Latin America Could Turn to Russia, China in Wake of Trade Split With US

The governments of some Latin American countries have signaled that they are ready to “break their dependence” on the United States; Russia and China could play a key role in the region, Venezuelan political analyst Ernesto Wong told Sputnik Mundo.

Chinese President Xi Jinping
In an interview with Sputnik Mundo, Venezuelan political analyst Ernesto Wong said that in Latin America, there are several factors which have given rise to the hope that this year will see a number of key political changes in the region.

One of these factors is the willingness of some regional governments to “break their dependence” on the United States and allow Russia and China to play a key role in the region, according to Wong.

“Latin America is at odds with Washington but it is developing friendly ties with China and Russia, which is why in 2017 the region is expected to overcome the imperialist dependence on the US and to establish more favorable conditions for exchange… trade and investment with Russia and China,” Wong said.

As for China, Wong referred to the January 20 meeting between Beijing and the Community of Latin American and Caribbean States (CELAC), which he said opened up new prospects for the exchange of public and private capital.

“It’s important that none of the countries of the Pacific Alliance decided to break off relations with China, which means that they are  interested in continuing trade ties with Beijing,” he said. The Pacific Alliance is a Latin American trade bloc which currently includes Chile, Colombia, Mexico and Peru.

According to Wong, the most important affecting the Pacific Alliance is the existence of Trump’s so-called model of “neo-isolation.” The alliance had been seen as a close partner of the United States and Canada; its members (less Colombia) were among the countries set to co-establish the Trans-Pacific Partnership (TPP) this month.

This initiative was nullified when Trump abandoned TPP on January 23. Trump also raised the question of revising the terms of the North American Free Trade Agreement (NAFTA).

“As a consumer, the US is in a critical situation after it greatly reduced its imports, which were supported by the free trade agreement. Trump wants to get out of it because he intends to develop national industry,” Wong said, adding that this process will also be affected by the critical situation in Western Europe.

Aside from to China and Russia, Latin American countries may also invest in Africa, according to Wong.

“This is potentially a good opportunity because openness toward Africa would help promote Latin American products there and the African continent would benefit from receiving equal conditions for exchange,” he said.

He added that such transparency would also be attractive for those countries in the region which are not progressive because they seek to improve relations with other regions, which could give them the opportunity to obtain a larger income.Wong emphasized that it is Latin America distancing itself from the United States and rapprochement between Eurasia and Latin America that will pave the way for regional countries becoming more independent and sovereign.

Article originally published here
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Cuba Sees Explosion in Internet Access

cubainternetTwo days before Christmas, Luis Gonzalez received a little Chinese modem from Cuba’s state-owned telecommunications company.

The 55-year-old theater producer connected the device to his phone and his laptop computer, which instantly lit up with a service unimaginable in the Cuba of just a few years ago — relatively fast home internet.

“It’s really easy to sit and find whatever you need,” Gonzalez said as he sat in his living room updating his Facebook account, listening to Uruguayan radio online and checking an arriving tourist’s landing time for a neighbor who rents rooms in their building in historic Old Havana. “Most Cubans aren’t used to this convenience.”

Home internet came to Cuba last month in a limited pilot program that’s part of the most dramatic change in daily life here since the declaration of detente with the United States on Dec. 17, 2014.

While Cuba remains one of the world’s least internet-connected societies, ordinary citizens’ access to the internet has exploded over the last two years. Since the summer of 2015, the Cuban government has opened 240 public Wi-Fi spots in parks and on street corners across the country. Cubans were previously restricted to decrepit state internet clubs and hotels that charged $6-$8 for an hour of slow internet.

In a country with an average monthly salary of around $25, the price of an hour online has dropped to $1.50, still steep but now well within the range of many Cubans with private income or financial help from relatives abroad.

The government estimates that 100,000 Cubans connect to the internet daily. A new feature of urban life in Cuba is the sight of people sitting at all hours on street corners or park benches, their faces illuminated by the screen of smartphones connected by applications such as Facebook Messenger to relatives in Miami, Ecuador or other outposts of the Cuban diaspora. Connections are made mostly through access cards sold by the state monopoly and often resold on street corners for higher prices.

