WTO Members Discuss Economic and Trade Impact of Natural Disasters on Small Economies

The Committee on Trade and Development met on 6 July 2021 to discuss how trade policy and WTO rules can help small, vulnerable economies build resilience to natural disasters and accelerate recovery after such events.

The Food and Agriculture Organization of the United Nations (FAO) presented its latest report on the impact of natural disasters on agriculture and food security. It said the effects on agriculture have been underestimated, primarily due to the unavailability of data. The FAO emphasized that data collection needs to be strengthened at the national and international levels to enhance knowledge sharing and to support capacity development.

The International Trade Centre (ITC) stressed the need to strengthen resilience and support mitigation in small, vulnerable economies. ITC data from SME competitiveness surveys show that resilient companies were five times less likely to lay off employees during COVID-19 and more likely to maintain stable sales. It said there is a need to focus on building the resilience of smaller companies to withstand shocks and to safeguard jobs. The ITC also said its Green recovery plan is focusing on empowering small businesses to recover from the pandemic.

The United Nations Conference on Trade and Development (UNCTAD) noted that developing countries, particularly small economies in tropical areas, are the most affected by climate change. It highlighted projections indicating a high probability of droughts over the next ten years. UNCTAD stressed that if countries implement aggressive climate change mitigation, they can alleviate the frequency and intensity of such hazards.

The WTO Secretariat highlighted the WTO Natural Disasters and Trade Study, which focuses on six disaster-affected members: Fiji, Dominica, Nepal, St Lucia, Tonga and Vanuatu. The study shows that these countries are likely to be either hit by, or recovering from, a significant natural disaster in any given year. There is scope under WTO agreements, including those on agriculture and subsidies, to take measures to facilitate resilience and the entry of relief in the form of goods and services, the Secretariat said.

Members of the group of small, vulnerable economies shared their national experiences. Ecuador highlighted vulnerabilities to its economy due to climate change and cited policies the country has implemented in response.

Keisal Peters, the Minister of State for Foreign Affairs and Trade for St Vincent and the Grenadines, said her government estimated that 15% of debt accumulated between 2010 and 2017 is directly attributable to post-disaster reconstruction and building disaster resilience. As a deliverable for the WTO's 12th Ministerial Conference (MC12) later this year, she called on members to support a ministerial decision on a work programme for small economies which highlights the needs of economies exposed to natural disasters.

Sri Lanka called for an in-depth discussion of the significant economic and trade impacts suffered by small, vulnerable economies following natural disasters and possible trade policy responses that could help countries recover and build up their resilience. Trinidad and Tobago said that being classified as a high-income country constrains its ability to access concessional financing, technical assistance and capacity building, all of which are essential tools to overcome the impact of natural disasters.

China said it sees the need to take concrete action under the WTO framework to help small economies enhance their resilience. It also encouraged more discussions on food security.

The United States said that, through USAID programmes and funding, it has committed to strengthening the resilience of exposed countries and sectors to the impact of natural disasters and climate crises. USAID has responded to 66 disasters in 49 countries, providing nearly US$ 7.2 billion in humanitarian assistance, including more than US$ 385 million targeted at resilience and food security activities, the US said.

The committee chair, Ambassador Muhammad Mujtaba Piracha of Pakistan, indicated that the coordinator of the small, vulnerable economies group would be consulting with members to put forward a proposed ministerial decision on a work programme for review at the next dedicated session.