How International Trade Agreements Lead To Economic Growth

The Bank is cooperating with governments to address trade-related challenges, with financing commitments amounting to more than $22.5 billion (US$12.6 billion and US$9.9 billion IDA) at the end of 2017, up from just $3.3 billion in 2004. However, in many other countries, particularly in Africa and the Middle East, progress has been slower. In the poorest countries, their share of world trade has declined considerably and, without reducing their own trade barriers, they are at risk of further marginalizing. Approximately 75 development and transformation economies, including virtually all least developed countries, fit this description. Unlike successful integrators, they are disproportionately dependent on the production and export of traditional raw materials. The reasons for their marginalization are complex, including deep structural problems, weak political framework and institutions, and protection inside and outside. Non-traditional trade obstruction measures are more difficult to quantify and assess, but they are becoming more important with traditional customs protection and lower import quotas. Anti-dumping measures are increasing in both developed and developing countries, but they are disproportionately confronted by developing countries. Another major obstacle is the rules that require imports to comply with technical and hygienic standards. They entail costs for exporters that may outweigh the benefits to consumers.

The European Union regulations on aflotoxins, for example, cost Africa $1.3 billion in exports of cereals, dried fruit and nuts per European life saved9 Is there a right balance between costs and benefits? Countries are increasingly turning to the World Bank Group to work together on trade issues and, more broadly, on reforming the investment climate to ensure competitiveness. The WBG has the opportunity to contribute by sharing the technical knowledge that helps developing countries make informed policy decisions on trade and investment climate issues that will be essential for future growth and poverty reduction. In February 2017, the World Trade Organization`s Trade Facilitation Agreement came into force, which established a global effort to reduce trade costs and improve ties with the global economy.