The spread of connectivity has remotely reunited families separated for years, even decades. It’s fueled the spread of Airbnb and other booking services that have funneled millions in business to private bed-and-breakfasts owners. And it’s exposed Cubans to a faster flow of news and cultural developments from the outside world — supplementing the widespread availability of media spread on memory drivers.

Cuban ingenuity has spread internet far beyond those public places: thousands of people grab the public signals through commercially available repeaters, imported illegally into Cuba and often sold for about $100 — double the original price. Mounted on rooftops, the repeaters grab the public signals and create a form of home internet increasingly available in private rentals for tourists and cafes and restaurants for Cubans and visitors alike.

On the official front, Google and Cuba’s state-run telecoms monopoly Etecsa struck a deal last month to store Google content like YouTube video on servers inside Cuba, giving people on the island faster, smoother access.

While the explosion of internet in Cuba has taken place alongside the process of normalization started by Obama in 2014, it’s unclear how much better relations have speeded up Cuba’s move online.

What is clear is that Cuba began to dramatically increase access about six months later when the government began opening Wi-Fi spots around the country. For many Cubans, the start of home internet in December is potentially even more significant, breaking a longstanding barrier against private internet access in a country whose communist government remains deeply wary about information technology undermining its near-total control of media, political life and most of the economy.

Abridged, article originally published here

China Seizes Opportunities in Latin America

chinese-dragonChina has big plans for Latin America—plans that seem to reflect China itself: massive and ambitious.

There are plans for a $10 billion, 3,300-mile-long transcontinental railroad snaking through the jungles of the Amazon river basin and over the highest mountain range in Latin America, linking the Atlantic shore to the Pacific. There’s talk of a $50 billion supersized canal carving a 161-mile-long swath across Nicaragua, offering passage to the megatankers of tomorrow and overwhelming even the newly expanded Panama Canal to its south.

There are more. Many more. These gargantuan projects are aimed at fueling China’s needs for resources and feeding South America’s need for energy and infrastructure. But geopolitics also play a role as China strives to make Latin America an economic partner, if not a counterpoint to the United States.

In fact, China’s investments in Latin America, from mining to massive hydroelectric dams, nuclear reactors and railroads, grew by 500 percent between 2000 and 2010, totaling nearly $100 billion, with another $250 billion in spending promised over the next decade. And while the U.S. still accounts for more than three times as much in trade and investment in the region, some analysts see disturbing signs in the steadily shifting balance.

In 2000, the Chinese portion of Latin American trade was about 2 percent. The U.S. share was 53 percent. Ten years later, the Chinese share was up to 11 percent and the U.S. portion was down to 39 percent.

“Clearly we are still the dominant player vis-à-vis them,” says Francisco Cerezo, the U.S. head of DLA Piper’s Latin America corporate group. “But it does speak to the trend. And I would be more concerned about the trend and making sure you right the ship and you focus on it properly.”

The past two decades of forays into Latin America come as part of China’s “go global” plan. Its first priority: raw resources to fuel its economic growth. China is heavily, and increasingly, dependent on imported oil. Its energy needs led it to offer some $65 billion in loans to Venezuela’s government in the last decade, according to the Washington nonprofit Inter-American Dialogue, along with direct investments in oil production and infrastructure there.

China also single-handedly accounts for nearly a fourth of the world’s copper demand, along with significant demand for tin and iron ore. “That’s why you see them coming into Latin America’s mining sector, which is huge,” says Jerry Brodsky, a partner and director of the Latin American practice group at Peckar & Abramson. “It’s perhaps the largest economic driver in Latin America’s mining.”

China gets much of its copper from Chile, while the China-based Chinalco Mining Corp. International put $3.5 billion into the Toromocho mine in Central Peru, giving it control of “the world’s second largest preproduction copper project, as measured by proved and probable copper ore reserves,” according to the company’s website.

Now China is reaching beyond resources. Its latest wave of investments involves massive infrastructure and energy projects.

The China Three Gorges Corp. has been rapidly acquiring hydroelectric dams in Brazil since 2013, paying nearly $4 billion in June to take over operation of two of the country’s largest dams, with a combined capacity to produce 5 gigawatts of electricity. That came just three months after China Three Gorges announced a proposal to build a new 8-gigawatt dam on the Tapajos River.

