Monthly Archives: April 2018

IMO Member Countries adopt pathway to reduce shipping carbon footprint

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Alicia Nicholls

Member countries of the United Nations specialised agency charged with regulating the shipping industry, the International Maritime Organisation (IMO), adopted the first greenhouse gas (GHG) emissions reduction framework for the shipping industry. This decision came at the 72nd session of the IMO’s Marine Environment Protection Committee (MEPC) held in London from April 9-13.

The Initial Strategy adopted by IMO member countries has set a target of halving greenhouse gas (GHG) emissions from ships by 2050 vis-a-vis emissions levels in 2008. This move brings the shipping industry closer in line with the goals of the Paris Climate Change Agreement signed by over 190 countries in 2015, but to which the shipping industry (like the aviation industry) is not bound.

Some 80% of the volume of global trade is carried by ships. The phenomenon of mega-ships has seen a doubling in container ship capacity, and improvements in engine efficiency have increased the ability to travel longer distances in shorter time. However, the industry is estimated to account for 2-3% of global GHG emissions, including carbon dioxide and sulphur. A study entitled “Greenhouse Gas Emissions from Global Shipping: 2013-2015” found that CO2 and other emissions from ships were increasing, despite increases in efficiency. Aside from the very real climate impact, emissions  from ships have public health risks for persons who live on or near the coast.

So what was decided?

Under the Initial Strategy, IMO States agreed:

  • To reduce total annual GHG emissions from international shipping by at least 50% compared to 2008
  • The peak and decline of GHG shipping emissions completely by the end of the century
  • To reduce the carbon intensity of ships through implementation of further phases of the energy efficiency design index for new ships
  • A working group will develop a program of follow-up actions to the Initial Strategy, and will consider ways to reduce shipping GHG emissions in order to advise the committee and will report at the next session of the MEPC in October 2018
  • The Initial Strategy is to be revised by 2023.

As noted by the IMO, achievement of these targets will require continued innovations in shipping design and technology to maximise energy efficiency and decarbonisation through use of alternative and renewable energy sources.

Agreement on the Initial Strategy did not come easy and reflects a compromise. Small Island Developing States, China and the European Union for example, had advocated for a more ambitious emissions reduction target of at least 70%, which scientists argue would put the sector more on track to meeting the Paris Agreement goal to limit global temperature increases to well-below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit increases to 1.5 degrees Celsius above pre-industrial levels.  Others like the US, Saudi Arabia and Brazil had argued for lower targets.

Some environmental groups have posited that the compromise target of 50% is not enough to bring shipping emissions in line with the target set out by the Paris Agreement.

Nonetheless, the Initial Strategy is an important milestone as, after years of delay, it represents the first pathway forward for reducing the shipping industry’s carbon footprint. In March this year, a  mandatory data collection system for fuel oil consumption of ships also came into force.

The full IMO press release may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

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IMF: Trade tensions could derail global growth prematurely

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Alicia Nicholls

Currently strong global growth could be derailed by escalating trade tensions and retaliation. That is the word from the International Monetary Fund (IMF) in its latest World Economic Outlook (April 2018) entitled “Cyclical Upswing, Structural Change”. The lending agency has forecast global growth of 3.9% both for this year and the next, up from 3.8% in 2017, which was the most robust since 2011. Increased trade and investment has been a major propeller of this growth, according to IMF economists, which makes the current trade tensions between the United States and China a cause for concern.

GDP growth for Latin America and the Caribbean (LAC) is projected to be 2.0% in 2018 and 2.8% in 2019, up from 1.3% in 2017, but still below the projected global average. The IMF projects positive growth for all LAC countries (to varying degrees), with the exceptions of Dominica (-16.3%) which was ravaged by Hurricane Maria last year and Venezuela (-15%), which is currently in the throes of a deep economic crisis.

