Trade: 5 things to know about international trade this October

CEOs from all continents have signed up to a multistakeholder call for inclusive action at and beyond the WTO Ministerial starting next month. They feel agreements should be reached on trade and health, e-commerce, environment, and investment. Also that more be done to implement past agreements. Longer term, they’d like progress towards a level playing field and fixing the multilateral system.

Trade and investment policy could be more supportive of climate action by removing barriers to decarbonization and driving price signals along value chains. Divergent standards, local content requirements and uncertain, onerous rules are among the roadblocks countries could remove to help business decarbonize. Climate-smart agriculture and digital services could be better coordinated to link climate mitigation costs to end consumers. The EU, meanwhile, is calling for better cooperation between trade and climate ministers.

Research indicating that social and environmental provisions in trade agreements may reduce North-South investment flows needs to be considered in the design of trade policy efforts to lift standards. Support and technical assistance from developed countries in implementing domestic labour, environmental and non-discrimination legislation in developing country trading partners - and encouragement of inclusive supply chain practices by MNEs - could help deliver social justice through trade.

Supply chain disruptions continue to befuddle policymakers. Shipping costs have now receded from their peaks, though this seems driven more by snarl ups on land, rather than slowing demand. Whether and what long-term policy responses would be helpful is still unclear - but watch this space as efforts to evaluate supply chain uncertainty enter the trade facilitation mainstream.

The EU-US Trade and Technology Council held its first meeting on 29-30 September covering a range of issues from investment screening and AI regulation to WTO reform and industrial subsidy rules through 10 working groups.

136 countries have reached an agreement on corporate tax reform through the OECD/G20 Inclusive Framework to ensure a global effective minimum tax of 15% on MNEs and reallocation of 25% of profits of the largest and most profitable MNEs to market jurisdictions. The IMF indicates modest revenue increases in Asia. Implementation is expected in 2023, along with the removal of all unilateral digital services taxes, the incidence and effects of which we explored in a recent paper.