Bridges Weekly Trade News Digest • Volume 9 • Number 1 • 19th January 2005
Trade Response To Tsunami Disaster: Initiatives In The Pipeline
Pledges of aid and debt relief for countries affected by the Indian Ocean tsunami of 26 December 2004 have been followed by calls for special trade measures to help them rebuild their economies. The measures proposed focus mainly on expanded market access for the countries’ exports and a suspension of anti-dumping duties.
Tariffs pose a significant barrier to the countries hit hardest by the tsunami. Indonesia, Sri Lanka, India, Thailand, the Maldives, Burma, the Seychelles and Somalia together paid close to $1.8 billion in duties to the US in 2003, close to triple the amount that the US has pledged in aid to the region. The Sri Lankan government is exploring the possibility of asking the US and the EU to lift duties on Sri Lankan textile and garment exports, which account for close to half of the country’s export earnings.
Supachai: better market access, restraint in the use of trade remedies
In a 13 January letter to all WTO Members, WTO Director-General Supachai Panitchpakdi said that the WTO "shares part of the responsibility to assist recovery from this disaster," and asked Members to "reflect deeply and expeditiously on whether there is anything they can do at this moment in time in terms of their trade policy to help the worst affected economies to recover." While emphasising that the nature of any such measures would be up to individual governments, he observed that "obvious possible areas" would be "market access and some restraint in use of trade remedies."
In the wake of the tsunami, the United States International Trade Commission (USITC) did agree to review its decision to impose anti-dumping duties on shrimp imports from Thailand and India. However, this move has met with opposition from the US shrimp industry.
Supachai also urged Members to conclude the Doha Round as soon as possible. He said that "market access, particularly trade in some services sectors and certain modes of supply" would be particularly valuable to tsunami-hit countries. Although Supachai acknowledged that the benefits of an early conclusion to the round would only be felt in the medium term, he said that the wealth thus generated could help to reduce poverty, which would improve the capacity of countries to mitigate the effects of natural disasters and recover from them more quickly.
UNCTAD calls for introduction of immediate trade measures
Lakshmi Puri, head of the United Nations Conference on Trade and Development’s (UNCTAD’s) trade division said that rich countries should immediately introduce temporary trade measures to help tsunami-hit countries generate resources to rebuild their economies. Such measures would include temporary duty-free access to their exports, scrapping of anti-dumping duties and other restrictions, temporary work permits for their citizens, and help to rebuild trade and tourism infrastructure.
EU considering ways to provide relief through trade policy: Mandelson
Supachai’s comments followed a pledge by EU Trade Commissioner Peter Mandelson to actively consider ways to use European trade policy to provide relief for regions and businesses affected by the tsunami. The European Commission has been working to identify businesses affected by EU trade measures such as anti-dumping duties. These would reportedly be reviewed and possibly suspended. The EU is also considering reorienting trade-related technical assistance in areas such as sanitary and food safety standards so as to help businesses boost exports.
The EU is also contemplating speeding up the modification, adoption and implementation of its new Generalised System of Preferences (GSP) scheme that provides preferential access to imports from certain developing countries.
EU trade sources indicate that Sri Lanka, Indonesia, Thailand and India will be among the greatest beneficiaries of the new regime, with Sri Lanka receiving duty free access to the EU for almost all its GSP exports — including its vital textile and clothing exports. India, Indonesia and Thailand are also to benefit from reduced duties and wider product coverage, particularly on crucial seafood exports.
In addition, European Commission President Jose Manuel Barroso has stated that the EU might send old or redundant fishing boats to affected states, to replace vessels destroyed by the tsunami.
Some experts have argued for differentiating even among tsunami-hit countries, arguing that while countries such as Sri Lanka and the Maldives might benefit from such trade preferences, extending such treatment to larger countries including Thailand and Indonesia would benefit industrial and commercial centres rather than the regions affected by the disaster.
Vulnerable countries want market access; improved rules of origin
At last week’s conference of small island developing states (SIDS; see related article, this issue), countries — including many hit by the tsunami — highlighted the need for greater market access for their products.
Many small island states are also adversely affected by stringent ‘rules of origin’ for their exports. A recent Oxfam report on the response to the tsunami (available here) points out that rules of origin requirements often rob market access provisions of any real meaning. The EU, for instance, grants duty free access to Maldivian clothing exports only if the fabric and cloth are made in Maldives — an impossible requirement for a tiny atoll consisting largely of sandy beaches. Sri Lankan WTO Ambassador Gomi Tharaka Sendahira has said that the EU’s new preference scheme would provide little real help to his country in the absence of a substantial change in the rules of origin, since Sri Lanka’s garment export industry relies on imported yarn and textiles. Oxfam proposes modifying these rules so that countries can actually benefit from market access.
Sri Lankan official have said that an increase in real market access would also help assuage fears about impending job losses in the country’s textile sector resulting from the expiry of textile quotas on 1 January 2005.
"Small Islands Seek Access to Markets," ASSOCIATED PRESS, 11 January 2005; "The Asian Tsunami: The Challenge After the Jakarta Summit," OXFAM Briefing Note, 7 January 2005; "Sri Lanka to Request Trade Relief," DM NEWS, 12 January 2005; "Nations Request Trade Relief," THE WASHINGTON TIMES, 11 January 2005; "EU Trade Commissioner Seeks Trade Measures to Relieve Tsunami Victims," EU Press Release, 11 January 2005; "EU May Send Old Fishing Boats to Tsunami States," REUTERS, 12 January 2005; "Sri Lanka Seeks US Tariff Cuts To Assist in Recovery from the Tsunami," INTERNATIONAL TRADE REPORTER, 13 January 2005; "UNCTAD urges easing trade to help tsunami nations," FINANCIAL TIMES, 19 January 2005.