Longer-term prospects not as bright

However, it was not all positive news. While near-term global growth prospects remain positive, the IMF projects a slowing of growth in the medium-term. It was noted that ageing populations, lower rates of labor force participation and low productivity growth all made it unlikely that advanced economies would return to their pre-crisis per capita growth rates any time soon.

According to the IMF, some emerging and developing economies are likely to achieve longer-term growth rates comparable to their pre-crisis rates, but the outlook for commodities exporters was not as positive even though the outlook for commodities prices had improved somewhat. The IMF emphasised that economic resilience of these economies would be contingent on their diversification.

The IMF has also again sounded alarm about the rise in global private and public debt levels and the prospect of repayment difficulties due to monetary policy normalisation. This is an issue which is of particular relevance to the region, as some Caribbean countries are among the most indebted in the world.

Trade tensions could undermine current growth trajectory

During the press conference launching the report, IMF Economic Counsellor and Director of the Research Department, Mr. Maurice Obstfeld cautioned that while a slowing of growth is predicted in the longer term, “the prospect of trade restrictions and counter-restrictions threatened to undermine confidence and derail growth prematurely”.

Acknowledging the political imperatives driving the protectionist turn taken by some countries, namely public skepticism about the benefits of free trade and economic integration, Mr. Obstfeld noted that technology as opposed to trade was to blame. He further warned that fights over trade distracted from, rather than advanced the agenda of promoting growth whose benefits were more broad-based.

Multilateral system  in danger of being torn apart

In the report, the IMF warned that the multilateral system was in danger of being torn apart. Making the case against unilateral action, the IMF Economic Counsellor argued that inequitable trade practices were best coped with through “dependable and fair dispute resolution within a strong rules-based multilateral framework”.

He acknowledged that there was room to strengthen the current trading system and that plurilaleral agreements could be used as a “springboard” to more open trade. He also noted that multilateral cooperation was essential “to address a range of challenges in addition to the governance of world trade.”

The full press conference may be viewed here and the report may be downloaded here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Global Governance: Why isn’t it working and what can be done?

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Javier

Javier D. Spencer

By Javier D. Spencer, Guest Contributor

At an exponential rate, the world is convulsing into a single space, which heightens the interconnectivity and interdependence of countries. As a result, it is evident that issues such as climate change, security, human rights among others, instantaneously alter global relations. It can be scary when you think about it, especially since matters arising are becoming more and more complex.

Our human response to address the complex issues at a global level is to increase the robustness of global governance through multilateralism. We could say that for almost every global issue (sometimes overlapping), there may be at least two or three global institutions created to address that one issue. This, evidently, creates a new global society that is constructed to bring order, reliability, predictability and transparency.

The New Global society eliminates a central authority and places emphasis on collaboration among states which will seek to encourage common practices and goals. However, as there is growing interdependence for economies to integrate into the global economy, we observe that global governance has acquiesced to the limitations and challenges of multilateralism. It is designed to promote international peace, stability and co-operation; but unfortunately, it does not work, as it should. For this reason, there are challenges arising in the dynamic global economy that undermines the effective institutional outcomes of global governance, including democratic deficits and accountability; representation and power; and compliance.

Democratic Deficits & Accountability

Democratic deficits are prevalent in global governance when nothing holds the institutions and regimes accountable to a democratic electorate. There is a divergence between ‘what is’ and ‘what ought to be’ in respect of trust by the masses in the governance regimes and institutions. For example, we have seen a proliferation of trade agreements, like the now defunct negotiations on the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU, and the Trans-Pacific Partnership (TPP) (which was replaced by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after the US withdrew from the TPP), that were being negotiated in secrecy. Secrecy violates the very basic concept of democracy. Citizens have the fundamental right to be aware and to be able to air their concerns on policies and legislation. The absence of this right results in the deficit as the perception of governance goes beyond the influence of the citizenry.

