1. PH exporters urged to take advantage of self-certification benefits

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1 PHILEXPORT News and Features This Media Service is brought to you by the Philippine Exporters Confederation, Inc. (PHILEXPORT). Articles from PHILEXPORT News and Features may be reproduced without permission in accredited newspapers and magazines. The editors will appreciate receiving clippings of PHILEXPORT News and Features articles used. June 9, 2017 CONTENTS 1. PH exporters urged to take advantage of self-certification benefits Exporters in the Philippines are again urged to apply for self-certification with the Bureau of Customs (BOC) to avail of the many benefits provided by the self-certification scheme currently implemented under pilot in the Association of Southeast Asian Nations (ASEAN). 2. PCA to spur filing of more anti-competition charges in court, says PCC The Philippine Competition Commission (PCC) said that with the passage of the Philippine Competition Act (PCA), cases relating to anti-competitive practices are expected to be given more priority and attention by the courts. 3. Project to raise preventive safety and health actions among young workers, employers launched The International Labor Organization (ILO) has launched a project that increases preventive safety and health actions among young workers and young employers in the Philippines and three other countries. 4. PHL invites Mexican firms to look for business opportunities The Philippines is encouraging Mexican companies to look for more business opportunities offered by its fast-growing economy. 5. Australian business has a new body for engaging in ASEAN The Australian Chambers of Commerce and Business Councils across ASEAN are pleased to announce the official launch of AustCham ASEAN. 6. PH agencies ordered to execute 6 year development plan

2 Philippine President Rodrigo Duterte has instructed all government agencies and local government units (LGUs) to implement the new six year development plan in order to accelerate infrastructure development and expand opportunities in industry and services. 7. Proper security protocols in place at key PH transport facilities Transportation hubs in the Philippines are safe, according to security services of key public transportation agencies. The assurance was made in light of the recent armed and arson attack at Resorts World in Pasay City that killed 37 people, including the lone attacker. 8. PHL working to further improve quality of project preparation, implementation The Philippine government is working to further improve the quality of project preparation and implementation regardless of mode to undertake Php8.44 trillion worth of infrastructure projects crucial to sustaining high economic growth over the next six years. 9. Possible rising trade protectionism seen to derail rebound in global trade The possibility of rising trade protectionism can derail the welcome rebound in global trade which is expected to help the global economy to expand to 2.7 percent this year, according to the World Bank (WB). FULL STORIES 1. PH exporters urged to take advantage of self-certification benefits Exporters in the Philippines are again urged to apply for self-certification with the Bureau of Customs (BOC) to avail of the many benefits provided by the self-certification scheme currently implemented under pilot in the Association of Southeast Asian Nations (ASEAN). Self-certification is a system whereby a certified exporter has the authority to declare by itself on the commercial invoice that its export products have satisfied the rules of origin (ROO) under the ASEAN Trade in Goods Agreement. The Department of Trade and Industry (DTI) and Export Development Council are underlining the importance for Philippine exporters of participation in the self-

3 certification system not only to leverage the advantages but also to gain training and knowledge for when the scheme is implemented ASEAN-wide. The pilot self-certification mechanism was rolled out following the ASEAN Free Trade Agreement Council Meeting in 2008 to discuss ways to promote the use of AFTA and streamline certification procedures. ASEAN is currently engaged in negotiations on the region-wide full implementation of the system. The Philippines is part of an ongoing pilot program that executes the self-certification scheme between the Philippines, Indonesia, and Laos. Meanwhile, Thailand and Vietnam have already signified their intention to join this pilot. The BOC oversees the processing of documents for Philippine exporters and manufacturers under this system and provides the guidelines for accreditation. Among the benefits of self-certification is it reduces compliance requirements and administrative costs, as exporters are required only a one-time application to be certified compared to having to apply for a COO for each shipment. Self-certification also promotes ease of doing business and facilitates the release of shipments, with exporters able to issue their own certification even on weekends. To become a certified exporter, an enterprise has to apply in writing with the BOC s Deputy Commissioner for the Assessment and Operations Coordination Group. Along with the letter of application, the applicant must submit the latest income tax return, business permits, DTI or SEC registration, list of three authorized signatories, an illustration of the manufacturing process, and the list of products applied for authorization. Philippine Export Zone Authority locators must also provide their Unique Reference Number, while non-peza locators must submit their BOC-Client Profile Registration System number. Accreditation is free except for the documentary stamp attached to the certificate of accreditation to be issued to the exporter. 2. PCA to spur filing of more anti-competition charges in court, says PCC The Philippine Competition Commission (PCC) said that with the passage of the Philippine Competition Act (PCA), cases relating to anti-competitive practices are expected to be given more priority and attention by the courts.