China’s State Grid Corp. is developing two transmission lines to deliver power from the Belo Monte dam in the Amazon basin. Last year, state-owned China National Nuclear Corp. signed a $15 billion deal to build Argentina’s fourth and fifth nuclear power plants, roughly doubling the amount of electricity generated by the country’s nuclear plants. Construction of the first of the new reactors, in cooperation with Argentina’s state-owned Nucleoeléctrica, is due to begin early next year.

These projects come on top of the nearly $42 billion that China invested in infrastructure in Latin America in just 2013 through 2015 alone. China is finishing construction of a space tracking, telemetry and command facility in Patagonia, Argentina, complete with a pair of maneuverable parabolic antennas, engineering facilities, and a $10 million electric power plant.

China Harbour Engineering teamed up with local partners to win the contract for Autopista Mar 2, a 152-mile motorway connecting four towns north of Medellin, Colombia. And, in May, it landed a $465 million road contract in Costa Rica.

“They’re providing what the specific markets need,” says Brodsky. “They follow the path of least resistance. Latin American needs infrastructure. Brazil has an insufficient production of local energy. So does Argentina. The road projects in Colombia are booming right now because for 30 or 40 years they spent all their money fighting the guerrillas, and they didn’t pay attention to their road infrastructure. So now there is an accelerated program in Colombia for road building.”

The nature of the projects also plays to China’s strengths. Despite its recent economic slowdown, China remains flush with money from its boom years. Combined with the technical expertise that it has built with domestic projects and industries, those deep pockets allow China’s state-owned companies to compete at a scale that few challengers can match.

“When you get to that level of megaprojects, there are not that many qualified bidders out there­—people that have not only the technical capacity but the financial capacity,” Brodsky says, adding that Chinese companies “have the money to self-fund a lot of their projects, and that makes them very competitive when it comes to bidding for big, large projects in Latin America.”

Abridged, original article published here

Accelerating Growth to End Poverty without Damaging the Environment

img17001There is consensus that extreme poverty and hunger must be eradicated by 2030 through accelerated, inclusive and equitable economic growth without damaging the environment. This calls for sustainable and integrated, balanced and simultaneous implementation of economic, social and environmental dimensions without one dimension gaining at the expense of others, as agreed at the Rio+20 Conference and confirmed at the 68th session of the United Nations General Assembly, when world leaders met in New York City in September 2013.

This paradigm shift from economic growth and per capita income as a measure of development, and relying on a single-sector approach and trickle down mechanism, to an integrated, inclusive, equitable and labor-intensive multi-sector development agenda post-2015 will require a major shift in political will and in ways of doing business.

In agrarian societies where the majority of people live in extreme poverty and unemployment or under-employment, the acceleration of traditional methods of economic growth to create jobs and end hunger and poverty will mean enhancing agricultural methods of de-vegetating land and damaging the environment through biodiversity loss, soil erosion, dropping water tables, shrinking water bodies and adverse impact on thermal and hydrological regimes, resulting in intense and frequent droughts and floods.

On the other hand, introducing or speeding up intensive and mechanized agricultural methods using green revolution technologies of high-yielding seeds that require the application of high doses of fertilizers, pesticides and irrigation, including using underground salty water, will end up damaging the environment and reducing water supplies. This has already happened in some Asian countries.

In developed countries, continued or an acceleration of current patterns of consumption of meat and dairy products that rely on huge amounts of agricultural feed, and result in massive food waste, as well as increasing demand for non-food agricultural products like cut flowers, will mean that more land will be brought under cultivation by clearing vegetation or replacing food production in areas already under cultivation, as has happened in Uganda. Alternatively, more fertilizers, pesticides and irrigation will be used to increase land productivity, resulting in environmental pollution.

To overcome these trade-offs and successfully address unemployment, hunger and poverty, a new approach to production and consumption patterns is needed. The new approach should end food losses and waste, and apply labor-intensive methods rather than labor-saving machines. It should use a combination of organic and inorganic fertilizers and pesticides to boost productivity without damaging the environment.