There is also a growing concern about lack of accountability at the global governance level.  Accountability includes transparency, consultation, evaluation, and correction. Transparency means that there is visibility present; eliminating decision-making done in secrecy. Additionally, consultation purports an explanation of intentions by one party, and flexibility to adjust plans that will negatively affect another party. Consultation then ushers in evaluation where there is an independent monitoring and assessment of activities; and in the final analysis, there is correction, which means that there are provisions for redress or reform.

Representation and Power

An overwhelming question on the issue of representation is, “whose interest do these organizations represent?”   Global Governance regimes were created by and for the most influential states that were too important to fail. Therefore, the goals and objectives are partially beneficial to the major actors in global system. For example, voting at the International Monetary Fund (IMF) remains weighted, which means that one state is does not equal to one vote. How is finance for economic development expected to be achieved? It automatically disenfranchises the global south in crucial development decisions.

Another case in point is the daunting process of ensuring that developing countries, more specifically Least Developed Countries, are able to participate in international trade at the multilateral level. Although the Nairobi Decision on Rules of Origin and Export competition enables greater LDC participation, facilitation remains elusive. Interestingly, the Nairobi round is a successor to the Doha Round. The Doha Round, which was coined a being ‘development’ oriented failed miserably after many years of negotiations. The main aim of the Doha Round was to further liberalize trade, invest more in development, and address complex global issues. However, the rounds’ failure illumes the shortcomings of global governance regimes, especially for developing and least developed countries.

There are, however, proposed problems of increased representation at the global governance level. There will be an increased inefficiency, as more participants in the decision-making process could hinder coming to a single decision, due to the diversity of interests and goals. However, inadequate representation results in skewed authority and power within the governance regime. Ultimate power is given to whom it favourably represents and vice versa, representation reflects to the economies with economic dominance and power. It becomes a case where “the strong will do what they can and the weak must accept what they must”.

Compliance

If all states are sovereign, who ensures that states comply with these rules to yield an ideal outcome in the governance of the international system?   The enforcement problem arises because that is no authoritative international government since states value their autonomy. For instance, the United States has iterated its right to ignore any rulings from the WTO’s Dispute Settlement Body. Therefore, to what extent are states willing to sacrifice their political autonomy for a well-functioning international economy? None.

So, what’s next? Reform? How?

In order to align with the original mandate of international stability, peace, and cooperation, issues of democratic deficits and accountability; representation and power; and compliance must be addressed through speedy reform. The start of attaining reform is by identifying an effective global mechanism that provides strategic guidance. Global issues today are closely knitted into a web. Therefore, strategic guidance must view the international system as a whole.

At present, there are sufficient agencies created to tackle emanating issues. As such, there is no need to recreate the global governance regime. Instead, the existing structure needs to be appropriately matched to issues, in order to strengthen its efficacy.

This will certainly result in a change in the global agenda. An agenda that is inclusive, modern, flexible, agile, and resilient.  This envisioned modern-day agenda will mitigate the democratic deficit and increase accountability, linking leadership, vision and institution. An inclusive agenda fosters participation, which balances representation and power. Reform needs to happen faster.

Javier Spencer, B.Sc., M.Sc., is an International Business & Trade Professional with a B.Sc. in International Business and a M.Sc. in International Trade Policy. His professional interests include Regional Integration, International Business, Global Diplomacy and International Trade & Development. He may be contacted at javier.spencer at gmail.com.

WTO: Trade tensions could sabotage global trade growth momentum

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Alicia Nicholls

The World Trade Organisation (WTO) has predicted that global merchandise trade growth will remain strong in 2018 and 2019, but has cautioned that this momentum is contingent on the policy choices taken by governments.

This forecast was disclosed by WTO Director General, Roberto Azevedo, in a press conference held last week. According to Mr. Azevedo, global merchandise trade grew an estimated 4.7% in 2017 and is forecast by WTO economists to grow 4.4% in 2018 and by a more modest, 4.0% in 2019.