4 During a recent briefing before the business and legal community in Makati City, Commissioner Annabelle Asuncion said that the PCA, or Republic Act No , will help to fast-track the investigation and prosecution of anti-competitive acts. The PCA, or An Act Providing for a National Competition Policy Prohibiting Anti- Competitive Agreements, Abuse of Dominant Position and Anti-Competitive Mergers and Acquisitions, Establishing the Philippine Competition Commission and Appropriating Funds Therefor, stipulates three types of penalties administrative, civil, and criminal charges. Administrative fines, said Asuncion, are penalties that the PCC as a quasi-judicial agency can impose on violators of the PCA. Moreover, the law gives legal recourse to people who have been adversely affected by uncompetitive acts through the filing of a civil case. The PCA is special in the sense that it does provide for civil liability, so a private party who feels aggrieved by the acts of an entity may file a civil action after the PCC has completed its preliminary investigation, said Asuncion. We will issue some sort of document saying that we ve completed it and the private party can now go to the civil courts to enforce them, seek damages as they would in normal damages cases. The provision on civil action, found in Section 45 of the PCA, states: Any person who suffers direct injury by reason of any violation of this Act may institute a separate and independent civil action after the Commission has completed the preliminary inquiry provided under Section 31. Meanwhile, under Sections 14(a) and 14(b) of the PCA, violations of anti-competitive agreements also carry corresponding criminal liability, the commissioner said. Violators face imprisonment of two to seven years, and a fine of not less than P50 million but not more than P250 million. Asuncion said that after the PCC finishes its preliminary investigation, the case will be passed on to the Department of Justice (DOJ) for hearing. Hopefully because the PCA has already been passed, we will not encounter the same problem as before where the DOJ has to choose between prosecuting a murder case and an anti-competitive agreement. She added that there is an office for competition under the DOJ and we re hoping that they will become sort of special prosecutors for these types of cases.

5 The commission is likewise working to have the commercial court specialize also on these types of special cases. But Asuncion admitted it won t be easy initially: Because it s a new law, it s a new agency, it s a new type of prosecution, we expect some time before the courts as well as the prosecutors become familiar with it. She added that the commission is currently conducting capacity-building efforts and encouraging prosecutors and certain courts to specialize on the anti-competitive law so they can appreciate an anti-competitive case and develop a good understanding of the law. 3. Project to raise preventive safety and health actions among young workers, employers launched The International Labor Organization (ILO) has launched a project that increases preventive safety and health actions among young workers and young employers in the Philippines and three other countries. Dylan Tromp, Project Manager of ILO s Youth 4 OSH (Occupational Safety and Health), and Kathy Brimon, ILO National Project Coordinator of SafeYouth@Work Philippines, cited data showing 860,000 workers suffer from non-fatal work-related injuries and illnesses around the world every day. Tromp and Brimon said 6,400 workers also die from occupational injuries and diseases globally every day. They said lost work days represent 4 percent of the world s gross domestic product (GDP). Safe and healthy working conditions are a human right, and an indispensable part of a dignified working life. But there is also a strong economic argument, a business case, for reducing workplace injuries, deaths and diseases, they noted. These issues concerned the youth as they constitute 18 percent of the population in Southeast Asia. Citing United Nations data, Tromp and Brimon said the Asia-Pacific region is home to 45 percent of the world s youth, representing 700 million young people. The ILO said the two-year Youth4OSH project seeks to reduce workplace injuries, fatalities and occupational diseases through increased preventive safety actions by young workers and young employers engaged in the global supply chains in the Philippines, as well as in Indonesia, Myanmar and Vietnam.