In developing countries, much food, especially perishable produce like fruits and vegetables, is lost through pre-and post-harvest leakage. Controlling food-destroying birds, insects and wild animals before crop harvest and improving storage, including cold facilities and agro-processing after harvest, would go a long way in reducing food losses, thereby making more food available without applying environmentally destructive extensive or intensive agricultural methods. Degraded lands would be restored through labor-intensive re-forestation programs that would create jobs and raise incomes to pull people out of intergenerational extreme hunger and poverty.

Experiments by smallholder farmers in some African countries have shown that labor-intensive, environmentally and socially-friendly technologies such as crop rotation, terracing and contour farming, as in the Machakos district of Kenya, mixed cropping and mixed farming of crops and animals, zero grazing, small-scale irrigation and water harvesting schemes and fertilizer trees have boosted agricultural productivity and food availability and affordability, reducing hunger and poverty without damaging the environment.

Thus changing production methods, including mechanized agriculture, that are environmentally and socially-unfriendly and eliminating pre-and post-harvest food losses in developing countries and consumption patterns in developed countries, including massive food waste, would go a long way in creating needed jobs and making more food available and affordable, ending hunger and extreme poverty by 2030 without damaging the environment. However, this success will require changing political mind sets and ending business as usual in production and consumption patterns in the post-2015 development agenda.

Article originally published here

Mexico’s International Trade Agenda for 2017

mexico1International events such as “Brexit,” the United States’ potential withdrawal from the Trans Pacific Partnership Agreement (TPP) or the possibility of renegotiating the North American Free Trade Agreement (NAFTA) are all extremely relevant for Mexico’s economy – which has the fourth-largest gross domestic product (GDP) in the Americas and the 15th-largest GDP in the world. The Mexican economy rests heavily on its exports, making 2017 a particularly challenging year for Mexico’s international trade agenda during this last year of the current administration. In 2018, Mexico will hold federal elections to designate a new president and Congress.

The Mexican international trade agenda will be most likely occupied by existing negotiations – such as the modernization of the European Union (EU)-Mexico Global Agreement – as well as with current trade issues such as China’s steel overcapacity and the sugar export restrictions imposed on Mexican exports to the U.S., but there are certain likely events that deserve a close examination:

  • likely formalization of the United Kingdom’s exit from the EU – widely known as “Brexit” – a formal invocation of Article 50 of the Lisbon Treaty that may have an impact in the current free trade agreement (FTA) negotiations with the EU and also may require bilateral negotiations with the UK
  • renegotiation of NAFTA or a possible U.S. withdrawal
  • formal U.S. withdrawal from the TPP and/or possible revival of the initiative in a different format – with or without the U.S.
  • surge of trade protectionist measures, not only through the adoption of additional unilateral measures allowed under international trade agreements, either by Mexico or against Mexican exports, such as antidumping and countervailing duties, but also through more aggressive unilateral actions (customs duties increases, safeguards investigations, tax or export restrictions, etc.), all of which may result in additional dispute settlement proceedings under the World Trade Organization (WTO) or bilateral FTAs – such as NAFTA Chapter XIX­– and investment treaties
  • increase activism by Mexico to diversify its export destinations and foreign direct investment sources, particularly with China, Korea and Japan, to expand and increase trade flows. (Mexico already has an FTA with Japan, has explored the possibility of an FTA with Korea and has not formally expressed yet any interest to negotiate with China)
  • increased pressure by China to obtain recognition from Mexico as a market economy, which could have a serious impact on new antidumping investigations and on the 27 existing antidumping duty orders against Chinese products (out of the current 52 products that are subject to antidumping orders in Mexico); China recently filed for consultations with the EU and the U.S. under the WTO to address this matter

On its own, 2017 will be a busy, uncertain year for Mexico’s trade agenda. The uncertainty over Mexico’s relationship with the U.S. will add additional stress to the system. While the debate will continue to rage in the U.S. as to whether NAFTA was a good trade deal for the U.S., NAFTA brought benefits to Mexico that created a more stable neighbor for the U.S.

Article originally published here

Cambodia’s Experiment With Responsible Tourism

In Cambodia, local communities open their homes to visitors as part of community-based tourism.

While most visitors to Cambodia are still struggling to find the perfect spot to capture the sunrise of Angkor Wat among the crowd, some have already heard the call of the local community and found their tranquility there.