He noted that trade volume growth in 2017 was the most robust since 2011, with Asia being responsible for much of the recovery. He noted that South and Central America and the Caribbean made a positive contribution for the first time since 2013 due to Brazil’s economic recovery. The ratio of trade growth to GDP growth will be slightly lower in 2018 at 1.4 in 2018, down from 1.5 in 2017. Commercial services trade experienced strong growth in 2017 after two years of lacklustre growth.

The escalating global trade tensions, particularly between the US and China, cast a shadow over the forecast, as Director-General Azevedo strongly cautioned that continued positive trade growth could be “quickly undermined” if Governments turned to trade restrictive policies and engaged in retaliation. Mr. Azevedo pointedly stated that “a cycle of trade retaliation is the last thing the world economy needs”, noting that trade tensions may already be impacting business confidence and investment decisions. He further warned that missteps on trade and monetary policy “could undermine economic growth and confidence”.

In an appeal to WTO Member States to resort to the rules-based system as opposed to unilateral action, Mr. Azevedo added that “pressing trade problems confronting WTO Members is best tackled through collective action”.

The full WTO press release may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

 

Caribbean Trade & Development Digest – April 8-14 , 2018

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Welcome to the Caribbean Trade and Development Digest for the week of April 8-14, 2018! We are pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. We hope you enjoy this edition.

REGIONAL

Poultry producers complain to CARICOM over non-adoption of standards

Stabroek News: Regional poultry producers have expressed concern at the non-adoption of specifications for their meat and feeds which had been developed by the standards body, CROSQ and approved. Read more

Trinidad and Tobago judge rules homophobic laws unconstitutional
 
The Guardian (UK): The ruling, which declared sections of the Sexual Offences Act unconstitutional, may soon lead to decriminalising gay sex. Read more 

Canada’s PM, Justin Trudeau, meets with CARICOM States

Breaking Belize News: This afternoon, representatives from CARICOM met with Prime Minister of Canada  Justin Trudeau to discuss trade and the situation with Venezuela. Read more 

CARICOM Secretary General says CSME is a “work in progress”

Nation News: The Caribbean Community (CARICOM) Secretary General , Irwin La Rocque says while the CARICOM Single Market and Economy (CSME) continues to be a work in progress, it is sufficiently advanced to be used more effectively by the regional private sector. Read more 

CARICOM busy laying the groundwork for restructuring

Antigua Observer: CARICOM is pressing ahead with plans to ensure the restructuring of the governance of West Indies cricket, undeterred by the International Cricket Council’s request to have Cricket West Indies president, Dave Cameron, present at any meeting between the two bodies. Read more

Harmonised Cross Border Trade Needed for CARICOM Economic Integration

St Kitts & Nevis Observer: Harmonised approaches to conducting trade across borders in the Caribbean and effective customs valuation are among the steps that must be taken towards full economic integration within the Caribbean Community (CARICOM). Read more 

WTO

Strong trade growth in 2018 rests on policy choices

WTO: World merchandise trade growth is expected to remain strong in 2018 and 2019 after posting its largest increase in six years in 2017, but continued expansion depends on robust global economic growth and governments pursuing appropriate monetary, fiscal and especially trade policies, WTO economists said. Read more 

WTO members discuss ways of improving the transparency of regional trade agreements

WTO: WTO members discussed how to improve work on enhancing the transparency of regional trade agreements (RTAs) at a meeting of the Committee on RTAs on 9-10 April at the WTO. They reviewed five RTAs covering countries in Europe, Asia and Africa. The new chair of the committee, Ambassador Julian Braithwaite of the United Kingdom, presided at this first committee meeting of 2018. Read more

China initiates WTO dispute complaint against US tariffs on steel, aluminium products

WTO: China has requested WTO dispute consultations with the United States concerning certain US duties imposed on imports of steel and aluminium products. The request was circulated to WTO members on 9 April. Read more 