6 One of the key factors cited for the high injury toll is the lack of awareness of workplace safety and worker rights. The project seeks to address this by developing and pilot testing a range of tools and strategies for raising workplace safety awareness and generating public demand for improvements in national OSH systems. It will establish and engage networks of young intermediaries in the construction and manufacturing sectors which will then be equipped with the tools and skills to promote OSH awareness and preventative action. 4. PHL invites Mexican firms to look for business opportunities The Philippines is encouraging Mexican companies to look for more business opportunities offered by its fast-growing economy. This, as Mexico is setting its sights on the Philippines and other ASEAN markets with the aim to diversify its foreign markets. Commercial Counselor Vichael Angelo Roaring, head of the Philippine Trade and Investment Center in Mexico City, noted the Philippine s status as one of the fastestgrowing economies in the region, the ease of doing business in the country, and its position as a strategic entry point into the wider ASEAN market. Roaring said the country also offers investment incentives, such as income tax holidays. For his part, Philippine Ambassador to Mexico Eduardo Jose de Vega cited the opening of the maritime route between Philippines and Indonesia (Davao-Bitung), which will facilitate the exchange of goods between the two ASEAN members. This makes it more attractive for Mexican companies to do business with the Philippines, he said. The ambassador also noted the importance of Mexico as a Philippine trading partner given the Department of Trade and Industry s decision to locate its Latin American trade promotion office in the region. De Vega further said the Philippines, for cultural reasons, could be a more attractive market for certain Mexican products than its ASEAN neighbors, such as being a prospective destination for liquor and pork products. The Philippine Embassy in Mexico, in cooperation with PROMEXICO, the Mexican government agency for trade and investment promotion, held a conference and webinar titled Opportunities for Doing Business with the Philippines.

7 5. Australian business has a new body for engaging in ASEAN The Australian Chambers of Commerce and Business Councils across ASEAN are pleased to announce the official launch of AustCham ASEAN. Recognizing the need to improve information flows on Australian business activity in ASEAN, seven officially registered Australian chambers and business councils from across ASEAN have come together to establish the Australia-ASEAN Chamber of Commerce (AustCham ASEAN) as an umbrella organization for advocacy on issues impacting Australian business operating in ASEAN. AustCham ASEAN was officially launched by the Australian Prime Minister, the Honorable Malcolm Turnbull, in Singapore recently. An annual survey of Australian businesses operating in ASEAN will be conducted by AustCham ASEAN, and is being supported by the Australian government through an Australia ASEAN Council (AAC) grant of A$50,000. AustCham ASEAN has been formed as a registered Society in Singapore with the following foundation members: Indonesia Australia Business Council; Australia Chamber of Commerce Lao PDR; Malaysia-Australia Business Council; Australia-New Zealand Chamber of Commerce (Philippines) Inc.; Australian Chamber of Commerce, Singapore; Thai Chamber of Commerce and Australian Chamber of Commerce in Vietnam. It is expected that organizations from the remaining three ASEAN countries will join shortly. AustCham ASEAN has also been officially accredited as an ASEAN Plus 1 Business Council by the ASEAN Business Advisory Council (ABAC). AustCham ASEAN will focus on three main activities: informing Australian business on regional integration developments and the business landscape; explaining the contribution of Australian business to ASEAN markets; and advocating for policies, rules and regulations that support Australian business activities in ASEAN ASEAN is the 6th largest economy in the world and the 2nd largest Foreign Direct Investment (FDI) recipient. With a proud history of engagement with ASEAN, Australia recognizes the importance of the ASEAN community and its role in facilitating trade and diplomatic relationships. ASEAN is one of Australia s leading trade partners and Australian distributors of goods and services have a deep engagement with the region. The 2016 survey of Australian firms conducted by the Australian chambers and business councils in ASEAN confirmed that the ASEAN Economic Community and regional integration is important for Australian firms to invest and operate in the region. Over half of Australian businesses surveyed indicated that regional integration was one of the key reasons for them to trade and invest in ASEAN this was the second most