Over the past few years, more and more Cambodian communities in the rural areas have become willing to open their homes to visitors, inviting visitors to get a taste of the local culture or to explore the wildlife in the country.

Unlike general tourism, which is mostly organized by private tour operators, meaning the bulk of the profits leave the community, these Community-Based Tourism (CBT) and Community-Based Ecotourism (CBET) projects are managed by local communities themselves or with the local communities strongly involved in the decision-making process. The profits thus benefit local communities directly, improving their community development.

There are currently 66 CBT and CBET projects across Cambodia, according to a recent brochure published by Cambodia’s Ministry of Tourism. These projects offer the visitors a wide range of options to explore the country in many different ways, from visiting floating villages and taking jungle trekking tours to joining bird and dolphin watching tours.“In order to do the CBET and CBT in the right way, in a way that is not exploiting the communities, then you must engage and consult with local communities… These communities need to be empowered in the decision-making process and that’s absolutely essential,” said Alison Curry, marketing technical adviser at Sam Veasna Center (SVC), a non-profit NGO that works with eight local communities to promote bird watching and other ecotourism activities while reducing deforestation and poaching in these protected areas and contributing to community development.

According to the Tourism Statistics Report published by Cambodia’s Ministry of Tourism, more than 4.7 million international tourists visited Cambodia last year. “Around 10 percent to 20 percent of tourists in Cambodia visit the CBT and CBET sites,” said Ho Vandy, secretary-general of the Cambodia National Tourism Alliance.

 

cambodiaThe inflow of visitors has improved the livelihood of the locals in Banteay Chhmar, a village located in the northwest of Cambodia that is known for its namesake cultural heritage — an 800-year-old temple built by King Jayavarman VII, the same king who built Bayon.

The locals at Banteay Chhmar started a project called Banteay Chhmar Community-Based Tourism (Banteay Chhmar CBT) in 2007. The project is dedicated to the preservation and protection of the cultural heritage as well as implementing responsible tourism practices in the area. Besides visiting the temple, the local community in charge of the project also welcomes visitors to have a genuine local experience by staying at homestays, taking a village tour, or getting a ride on an ox-cart.

“This CBT project benefits the local people and I can also help my family by taking part in it,” said 32-year-old Kit Sokuon, who is one of the 11 local tour guides at Banteay Chhmar CBT.

Before joining the CBT project in 2011, Sokuon worked in the field every day, growing rice and cassava. He didn’t know any English at that time. “It was really hard work. Now, besides being a farmer, I can also bring tourists to visit the beautiful temple, showing them around my childhood playground and share the history of the king with them,” he says. “It is a good job for me.”

Khlout Sopheng, vice president of Banteay Chhmar CBT, said 1,392 visitors visited Banteay Chhmar last year, bringing in revenue of around $45,000. Approximately 19 percent of the income will be collected in the community local fund, which will be used in waste collection services, cleaning the moat, opening a library, and other community development-related activities, Sopheng added.

The responsible tourism project in the village has also educated locals about the importance of the preservation of Banteay Chhmar. “Before we set up the project, many people looted the stones and the sculptures [in the temple] and sold them to outsiders,” said Tath Sophal, general manager at Global Heritage Fund-CBT. Global Heritage Fund is a San Francisco-based non-profit organization that supports the conservation work and Banteay Chhmar CBT. “As more and more local people join our project, they know that only supporting the preservation of the temple can help them earn more money so there is no looting now.”

To make sure that the 76 direct members Banteay Chhmar CBT is working with can all get to participate in the project, all of the tour guides, homestay owners, and cooks will take turns to welcome the visitors. “After seeing the success of the project, there are more and more locals applying for being our direct members, but we have to find a balance between the number of visitors and the number of CBT members so we can’t take everyone in,” said Sopheng.

Some 100 kilometers to the southeast lies Prek Toal, a floating village that has begun a CBET project called Saray Tonle in 2004 with help from Osmose, a non-profit NGO focusing on conservation through education and ecotourism.

Chim Sopheap, executive director at Osmose, said that before Osmose introduced the concept of ecotourism to Prek Toal, the village was really poor and no visitors would go there. Now, more than 7,000 visitors have discovered the floating village culture in the area, by joining a water hyacinth handicraft workshop or taking a traditional paddle boat tour.

