the total transport budget. We are actively working with clients to turn this around.
Complementary infrastructure: Just like other transport systems, IWT requires complementary infrastructure. For example in Viet Nam, in addition to the upgrading of waterways for larger vessels to navigate, the World Bank is helping invest in and develop complementary ports, access roads, higher bridges for larger vessels, multi-modal connections, as well as navigation locks and maritime access channels to connect the waterways to the seas and coastal ports for international trade.
Policy: Besides policies to guide operations and safety, we have been working with transport authorities to adopt international good practices that are conducive to more sustainable transport such as IWT. These include establishing a transport strategy for multi-modal integration, facilitating data exchange across transport modes for more seamless connections, encouraging transport companies to consider IWT and other sustainable modes, better coordinating scheduled vessel services, and consolidating cargo on vessels to reduce the costs and emissions associated with individual trucks.

In the face of soaring transport demand, it may be tempting to keep the status quo and to continue building upon the current model: more roads, more trucks, more congestion, more greenhouse gas. However, our analytical work and experience from the field show that inland waterway transport can provide a realistic alternative that would make freight transport greener, cheaper, and safer. It’s hard to imagine why countries would want to miss out on this, especially in a context where governments are scrambling to curb climate emissions and diversify their supply chains. From Bangladesh to China to Viet Nam, our team is proud to help clients harness the power of IWT, and is excited to explore similar opportunities in other countries around the world.

Moving towards greater regulatory cooperation for international trade

Press Room Team — Sun, 18 Aug 2024 22:25:31 +0000

As tariffs continue to decrease worldwide, technical measures like sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT) have become relatively more important as potential obstacles to international trade.

The literature has focused particularly on the potential obstacles arising from differences in national regulations, a situation known as “regulatory heterogeneity.” The idea is that when regulations in the destination market differ significantly from those in the exporting country, firms wishing to export to the destination market face additional costs to identify, comply with, and demonstrate compliance with such regulations. The need to produce different versions of a good to comply with disparate regulations in each destination market limits exporting firms’ ability to take advantage of economies of scale, making the product even more expensive.

The Inter-American Development Bank (IDB) publication “Barriers or Enablers? Towards Trade-Compatible Technical Measures in Latin America and the Caribbean” found high levels of regulatory heterogeneity in Latin America and the Caribbean (LAC). Using a regulatory distance index—the percentage of technical measures that differ between two countries for each good—the calculations show that the average regulatory distance between LAC countries is 58%. In other words, on average, 58% of the technical measures in place between each pair of countries in the region are different. In contrast, the regulatory distance index between European Union (EU) countries is zero, as the bloc has achieved regulatory convergence by combining different trade regimes.¹

Regulatory heterogeneity has a negative impact on international trade. Figure 1 (panel A) shows econometric estimates of the probability of observing international trade between countries—the extensive margin, in technical terms. The nature of technical measures makes it important to examine this margin. Unlike tariffs, technical measures may involve both variable costs and fixed costs that may be high enough to impede trade. Moreover, even if exporting firms comply with all the requirements associated with technical measures in a foreign market, access to that market may not be automatic, as it may take several years for the exporter to obtain certification. Therefore, it is useful to examine the impact of regulatory distance on the likelihood that two countries trade a good.

The first bar in panel A shows that a mere 10% increase in the regulatory distance between two LAC countries reduces the probability of trade flows between them by 25%.² The negative effect on trade in the agricultural sector is even larger (second bar), suggesting that regulatory differences between countries pose a significant challenge to using international trade as a tool to promote food security.

Figure 1 (panel B) shows the effect of regulatory distance on import volumes—the intensive margin, in technical terms. This effect is also negative. The first bar shows that a 10% increase in regulatory distance is associated with a reduction in import volumes of about 3.5%. This effect is also significant. For example, reducing the average regulatory distance in LAC from 58% to 25% is associated with a 19% increase in the region’s average bilateral trade volume.

According to a survey of LAC exporting companies that formed part of the study, 45% of respondents said they found it difficult to identify the relevant regulations in their destination markets. Likewise, 40% admitted that their annual costs for compliance with technical measures represent more than 20% of their total sales. Some 43% of the companies surveyed said that regulatory heterogeneity generates high costs due to significant changes in production, testing, or both to meet the demands of each target market, and this percentage increases to 50% for small companies. These results support the econometric findings and suggest that reducing regulatory heterogeneity could cut the costs of dealing with technical measures when supplying multiple markets, which would be particularly useful for small exporting firms.

