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Exploring the nexus between trade policy and disaster response

Selina Jackson's picture
 Nugroho Nurdikiawan Sunjoyo/World Bank


Strong trade connectivity can help disaster response and recovery by ensuring that humanitarian relief goods and services get to where they are needed when disaster strikes.  Trade policy measures, however, can sometimes have adverse effects.  Research led by the World Bank highlights that a common complaint of the humanitarian community is that customs procedures can delay disaster response, leaving life-saving goods stuck at borders.  Other measures such as standards conformity procedures, certification processes for medicines, and work permits for humanitarian professionals can slow the delivery of needed relief items.  Border closures can exacerbate situations already marked by human tragedy and unlock   full-scale economic crises. 
 
This nexus between trade policy and humanitarian response was discussed at an event organized jointly by the International Federation of the Red Cross and Red Crescent Societies (IFRC), the World Bank Group and World Trade Organization at the 5th Global Review of Aid for Trade on June 30 in Geneva.  Among the steps suggested to address concerns were rigorous disaster planning; better coordination between humanitarian actors, implementation of the WTO's Trade Facilitation Agreement and better recognition of the role of services.  


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Some $24.5 billion was spent in 2014 responding to the needs of the 100 million people affected by natural disasters.[1]   While there has been analysis by the humanitarian community of the regulatory hurdles they face, there has not been any systematic examination of the trade dimension to humanitarian crises: trade's role as a conduit for relief items or how trade can promote recovery.  As a first action to bridge this gap, the joint IFRC, World Bank and WTO event considered a range of trade policy issues that typically arise in disasters, and discussed them in the context of the experiences of three recently disaster-affected countries, Nepal, the Philippines and Liberia.  The session also touched on the potential of the new WTO Trade Facilitation Agreement to streamline and improve the effectiveness of border management.
 
Forthcoming World Bank led research, drawing extensively on surveys conducted by the IFRC, highlights that the trade concern most frequently cited by the humanitarian community is import clearance.  Bureaucratic administrative procedures, burdensome documentation requirements, inflexible working hours, lack of coordination between different government agencies and a limited institutional capacity; all were identified as adding delay and cost to humanitarian response.  Although trade negotiators did not have disaster relief in mind when they negotiated the WTO's Trade Facilitation Agreement (TFA), a number of TFA disciplines address the concerns raised by the humanitarian community, including: publication of procedures, coordination in border management, applying risk based approaches, pre-arrival processing, and priority treatment of perishable goods. 
 
Disaster-affected countries often struggle to cope with the volume of assistance that arrives after a catastrophe – an import surge that can overwhelm the infrastructure and services of even the best-organized administrations.  This was the situation that Naindra Upadhaya, Permanent Secretary at the Department of Commerce and Supply Management of Nepal, described that his country faced in the initial period after the devastating earthquake of 25 April 2015.  Airport and border authorities in Kathmandu struggled to cope with the volume of assistance that arrived – and to distinguish relief assistance from normal commercial transactions.  However, by bringing together representatives of agencies responsible for clearance and humanitarian actors and making use of a single window system, they managed to streamline processes and reduce clearance times to some 15 to 20 minutes. 
 
The humanitarian sector is changing, with a growing number of, and diversity in, actors responding to humanitarian emergencies (state actors, inter-governmental organizations, private sector, and NGOs).  Elise Baudot, Head of Policy, Strategy, Knowledge at IFRC explained, that although all these different actors share a common humanitarian objective in emergencies, issues of coordination and coherence often arise, such as the wrong type of goods being delivered.  Not only is this wasteful, it increases the demands on border officials and delays the arrival of appropriate goods.  Another difficulty cited by IFRC was a lack of transparency in legal frameworks and frequent, often unannounced changes to import rules implemented as crises unfolded.  A common experience was that the open-door policy that countries operated at the start of a crisis was progressively closed, as new barriers were erected.  Keeping track of the changing policy environment was time-consuming.  Rules differed by country, by actor and were subject to constant change. 
 
To tackle rules and procedures that hold up disaster response, humanitarian actors and their consignments are often granted exemptions. This process of “managing by exemption" was not without its drawbacks in the experience of Frank Clary, Director of Corporate Social Responsibility at Agility – a global logistics company.  Border officials had to spend time logging and approving exemption requests, often on a consignment-by-consignment basis - time that in his view could be better devoted to providing logistical support to the humanitarian actors responding to the crisis.  The exemptions raised costs for humanitarian agencies as they had to send more staff to complete the paperwork to request these exemptions.  Reducing trade complexity would have an immediate impact on disaster response, in addition to reducing opportunities for corruption.  Building on this point, Frank Clary argued that one key step that countries could take to stimulate recovery was to remove trade barriers, not just temporarily during an emergency relief situation but on a permanent basis.  In this context, he lent his voice to that of the World Bank to call for the timely and effective implementation of the WTO Trade Facilitation Agreement.
 