“Prek Toal has become a relatively rich village after the CBET project was started. In the past, Osmose had to support the total cost of the repairing of their floating platform, which costs at least $6,000, but now, the village can afford at least 50 percent of the cost,” said Sopheap.

The success of Saray Tonle’s project was so significant that some locals in Prek Toal have also started their own CBET projects in the area. But Saray Tonle, which works with around 100 families in Prek Toal, is still “the leading CBET project in the area,” Sopheap noted.

However, CBT and CBET projects in Cambodia are still facing some challenges in the communities and there is also a lack of dialogue between the local communities, the Cambodian government, and local tour operators in terms of creating a supportive environment for the implementation of responsible tourism in the communities.

Somborath Dy, operation manager at Cambodian Rural Discovery Tours, which works with four local communities in the provinces of Kratie and Stung Treng, pointed out that when they’re promoting CBT and CBET in local communities, “a lack of youth participation, knowledge of tourism, hospitality skills and tourism products” are the biggest challenges for them.

“Not enough education and understanding of tourism can lead to a lack of respect and support for it, in favor of practices with more immediate economic returns,” said Thourn Sinan, chairman of the Cambodia Chapter of the Pacific Asia Travel Association.

Besides a still low awareness of responsible tourism, too much reliance on NGOs and hard-to-access sites are other factors that hinder the development of CBT and CBET in Cambodia. “Most CBT and CBET that I know of have been set up by NGOs or with significant NGO involvement… The reliance on NGOs for CBT and CBET in Cambodia is much stronger than I’ve seen in many places,” said Amy McLoughlin, awards manager at Wild Asia Responsible Tourism and co-founder of Ayana Journeys, a tour operator that promotes responsible and educational tours in Cambodia.

She adds, “I’ve never seen these sites being over-crowded and one of the reasons to date is probably the access. It takes time to get there. People are put off by the connectivity of locations.”

While more and more local communities are leaving their mark on the tourist map of Cambodia, they’re also calling for the government and tour operators to give them a boost to reach a broader market. “Currently, Cambodia tourist support, in terms of their marketing, is entirely focused on what I call temples and tragedy,” said Curry. “They are not promoting Cambodia to those many tourists who want to come in and to experience local culture and local community or nature and wildlife.”

Dy suggested that the Cambodian government should reduce taxes and support the budget of tour operators actively promoting CBT and CBET. Currently all the CBT and CBET groups in Cambodia don’t need to pay taxes to the government. According to Johnny Orn, former SVC Director, local non-profit NGOs like SVC, which puts all the profit it makes back into conservation and community development, only pay taxes on salary and labor and withholding taxes, but other tour operators need to pay full taxes.

The development of tourism can be a double-edged sword: it brings income to the local communities, but it can also cause over-development and have a negative impact on the inheritance of tradition and local culture. And these are the problems that all the parties involved in the CBT and CBET trend in Cambodia might be facing in the long term.

“The Cambodian government should have accurate understanding of the definition of what CBT and CBET is while assisting with marketing,” noted McLoughlin. She added that there is a big difference between having a high volume of visitors go into quite vulnerable communities to observe them and having quality visitors engaging in the projects owned by the communities.

Vandy suggested that the key for these local communities to stay competitive in the travel industry is to keep their identities. “If they don’t keep their tradition, it will be hard for them to attract more people from cities or other destinations.”

As in Banteay Chhmar, to prevent over-development, the CBT has made an agreement with the government that none of the properties in this protected area can be sold to outsiders; neither are outsiders allowed to build guesthouses or hotels in the zone. “We hope we can have a maximum of only 5,000 visitors every year. If the number of visitors grow over this number, there are many things we can’t control,” said Sophal.

Can this remote, tranquil village escape the fate of being disturbed by mass tourism in the future? “To do things right is a challenge, but it is a challenge worth doing,” said Curry.

Article by Afore Hsieh, originally published here

Non-Tariff Barriers Can Connect Trade to Sustainable Development

flagsIn the landscape of the 2030 Agenda for Sustainable Development, trade is a means of implementation towards the Sustainable Development Goals (SDGs). The Addis Ababa Action Agenda (AAAA) on financing for development further specifies the role of trade as “an engine for inclusive growth and poverty reduction, and contributes to the promotion of sustainable development.” That is, trade should function as a means for achieving “sustained, inclusive and sustainable” economic growth. More importantly, trade-led growth should enhance, rather than undermine, the potential for social development and environmental sustainability.