8 important driver after the growing consuming class. However, the survey also indicated a number of gaps currently inhibiting the operations of Australian firms in the region. Survey respondents indicated a range of challenges they encounter in doing business in ASEAN, from non-tariff measures to infrastructure bottlenecks to restrictions on service offerings. In addition, more than half of Australian firms surveyed indicated that they wanted more information to properly understand what ASEAN regional integration could mean for their business and 2018 will be major opportunities for Australian business engagement in ASEAN represents the 50th anniversary of ASEAN, and in 2018, the ASEAN- Australia Special Summit will be convened in Sydney. Through its activities, AustCham ASEAN will enable a greater flow of information between Australian business and ASEAN leaders. Building closer ties with ASEAN is of great strategic and economic importance to Australia. With a proud history of substantive engagement since becoming ASEAN s first dialogue partner over forty years ago, Australia recognises ASEAN s important role in facilitating trade, regional economic integration and enormous potential for further economic growth. I believe the activities of AustCham ASEAN to represent the Australian business community in the region will further strengthen the relationship between ASEAN and Australia, said Jane Duke, Australia s Ambassador to ASEAN. Fraser Thompson, President of AustCham ASEAN, commented that ASEAN is currently the 6th largest economy in the world and represents a major opportunity for Australian businesses. While many Australian firms are already active in the region, our hope is that AustCham ASEAN can support better engagement in the region by informing Australian businesses on developments in regional integration, and helping advocate on their behalf to address some of their challenges. -- Anzcham Press Release 6. PH agencies ordered to execute 6 year development plan Philippine President Rodrigo Duterte has instructed all government agencies and local government units (LGUs) to implement the new six year development plan in order to accelerate infrastructure development and expand opportunities in industry and services. Duterte on June 1 signed Executive Order No. 27 series of 2017, which directs all government agencies and LGUs to implement the Philippine Development Plan (PDP) and the Public Investment Program (PIP) starting this year until PDP is the updated medium term plan anchored on the AmBisyon Natin 2040, the long term plan for a stable and comfortable life for Filipinos, to be accomplished by

9 creating a more inclusive, high trust and resilient society, and globally competitive knowledge economy. The country s development program was approved by the National Economic and Development Authority Board on February 20 this year, following a series of Cabinet level and technical inter agency and stakeholder Sweeping plans Among the plan s goals are to strengthen value and supply chain linkages, remove restrictions, provide incentives, and promote job creating investments so as to increase local and foreign direct investment (FDI) in the country. According to the plan, industry and services will be integrated to make them globally competitive, largely by strengthening forward and backward linkages for more efficient supply and value chains. The PDP, particularly its Chapter 9, also seeks to expand opportunities in industry and services, particularly for micro, small, and medium enterprises (MSMEs), cooperatives, and overseas Filipinos. Tightening value and supply chain linkages will entail improving backbone services, such as distribution, transport, and logistics services, to facilitate movement of people, goods, services, knowledge, and ideas, as well as link firms, especially MSMEs, to domestic and global markets. Investments in infrastructure and logistics will also boost competitiveness, improve connectivity, and reduce costs, the PDP notes. Also sought is to amend restrictive provisions in the Constitution; repeal or amend relevant laws, rules, and regulations that restrict foreign participation in certain economic activities; and ensure that regulations promote fair competition. The incentive system will be modernized to remove nationality and export biases and make it more relevant to investors and more competitive with other Association of Southeast Asian Nations (ASEAN) member states. The medium term plan also seeks to increase the competitiveness, innovativeness, and resilience of industries and services in the Philippines. To achieve this, the plan aims to develop high value added, competitive, and sustainable sectors; improve the business climate; improve access to technology and innovation; and enhance labor capacities. Other goals are to improve market access; ensure consumer access to safe and quality goods and services; improve access to production networks and finance; and enhance productivity, efficiency, and resilience.