Regulations are not inherently harmful—indeed, they serve legitimate national objectives. The key is to avoid creating unnecessary barriers to trade. As part of a modern trade and integration agenda, technical measures should be designed to meet national objectives in a way that does not undermine international trade and potentially even promote it. Participation in international regulatory cooperation mechanisms can significantly promote international trade. Exporting companies in LAC would be the first to benefit from such changes and would undoubtedly appreciate them.

Free Enterprise Lets Businesses Solve Problems, Improve Lives

Press Room Team — Thu, 01 Aug 2024 20:06:13 +0000

When businesses can respond to problems and needs, they can transform lives. Free enterprise can improve your economic mobility, safety, productivity, life expectancy—in your local community and across the globe.

While naysayers may say otherwise, free enterprise and free markets have improved economic mobility, equality, safety, production, life expectancy, and overall happiness across the globe for years.

The myths and facts on free markets explained below are highlights from Johan Norberg’s “The Capitalist Manifesto: Why the Global Free Market Will Save the World.” These statistics aren’t just numbers—they represent lives changed, opportunities created, and problems solved for people all over the world.

Economic Mobility and Inequality

Myth: Those born into the lower income quintiles face a daunting challenge to move up the economic ladder.

Free Market Fact: The chance of upward mobility remains strong.

Recent data shows that among Americans born in the lowest quintile, 37% rise to one of the three highest quintiles. Even in the second lowest quintile, nearly half successfully climbed the economic ladder.

Myth: The American middle class is shrinking due to a decline in prosperity.

Free Market Fact: The common narrative of a shrinking middle class is actually a result of upward mobility.

Individuals once considered part of the middle class have moved into higher income brackets, challenging the traditional understanding of class dynamics.

Myth: Those in the top quintile earn 16.7 times more than those in the bottom quintile.

Free Markets Fact: When accounting for taxes and transfers, the income gap is reduced from 16.7 times to a more modest four times.

Myth: Scandinavian countries like Sweden and Denmark have better economic mobility and equality.

Free Market Fact: The comparison often overlooks the fundamental differences in wage structures.

In Scandinavian countries, where wages are more compressed, a modest increase in income can propel individuals to a higher quintile. In the U.S., the bar is set higher, requiring a more substantial income boost for upward mobility.

Myth: Dynastic wealth is perpetuated through generations.

Free Markets Fact: Looking at the Forbes 400 in 1982, only 69 individuals or their heirs retained their positions in 2014.

Latin America’s Role in Global Food Security: Trade, investment, and sustainable transformations

Press Room Team — Mon, 22 Jul 2024 00:34:20 +0000

In a world where the bounty of food surpasses the caloric needs of its population, it is paradoxical that hunger and food insecurity persist on a grand scale. Global food provision offers approximately 2.980 kcal per person per day—well above the 1.830 kcal needed to avoid undernourishment.

Yet around 735 million people or 9.2% of world population, still face hunger, compared to 7.9% in 2019. This means that 122 million more people face hunger, while it is projected that almost 600 million people will be chronically undernourished by 2030.

Despite recent progress, malnourishment is still on the rise hitting mainly on the poor, women, and children, especially in conflict zones like the Middle East. The world is off-track to meet the Sustainable Development Goal 2, which aims to eradicate hunger targets due to the intensification and interaction of conflicts, climate extremes and economic slowdowns and downturns, combined with highly unaffordable nutritious foods and growing inequalities.

International trade has become increasingly important for food security

The role of international trade in bridging this gap has never been more critical, with global agrifood trade growing 350% from 2000 to 2021 and reaching a total value of $1.7 trillion, the dynamics of food security have shifted. Now on average, a quarter of all calories consumed around the world are imported, with key notable regional disparities.

Over the past four decades, the volume of calories crossing borders has multiplied by 4.2 times. This trend is reflected in the fact that seven out of ten economies worldwide import more food than they export. To put these numbers in perspective, in the last two decades, according to FAO, primary crops production grew by 54%, meat production by 53%, and milk production by 58%. Meanwhile, population growth during this period was 29%. This data underscores the growing importance of agrifood trade. Trade is indeed a key driver in all dimensions of food security: availability, access, utilization, and stability.