WTO establishes two panels to rule on US lumber duties

WTO: At the request of Canada, the WTO’s Dispute Settlement Body (DSB) agreed on 9 April to establish two panels to examine Canada’s complaints regarding anti-dumping and countervailing duties imposed by the United States on imports of Canadian softwood lumber. Read more 

Korea files appeal against WTO panel ruling regarding Japanese food import restrictions

WTO: Korea filed an appeal on 9 April against a WTO panel report in the case brought by Japan in “Korea — Import Bans, and Testing and Certification Requirements for Radionuclides” (DS495). The panel circulated its report on 22 February 2018. Read more 

WTO issues panel report regarding Korean duties on pneumatic valves from Japan

WTO: On 12 April the WTO circulated the panel report in the case brought by Japan in “Korea — Anti-Dumping Duties on Pneumatic Valves from Japan” (DS504). Read more

INTERNATIONAL

(New Zealand) PM looking to start EU trade negotiations

News ZB: Trade will be top of the agenda for the PM when she meets with French President Emmanuel Macron in Paris later today. Read more

The five biggest threats to the WTO

Bloomberg: The World Trade Organization is facing the greatest crisis of its 23-year existence. President Donald Trump doesn’t believe the WTO can handle the problems created by China’s rapid economic ascent and is fundamentally challenging the rules that govern international trade. Read more 

Mexico Pushes to Finish Trade Deal With EU This Month

Bloomberg Politics: Mexican trade negotiators are pushing to finish work on an updated free-trade agreement with the European Union ahead of a trip by President Enrique Pena Nieto to the region later this month, according to three people familiar with the plan. Read more 

IMF warns about trade war

CNN Money: Calling on countries to steer clear of protectionism, IMF Managing Director Christine Lagarde said in a speech that the “system of open trade based on rules and shared responsibility is now in danger of being torn apart”. Read more 

Kenya makes strong bid to host global trade chambers conference

The Standard (Kenya): Kenya has put up a strong bid to beat its fiercest competitors, including Dubai, in hosting the largest global commerce congress in 2021. Read more

Trump Proposes Rejoining Trans-Pacific Partnership

New York Times: President Trump, in a sharp reversal, told a gathering of farm-state lawmakers and governors on Thursday morning that the United States was looking into rejoining a multicountry trade agreement known as the Trans-Pacific Partnership, a deal he pulled out of days after assuming the presidency. Read more

Main-streaming blockchains in global trade

Hindu Business Line: Distributed Ledger Technology (DLT), a concept of recording and sharing data across multiple data stores, or ledgers as they are popularly called, is an idea whose time has come. The concept of DLT was introduced through block chains in the famous paper by the elusive author known only as Satoshi Nakamoto in 2008.Read more

More than half of the UK wants public vote on Brexit deal: survey

Euronews: The majority of people in the UK want a “people’s vote” on the final Brexit deal, according to a new survey in which some 52% of respondents expressed support for the idea. Read more 

Britain eyes former colonies to plug post-Brexit trade gap

NBCNews: With Britain less than a year away from leaving the European Union, but yet to secure any new trade deals, London is eyeing former colonies for help fill its post-Brexit trading hole. Read more 

U.S. Offers Compromise on Autos, Boosting Hopes for Nafta Deal

Wall Street Journal: The Trump administration is hammering out a compromise on auto-industry rules at the center of the North American Free Trade Agreement, increasing the chances that the U.S., Mexico and Canada can reach a deal this spring to revise the pact. Read more 

Brussels mulls offer of trade deal to Trump, if he drops tariff threat

Politico: The European Commission is developing a plan to offer Donald Trump the prospect of a trade deal with the EU in exchange for a permanent exemption from U.S. steel and aluminum tariffs, according to five EU officials and diplomats. Read more 

BONUS

WTO Press Conference on Trade Outlook

Audio available here.

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