In the past several decades, however, many developing countries witnessed that trade growth contributed to aggregate economic growth, and also increased the within-country income inequality. This would suggest that a country’s trade policy reflects the interests of the country’s economic giants rather than small and marginalized players, and that these interests can override the importance of conservation of natural resources and ecosystems.

There is a need to rethink policymaking in order to link trade growth to sustainable development, including its social and the environmental dimensions. The recent UNCTAD report, ‘Trading into Sustainable Development: Trade, Market Access and Sustainable Development Goals,’ looks into this issue, focusing on the interactions between market access conditions – such as customs duties (tariffs) and non-tariff measures (NTMs) – and achieving the SDGs.

What are non-tariff measures?

Historically, market access conditions in international markets were determined by the level of tariffs on imported products. However, tariff barriers have fallen significantly across countries: the trade-weighted average tariff rate in the world fell from just over 5% in 1995 to 2.5% in 2014/2015. Against the trends of falling tariffs, the influence of NTMs upon trade costs has increased. In 2014, around 70% of agricultural products traded in the world market faced sanitary and phytosanitary (SPS) measures, and over 60% of manufactured products faced “technical barriers to trade (TBT),” such as technical regulations and product standards.

Such regulatory measures are designed to meet important social and/or environmental objectives, such as by setting maximum levels for toxic residues in food, ensuring the sustainable sourcing of natural resources, or limiting trade in polluting substances. But they can directly affect trade flows and economic development when they are applied to imported products. In many cases, NTMs can be more trade-restricting that tariffs. UNCTAD estimates that existence of SPS measures to agricultural exports may increase production cost by 22%, compared to the average tariff facing the same exports at around 5%. NTMs can be particularly restrictive for low-income countries constrained by limited capacity to comply with NTMs thus significantly increasing their trading costs.

Because the vast majority of NTMs directly target key determinants of sustainable development, such as food security, health and environmental protection, countries are likely to implement more such measures for the achievement of the SDGs. That is, the number of NTMs in world trade may be increasing fast.

How to make non-tariff measures work for sustainable development

Will an increase in NTMs squeeze low-income countries’ capacity to use trade as a means of implementation of the SDGs? Not necessarily. In fact, the presence of NTMs can be the source of regional or international collaboration that can help countries to achieve a win-win situation: (i) collectively improve policy environment towards achieving the SDGs; and (ii) reduce trade distortionary impact of NTMs. The key is to eliminate trade-distortionary effect of NTMs.

Trade distortions arise from NTMs when they increase production costs for exporting countries to meet the regulatory requirements, including the costs associated with conformity assessment and certification. These costs will be higher when exporters have to meet different requirements for different markets including domestic market. That is, NTMs can be trade-distorting when the “regulatory distance” between an exporting country and its market countries is large. Therefore, reducing the regulatory distance among trade partners is the way to achieve the win-win situation.

Regulatory distance between countries is measured by the similarity of regulatory patterns of NTM types applied to a specific product classified at the HS 6-digit level. For example, if two countries each apply ten different product requirements to lemons, the regulatory distance is huge and it increases trade costs significantly. UNCTAD has assessed the potential impact of reducing costs related to NTMs in the 15 member countries of the Southern African Development Community. The gains amount to US$6 billion through a 25% reduction of NTM-related trade costs. No member country is worse off from the reforms. The largest gains stem from reducing the restrictiveness of SPS measures and TBT for partners from the whole world through alignment with international standards. In the case where barriers to trade from NTMs are reduced only to SADC exporters, the gains are much lower, with a total of about US$1.3 billion.

Moreover, when regulatory convergence is achieved among countries, it implies that countries will be implementing policy measures in a manner coherent with their trading partners. Such collaboration can jointly improve the effectiveness of policy measures, particularly in the areas where policy impacts can be cross-border, such as environmental regulations.

NTMs provide an important “policy interface” between the SDGs and trade, particularly in the framework of regional economic cooperation among developing countries.

Article originally published here