10 Moreover, PDP lists legislation needed to propel these strategies. These include the Ease of Doing Business Act, Inclusive Business Bill, and amendments of the Public Service Act and the Retail Trade Liberalization Act. The PDP also supports the repeal or amendment of the Flag Law (Commonwealth Act 138) to create a level playing field for foreign firms in bidding for government procurement. Infrastructure development The PDP notes that despite improved and expanded transport systems, it is still inadequate vis a vis the growing demand. Thus, it underscores increasing investments in infrastructure and accelerating infrastructure programs and projects. This is mainly by ramping up spending on infrastructure to at least 5.3% of GDP in 2017 and possibly to 7.4% in With a growing economy, the Philippines requires more and better selected infrastructure investments, given its archipelagic landscape, expanding population and rapid urbanization, PDP Chapter 19 states. PDP lists four major strategies to accelerate infrastructure development, and these are to increase spending on public infrastructureí¾ implement strategic infrastructure for the various infrastructure subsectorsí¾ ensure asset preservationí¾ and intensify research and development on cost effective technologies. In particular, the plan aims to enhance the transport sector by providing adequate, accessible, reliable, and safe access for people and goods moving across the country, to neighboring regions, and to other parts of the world. Accordingly, there is a need to enact a National Transport Policy and to create independent regulatory bodies for the railways, airports and seaports, among others, to establish a more streamlined transport sector that is able to efficiently and effectively carry out the identified development strategies. Roadmaps and evidenced based studies should be used to guide the rational development of an intermodal transport infrastructure network. To improve connectivity and mobility, multi modal transport terminals will be established, complete with ancillary facilities to provide smooth transition for passengers and freight from one mode to another. New economic centers will be supported with transport infrastructure and services in accordance with land use and urban planning methodologies and other sustainable construction technologies that have been proven effective in livable cities.

11 Transport agencies must continue to forge convergence programs with concerned agencies to ensure that economic sectors are offered adequate transport infrastructure support and services. To support development in Mindanao, road projects under the Mindanao Logistics Infrastructure Network are to be pursued along with the Improving National Roads for Inclusive Growth in Mindanao Projects in Western Mindanao. The capacity of the Brunei Darussalam, Indonesia, Malaysia, the Philippines East ASEAN Growth Area road network will also be increased. Easing traffic congestion In the short term, the plan says road based transport will be improved by addressing traffic congestion through engineering, enforcement, and education, while in the long run, the road network will be upgraded and expanded to the highest quality standards. The desired shift from private to public mass transport should be encouraged by ensuring the accessibility, affordability, adequacy, and reliability of rail transport and bus rapid transit (BRT) systems. The government will exhaust all possible means to improve the operational efficiency of airports and to address constraints to optimal capacity utilization. In particular, strategies will focus on decongesting air traffic in the greater capital region, such as building a new international airport. Meantime, movements at both land and air facilities at the Ninoy Aquino International Airport are to be optimized, while the development of Clark International Airport will be fast tracked, including the establishment of a fast and direct access to Manila, such as rail. Port facilities will be improved so that inter island shipping, including a stronger roll on/roll off network, remains a viable transport option for people and cargo. The government aims to expand port facilities and fully utilize existing ports. In particular, a more direct connection between Manila and Batangas ports will be explored and co loading (modified cabotage) will be implemented to encourage shipment between domestic ports. Existing dry ports will be improved and new ones will be built to provide support to manufacturers, importers, and exporters. These will be done by reducing vehicle turnaround time, thus, accelerating trade movement, the plan says. It added that logistics hubs will be developed to connect industrial and manufacturing zones as well as agroindustrial areas, to major port areas.

