Posted on August, 17, 2023 at 12:56 am
A "humanitarian corridor" in the Black Sea will allow the release of cargo ships trapped in Ukrainian ports following the recent collapse of the Black Sea Grain Initiative, Kyiv says. But there are questions about how workable the solution will prove, figures in the shipping and insurance sectors have told Reuters.
Russia withdrew from the Black Sea grain deal last month and has since imposed a de facto blockade on Ukraine. The agreement had allowed Ukraine to export over 32 million tons of corn, wheat and other grains, as we reported in last month's trade roundup.
Ukraine has begun registering ships that plan to use the humanitarian lane, but there have also been reports of Russian warships firing warning shots at cargo vessels in the area.
"Insurers and their backing banks will have to agree [to the humanitarian corridor] and they may say we do not like the risks," one source in the insurance industry told Reuters.
Russia and Ukraine are two of the world's biggest agricultural producers. International wheat prices increased by 1.6% in July following the collapse of the Black Sea deal, the UN Food and Agriculture Organization (FAO) says. This was their first month-on-month rise in nine months.
Moscow says it will only rejoin the grain initiative if it receives a deal to support exports of its own food and fertilizer. Turkish President Tayyip Erdogan, who helped broker the initial deal alongside the UN, says he aims to persuade Russian President Vladimir Putin to re-enter the agreement at talks this month.
Services trade is faring better than merchandise trade as export restrictions on food and fertilizers spread, according to two new World Trade Organization (WTO) reports.
"The pronounced weakening of merchandise trade, which slumped during the fourth quarter of 2022 and appeared to have remained below trend in the first quarter of 2023, is of concern," the WTO says in its Trade Monitoring Report for 16 October 2022 to 15 May 2023.
It flags an increase in export restrictions since 2020, with 63 such rules in place on food, feed and fertilizers. Overall, 110 restrictive trade measures entered into force during the period the report covers, although 182 rules to better facilitate trade also came into play.
"The stockpile of import restrictions in force remained important with no sign of any meaningful rollback," the report says, adding that 9.2% of global imports were affected by restrictions by the end of 2022.
However, there was strong growth of 15% in services trade last year, outpacing the 2.7% rise in merchandise trade, the WTO's World Trade Statistical Review 2023 says. Combined trade in goods and services climbed 13% on the year to $31 trillion.
Travel led the pack in commercial services growth, rising by 91% compared with pandemic-hit 2020. Computer services are also a strong area for trade, with exports 44% above pre-pandemic levels.
A total of 74 trade services measures were introduced in October-May, most of which are designed to facilitate trade, the Trade Monitoring Report says.
Green trade is also faring well, with WTO members introducing numerous new economic support measures to boost renewable power and energy efficiency projects, and to cut the environmental impact of their acivities.
Commercial ships travelling through the Panama Canal continue to face long queues and delays. A major drought in the region has forced authorities to significantly limit the number of ships passing through the vital trade route, highlighting the impact the climate crisis is having on global trade. The Panama Canal Authority has said in a statement that the ongoing drought has “no historical precedence”.
China's exports slumped 14.5% and its imports dived 12.4% in July compared with a year earlier. Both drops are much more severe than expected, with weak global demand having a clear impact on the world's second-largest economy.
The White House is restricting US investment in three Chinese tech sectors – quantum computing, semiconductors and AI. The move is intended to stop US money from aiding Chinese development of "sensitive technologies and products critical to the military, intelligence, surveillance or cyber-enabled capabilities", US President Joe Biden says. China's Commerce Ministry says it hopes the US will not "artificially hinder global economic and trade exchanges and cooperation".
India has placed sudden import restrictions on laptops and tablets as it looks to support its "Make in India" plan. The change came into force in early August and follows the launch of a $2 billion initiative to promote domestic hardware manufacturing.
Japan and Qatar have signed a deal to develop their trade and investment ties. They will focus on areas of "mutual interest and expertise" including healthcare, agriculture and information and communication technologies to support knowledge sharing and technological innovations.
But a trade agreement between Japan and the US is coming under pressure amid disagreements about whaling, the Financial Times reports. Washington wants Tokyo to accept "anti-whaling language" in the Indo-Pacific Economic Framework, but Japan is opposed to any suggestions of banning whaling.
AI could create personalized advice for exporters by scanning and filtering databases such as the WTO's Technical Barriers to Trade. This could reduce notification disparities among WTO members and help countries with lower administrative capacities, according to the European Commission's Head of Global Regulatory Cooperation and International Procurement Negotiations.
The major financial centres of Switzerland and Singapore are expanding their trade links with deeper collaboration on fintech. Swiss foreign direct investment in Singapore has more than doubled in the past five years, and talks are ongoing on adding a digital trade agreement to the 2003 EFTA-Singapore Free Trade Agreement.
Record temperatures are driving food prices higher. Soybeans, olive oil and rice are just three of the products being affected by shortages and price hikes.
Foreign direct investment (FDI) that is aligned with climate goals is key to supporting developing countries in their climate adaptation and mitigation efforts. Several experts explain exactly why climate FDI is so important. There's also a new World Economic Forum Guidebook on Facilitating Climate FDI.
The US government's long-term credit rating has been downgraded by a leading rating agency. The World Economic Forum's Digital Editor, Spencer Feingold, explores what this could mean for the country's ability to borrow money and attract investment.
Source: WEF