One-stop shops, simplified customs clearance procedures and duty-free/tax-free entry for relief items are all part of the disaster contingency measures that the Philippines has in place.  Ambassador Esteban Conejos, Permanent Representative of the Philippines to the WTO highlighted that his country has to cope with some 10-20 typhoons every year.  In this context, he also evoked a "services trade" dimension to the disaster caused by Typhoon Haiyan.  The damage caused by this powerful cyclone had prompted the Philippines government to suspend an exemption written into its national General Agreement on Trade in Services (GATS) schedule that prohibited access of foreign ships to domestic shipping (inter-island cabotage) services.  The prohibition was suspended to allow the entry of foreign ships into Philippines waters to provide foods and supplies to the affected areas.  
 
Other services cited in disaster response include ICT and telecoms services.  ICT innovations used after a disaster, such as cash assistance using mobile money, depend on strong ICT infrastructure.  The World Bank suggested that this underlined the link between the policy context affecting the provision of services, and the management and response to disasters. Such links needed to be given greater consideration – as did the long-term relationship between trade in services, the efficiency and quality of services provided in a disaster-prone country, and its readiness to respond to emergencies.
 
Trade policies inhibiting access or driving up the cost of food were another angle discussed.  Food shortages are a familiar characteristic of nearly all humanitarian crises.  In 2013, the World Food Programme purchased 2.1 million metric tonnes of food valued at $1.6 billion from 91 different countries.  Not only did measures such as export bans affect access to food, sanitary and phytosanitary measures often created difficulties too.  The example of BSE (or mad cow disease) controls was cited in the context of ready-to-eat meals delivered by the UK to the US as part of relief efforts after Hurricane Katrina – meals that were never delivered to beneficiaries due to BSE-restrictions and that had to subsequently be stored at significant cost.  Similar problems had arisen with genetically modified foodstuffs.
 
Ensuring sufficient access to food was a major concern of the Liberian government as the Ebola crisis unfolded.  When disaster struck in February 2014, the Liberian economy was already under significant economic pressure due to falling prices for Liberia's key export commodities, notably iron ore and rubber.  Axel M. Addy, Minister of Commerce and Industry of Liberia explained how an exodus of expatriate staff from mining operations created a domino effect in the economy.  Local businesses serving the expatriate community closed and shed workers.  This then became a general economic crisis as borders closed, and what he termed an "informal blockade" started to impact the economy.  Only by assuring key suppliers, notably of petroleum and rice, that medical protocols were in place in the port and airport of Monrovia, had the necessary supplies been secured. 
 
Given the impact of disasters, a focus on rebuilding capacity to resume international trade could make an important contribution to economic recovery.  The trade policy measures taken by unaffected countries can have a significant impact on how a disaster-struck country recovers.  While some countries have provided disaster-affected trading partners with preferential market access to stimulate export-driven growth, others have adopted trade policy measures (such as import bans and other restrictive measures) that impede economic recovery. As the Ebola crisis highlighted, many countries adopted various protective measures, such as refusing entry to vessels and/or crews that transited through an affected country port.
 
Minister Addy identified "stigma" as a big barrier to recovery.  While media attention had proven useful in rallying international attention in response to the Ebola crisis, it also perpetuated a negative image of Liberia.  One key challenge for his country now was how to rebrand and rid itself of the Ebola stigma that provoked negative trade actions by suppliers and buyers alike.  Minister Addy also recommended greater use of local vendors in providing humanitarian response.  He recalled that local Liberian rice millers had had to compete with rice supplied as food aid that had made it into the local market and depressed prices.
 
One challenge in policy analysis is tracing cause and effect, and trade is no exception.  Analysis of the effects of trade policy measures on disaster-affected countries – whether positive or negative, intentional or unintentional – appears to offer a lens through which immediate and visible impacts on people's livelihoods and welfare can be more readily discerned.   The June 30 session started a discussion that merits further elaboration, not just for those engaged in policy analysis, but more importantly, those engaged in disaster preparedness and response. To take this discussion forward, a forthcoming paper by the World Bank and IFRC, and in collaboration with the WTO, will explore these issues in greater depth.
 
[1] Source: Global Humanitarian Assistance Report 2015, Development Initiatives: http://www.globalhumanitarianassistance.org/report/gha-report-2015

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