12 The plan aims for the safety and security of the public transport system by adopting a universally accepted security structure to eradicate activities that may cause injury, death, loss, or damage to property. Laws governing transport Part of the legislative agenda to hasten infrastructure development is to amend the Build Operate Transfer Law and its implementing rules and regulations; enact a National Transport Policy; and enact a law creating an independent body for transport safety and security. Another goal is to enact a law creating independent regulatory bodies for railway and maritime transport sectors, which the PDP says addresses the weak and fragmented institutional setup of concerned transport agencies by creating respective independent regulatory bodies for the railway sector and maritime transport sector, consistent with the National Transport Policy. The existing dual roles of some agencies acting as both operator and regulator of transport facilities will be effectively eliminated, it adds Proper security protocols in place at key PH transport facilities Transportation hubs in the Philippines are safe, according to security services of key public transportation agencies. The assurance was made in light of the recent armed and arson attack at Resorts World in Pasay City that killed 37 people, including the lone attacker. At the Tapatan sa Aristocrat on June 5, transportation officials from the Light Rail Transit Authority (LRTA), Metro Rail Transit 3, Philippine National Railways, the Philippine Coast Guard (PCG), the Manila International Airport Authority, Civil Aviation Authority of the Philippines and the Office of Transport Security (OTS) assured the public that proper security protocols are in place in all major air, land and sea facilities and gateways across the country. Sa atin, pag mayroon tayong nakukuhang delikadong information, vina validate naming yan Yun pong sinasabi mong threats, yung threats lagi pong nariyan yan. Omnipresent yan. Hindi tayo pwedeng mag relax. (We validate information that we receive. Threats are always there. That s omnipresent. We can t relax.) So if you noticed, even the President, alerto siya (was alert), said OTS Undersecretary Art Evangelista. Evangelista added that airports observe meticulous security procedures before passengers are allowed to enter the aircraft. There are even independent screening protocols laid out by airline companies before planes depart.

13 If you notice sa airport, nag o observe kami ng three tier defense system. Meron kaming checkpoint bago mag terminal. Meron kaming screening point bago ka pumasok sa terminal. At doon sa final [post], may screening point pa roon. Hindi pa satisfied ang airline, mayroon rin silang sariling screening point bago ka pumasok ng eroplano. Ganun katindi ang screening sa airport (At the airport, we observe a three tier defense system. We have a checkpoint before you reach the terminal; another before you enter the terminalí¾ and the final one there s a screening point. Airlines are not easily satisfied so they have their own screening point before you enter the plane. That s how strict airport screening is.), Undersecretary Evangelista explains. Similarly, the PCG has been observing stringent measures to identify potential threats on ports. They have stationed K 9 dogs to detect explosive devices and narcotics in every vessel. Sa port security, meron po tayong tinatawag na layering katulad po din sa airport. Meron po tayong frisking. Meron po tayong X ray machines at saka ibang sistema upang malaman po natin kung may threat o wala. At higit po sa lahat, lingid po sa kaalaman ng karamihan, ang Philippine Coast Guard ang may pinakamaraming inventory ng K 9 na aso sa Pilipinas (For port security, we have what we call layering like what we have at the airport. We implement frisking; we have x ray machines and other systems to identify if there s a threat or not. Also, unknown to most, the Philippine Coast Guard has the most inventory of K 9 dogs in the Philippines.), explained PCG Commodore Joel Garcia. The PCG also conducts constant periodic review of its security protocol to ensure that port monitoring is ensured. For its part, the LRTA said its management is beefing procurement of emergency response equipment necessary for rescue and other untoward incidents. In activate namin and we are lining up trainings and quick response teams. Because as we all know, marami sa ikinamatay ng mga tao sa Resorts World ay due to suffocation. And the LRTA Administrator also ordered the procurement of breathing apparatus and rescue equipment na bini bid na po natin yan. Siguro in a few weeks i de deliver na (We activated training and quick response teams. As we all know, most deaths at Resorts World were due to suffocation. The LRTA administrator has ordered procurement of breathing apparatus and rescue equipment that we are now bidding out. Maybe in a few weeks they will be delivered.), said Dominic Cabigting, Administration department head of LRTA PHL working to further improve quality of project preparation, implementation The Philippine government is working to further improve the quality of project preparation and implementation regardless of mode to undertake Php8.44 trillion worth