Latin America’s Vanguard Role

In a nutshell, trade facilitates the global demand for food by matching supply and demand, stimulating investment, and improving the resilience of food systems. It is estimated that four factors will come into play:

Demographic Dynamics: Rapid population growth, aging, and shifts in income, dietary preferences, and urbanization are likely to lead to increased demand for certain types of food, such as meat and dairy products. This intensifies international trade’s role in enhancing food availability and access, widening trade deficits for net importing countries.
Concentration of Production: Key agricultural commodities are produced by a few countries, making agrifood products heavily traded. At a global scale, with just three top producers accounting for 65 percent of key global agricultural output, international agrifood trade remains crucial in ensuring global food security, including processed food.
Climate Impact on Trade: Adverse climate change effects are reducing global food production by and expected 8%, exacerbating global food insecurity. Recurrent natural disasters, in the form of extreme floods, storms, droughts, wildfires, and pest and disease outbreaks, are also causing significant distress, with a total loss of approximately US$3.8 trillion in agricultural production over the past 30 years, and disruptions like the Panama Canal drought impede trade flows.
Balanced Global Trade Network: The food and agricultural trade network is becoming more balanced as countries form trade clusters based on geographic proximity and trade agreements. Indeed, the number of RTAs in force have multiplied from fewer than 25 in 1990 to more than 350 in 2022¹.

Against this background, the role that Latin America and the Caribbean (LAC) can play as the main net food exporting region in the world is paramount. In a nutshell, the world needs the region in its fight against global hunger and malnutrition as part of the Global Alliance called on as part of Brazil’s G20 Presidency. Our region is a key global player in international food markets. It accounts for 14% of the value of global agricultural and fisheries production; its share of world agrifood exports is around 18%. By 2031, the region will lead the global provision of key products essential to meet food demand, including 61% of global soybean exports; 59% sugar, 45% fish feed, 43% corn, 40% fish meat and oils, and 32% chicken, further solidifying its status as a critical player in the global food supply chain.

However, challenges remain. In the last two decades, the share of agrifood in total exports rose from 15% to 25 %, and 42% of what is produced is now exported. Yet, as most Latin American countries have experienced a decline in the competitiveness of their agrifood exports over the past decade, the region’s policy agenda must take on the challenge of strengthening the agrifood sector’s international integration. Addressing traditional trade barriers (tariffs and quotas) and non-traditional trade barriers (carbon border adjustment measures and deforestation-free products), along with environmental challenges like greenhouse gas emissions and sustainable land use, is critical.

Furthermore, a sustainable transformation of LAC’s food system is also needed to materialize new opportunities. Indeed, addressing the “hidden costs for the region” is imperative. They include environmental costs from greenhouse gas emissions, nitrogen emissions, land-use transitions, deforestation, blue water withdrawals, social costs associated with undernourishment and poverty, and health costs from unhealthy dietary patterns. These hidden costs produced by our agrifood systems amount to US$493 billion per year, one of the highest in the world. The IDB estimates that decarbonization of agrifood systems could entail a net benefit to the region’s economies of $940 billion, from health benefits, household savings, and ecosystem services.

Overall, LAC has a fundamental role to play in the global fight against food insecurity. Still, a renewed trade and investment agenda is critically needed to be anchored in its sustainable transformation and stronger public–private cooperation. Food systems are intrinsically complex with many dynamic components (Figure 1), involving multiple transitions from repurposing agricultural policies to leveraging private sector participation, scaling up climate finance, or reducing food waste and loss.

Through the Integration and Trade Sector (INT), the IDB is actively promoting regional policy dialogues between public and private stakeholders to identify a strategic agenda around the more pressing trade and investment bottlenecks in order to strengthen the role that LAC can play in tackling these critical global development challenges. Experience shows that integration, coordination, consistency, and progressivity will be essential principles to achieve concrete results as collective measures and a global alliance are needed to make significant strides towards sustainable development in the region.

Trading in a new climate: How mitigation policies are reshaping global trade dynamics

Press Room Team — Tue, 11 Jun 2024 23:46:47 +0000

Faced with the urgency of climate change, many countries are embracing policies to tackle it. However, these policies are not only reshaping the landscape of global trade flows but also risking further fragmentation and inequality. One challenge concerns the consequences for low-income countries that rely on export-led growth and especially their Small and Medium-sized Enterprises (SMEs) part of global supply chains. To successfully navigate this challenge and promote a just and inclusive transition to a greener world, bold policies are needed that foster coordination and incentivize firms to decarbonize.

