The United Nations Conference on Trade and Development (UNCTAD) stated that Trade within regional trade agreements (RTAs) was more resilient than the one without agreements during 2020, a year marked by the new coronavirus pandemic.
In an analysis published this Thursday (14.10.2021), UNCTAD indicates that ““Trade within the RTAs decreased by approximately 5,6 percentage points”, a figure significantly lower than that arising from the exchange between countries without an agreement.
Furthermore, in differentiating between superficial and profound agreements, the main organ of the UN General Assembly expresses that “Trading within deep RCAs has been better that trade within shallow RTAs.”
UNCTAD also acknowledges that the results show some heterogeneity between developed and developing countries, as well as within developing country regions. It details: Trade under RTAs performed better than trade under no-deal for developing economies in Asia and Latin American and Caribbean countries, as opposed to African countries.
Supported by descriptive statistics and econometric methods, an additional result of the research is that, during the COVID-19 pandemic, The importance of deep trade agreements to make trade more resilient was significantly above historical averages.
UNCTAD explains that “trade flows within RTAs are under more robust conditions and have lower trade costs relative to trade outside RTAs (e.g. lower tariffs and more intense cooperation in other areas such as trade regulations and investment regimes).”
The research also states that “more resilient trade contributes to more stable access to essential goods during a crisis, as well as making exports less volatile.”
Under this scenario, the study examining the effect of RTAs in mitigating the trade downturn during the COVID-19 pandemic concludes with a simple suggestion: “RTAs are important for trade integration strategies and sustainable development.” And it recommends that countries consider deep trade agreements to help substantially implement the Goals on issues that affect us all.Paper on “Trade agreements and trade resilience during the COVID-19 pandemic”)
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