14 of infrastructure projects crucial to sustaining high economic growth over the next six years. The planned Infrastructure program is meant to achieve our growth potential, sustain high economic growth that would generate gainful employment and reduce inequality and poverty, said National Economic and Development Authority (NEDA) Undersecretary Rolando Tungpalan. Tungpalan said the economy is projected to grow between 6.5 percent and 7.5 percent in 2017, and 7 percent to 8 percent from 2018 to The gross domestic product (GDP) growth translates to larger economy, expanding from about USD290 billion in 2016 to USD510 billion by 2022, he noted. Tungpalan said of the Php8.44 trillion (or roughly US$168 billion) total infrastructure investment requirement under the Public Investment Program, two-thirds of the projects will be implemented through local financing or General Appropriations Act (GAA). He added the remaining projects will be carried out through public-private partnership (PPP) at 18 percent, and official development assistance (ODA) at 15 percent. The NEDA official stressed that the specific decisions in recent times to change the mode of implementation from PPP to ODA, if not GAA of some projects amid challenges, do not constitute a shift in policy from PPP to ODA. This is really to say it s not whether it s ODA or PPP: Good quality at entry, implementation, and operations and maintenance should be matched with good governance to produce good sustainable results, Tungpalan added. 9. Possible rising trade protectionism seen to derail rebound in global trade The possibility of rising trade protectionism can derail the welcome rebound in global trade which is expected to help the global economy to expand to 2.7 percent this year, according to the World Bank (WB). In its June 2017 Global Economic Prospects, the WB said that over the medium term, additional erosion of the multilateral rules-based system could put downward pressure on economic integration, and ultimately on growth and job creation. While the widespread imposition of trade barriers remains a tail risk in the short term, unilateral restrictions may be met with retaliatory measures, it said.

15 Citing previous papers, the WB noted that a non-cooperative rise in trade restrictions could result in retaliatory measures, eventually leading to substantial increases in tariffs worldwide. This could result in large income losses for all countries involved. An upward spiral in beggar-thy-neighbor protectionist measures would put into reverse the process of trade liberalization that has been a major contributor to deepening trade in past decades, it added. The WB noted another study indicating that new preferential trade agreements and a rising number of World Trade Organization (WTO) members appear to have increased global trade growth by an average of more than 1 percentage point per year. The unwinding of such agreements would likely put downward pressure on trade prospects and jeopardize the effectiveness and viability of the multilateral trading system. Past experiences with protectionist policies warn of considerable unintended damage, it added. The WB said rising protectionism and declining trade integration would harm growth. An increase in barriers to trade may result in cascading trade costs along the supply chain. Apart from a pickup in trade and manufacturing, the WB identified other drivers of global economic growth this year. These are rising market confidence and stabilizing commodity prices which will allow growth to resume in commodity-exporting emerging market and developing economies. A bright spot in the outlook is a recovery in trade growth to 4 percent after a postfinancial crisis low of 2.5 percent last year. The report highlights a key area of weakness in global trade, trade among firms not linked through ownership. Such trade through outsourcing channels has slowed much more sharply than intra-firm trade in recent years. This is a reminder of the importance of a healthy global trading network for the less integrated firms that account for the majority of enterprises.