The impact of recent climate mitigation policies on emission reduction commitments

The large number of climate mitigation policies — including net zero goals, supply chain due diligence obligations and green subsidies — is significantly reshaping global trade flows. For example, the European Union’s Carbon Border Adjustment Mechanism (CBAM) is penalizing high-carbon content exports to the European Union (EU) to encourage cleaner production and meet its own climate ambitions. The EU Corporate Sustainability Reporting Directive will require around 50,000 large companies and listed SMEs in the EU to report their environmental and social impacts, including through their supply chains. Several countries are using green subsidies at the risk of distorting market access to firms from other countries producing green products. These policies are a game-changer in the global trade landscape.

Reshaping global trade flows: Risks for SMEs and low-income countries

The shift towards more binding social and environmental regulation will reshape global supply chains, which are critical to development and job creation. However, countries that fail to decarbonize production processes risk losing trade to greener counterparts. World Bank research shows that climate change mitigation policies can disproportionately affect low- and middle-income countries, leading to a decline in their trade compared to high-income economies. This poses a significant challenge for job security in affected sectors.ⁱ

The Bank’s new CBAM Exposure Index (Figure 1) shows for instance that Zimbabwe is the most vulnerable country, largely because of its sizeable exports of high carbon-emissions intensive ferroalloys to the EU. In Mozambique, almost 20 percent of the country’s exports fall under CBAM, impacting the economy, especially with 97 percent of aluminum exports going to the EU.

Source: Maliszewska, M., Chepeliev, M, Fischer C. and Jung, E. (2023) How developing countries can measure exposure to the EU’s carbon border adjustment mechanism. https://www.worldbank.org/en/data/interactive/2023/06/15/relative-cbam-exposure-index

Note: The relative CBAM exposure index is measured by multiplying the export share by the difference between the exporter’s emissions intensity and the EU average emissions intensity for the CBAM product, scaled by the assumed CBAM price ($100 per ton). This index identifies countries with an excess of carbon emissions to the EU average. In the figure, green signifies cleaner than the EU average while red expresses more carbon intensive than the EU average. For the relative CBAM exposure index, the threshold is zero. Negative (green) index indicates relatively clean exporters may gain competitiveness in the EU market, while positive (red) indicates countries that may lose export competitiveness. See: https://www.worldbank.org/en/topic/trade/brief/technical-note-for-the-cbam-exposure-index

Disproportionate impact on SMEs: Compliance challenges and risk of exclusion from global supply chains

Multinational enterprises (MNEs) are under increasing pressure from consumers, investors, and regulators, to enhance sustainability requirements for their products. While this is a positive development, it comes with compliance costs. A recent survey found that 78 percent of MNEs would exclude suppliers endangering their carbon transition plans by 2025.

SMEs, particularly in developing countries, bear a higher burden of compliance due to their limited resources. Failure to comply with these requirements can result in exclusion from global supply chains and trade. For example, the new EU Regulation on deforestation-free products may hinder the access of small-holder farmers producing cocoa, coffee, and palm oil from countries like Côte D’Ivoire, Ethiopia, and Honduras.

What is needed for a just and inclusive transition to a greener world?

To ensure a just and inclusive transition to a greener world, it is crucial to implement better coordinated policies with compliance requirements that are manageable for the green transition of SMEs. This can be achieved through environmentally friendly trade practices, lowering barriers to trade in the goods, services, and technology that help with adaptation and mitigation.

Additionally, global collaboration is essential to harmonize regulations and introduce mutual recognition agreements to avoid duplication. Enhancing institutional capacity in carbon standards, measurement, and verification, along with compliance to private initiatives, is also vital. For example, in Georgia, less than half of businesses monitor energy consumption and only 3 to 5 percent monitor emissions.

Mobilizing support to address the technical and financial needs for firms affected by mitigation policies is critical to ensure compliance, promote sustainable practices and facilitate the adoption of green technology. For example, in South-East Asia, 79% of SMEs surveyed acknowledged the need to acquire new technical skills to effectively deal with climate change and leverage existing climate mitigation opportunities.

Increased global cooperation, technical and financial assistance are necessary to safeguard the continued access and participation of SMEs in global value chains. This is what the World Bank is supporting in Brazil, Türkiye, and Kenya.

Takeaways

The challenges posed by climate mitigation policies require careful navigation to achieve a just and inclusive transition to a greener world. By implementing bold policies that foster coordination, incentivize decarbonization, and support SMEs, we can promote sustainable practices and facilitate the adoption of green technology. Increased global cooperation, technical assistance, and financial support are essential to ensure the continued access and participation of SMEs in global value chains, safeguarding future inclusive growth. Together, we can navigate these challenges and create a more sustainable and equitable world.