Academic literature on the topic 'International Trade Law and Policy'

Donald Trump ha orientado su política exterior hacia dos objetivos económicos principales en materia de comercio exterior. El primero consiste en luchar por un fair trade que reequilibre la relación comercial de Estados Unidos con sus socios comerciales, a través de una lógica que privilegie a los intereses estadounidenses por encima de la búsqueda de intereses comunes. En virtud del segundo objetivo se busca frenar la des-localización de actividades productivas de Estados Unidos para impulsar la creación de nuevos empleos y estimular el crecimiento de la economía interna. Estos dos objetivos de la política exterior de Trump han sacudido profundamente los pilares más fundamentales del derecho del comercio internacional: un conjunto normativo, construido después de la Segunda Guerra Mundial para dar sustento jurídico a las relaciones económicas del nuevo orden internacional liberal. En primer lugar, el neoproteccionismo de la política exterior de Trump constituye una contestación frontal del libre comercio como paradigma dominante del derecho del comercio internacional. En segundo lugar, el confirmado bilateralismo de dicha política es el exacto opuesto del multilateralismo, promovido por las normas e instituciones de la regulación jurídica del comercio internacional. Tanto el neoproteccionismo como el bilateralismo manifiestan la existencia de una crisis más profunda de la cooperación entre Estados en el orden internacional liberal de la posguerra.

Against a backdrop of consistent NGO pressure, countered by an unrelenting and increasingly transnational organised crime-framed poaching effort, the Secretary of State for the Environment Food and Rural Affairs moved to enact legislation which will significantly curtail what remains of the market for ivory products in the UK. The Ivory Bill, at the time of writing going through its parliamentary stages, will sidestep the majority of the current exemptions, premised on the antiquity of a worked item, to the usual prohibition on the trade of raw or worked ivory which owes its existence to the Convention on the International Trade in Endangered Species of Wild Fauna and Flora 1973 (CITES) and the Treaty’s domestic implementing measures. The accelerated illegal killing of charismatic species such as elephants has prompted legal responses at international and local levels in both range and destination-market states. Laws targeting both the supply and demand sides of the trade have been undermined by the trade in antique ivory: a shadow, parallel market of imitation antiques has existed for some time to launder poached ivory through the exemptions to the CITES system. This short article will introduce the mechanics of the Ivory Bill, set in the context of the drivers which have prompted it, and will evaluate its potential contribution to curtailing this destructive trade.

In September 2008, the United States Trade Representative (USTR) announced the United States’ intention to join Singapore, New Zealand, Brunei, and Chile in what was then called the Trans-Pacific Strategic Economic Partnership Agreement, a preferential trade agreement. Since then, the agreement has grown in scope and ambition. The negotiations to create what is now known as the Trans-Pacific Partnership (TPP) have expanded to include seven other nations. The USTR wants the TPP to be “an ambitious, next-generation, Asia-Pacific trade agreement that reflects U.S. economic priorities and values.” According to the USTR's webpage dedicated to the agreement, the administration is “working in close partnership with Congress and with a wide range of stakeholders, in seeking to conclude a strong agreement that addresses the issues that U.S. businesses and workers are facing in the 21st century.”

AbstractThere is a critical research gap regarding the trade and animal welfare interface: we do not know, empirically, what the impact of trade on animal welfare is. This gap exists, in part, as a result of the paternalism of international trade law and the underdevelopment of global animal law. This article addresses, firstly, the collision of dichotomous trade and animal welfare priorities in legal and political systems. It then explores attempts at reconciliation by the World Trade Organization and the European Union. This involves an investigation of the impact of trade on animal welfare. This impact is categorized into four component parts: (i) open markets, (ii) low animal-welfare havens, (iii) a chilling effect, and (iv) lack of labelling. Case studies from the European Union are examined. Thirdly, the article critiques trade law and policy as ill-suited primary drivers of global governance for animals. Global animal law is identified as a promising alternative, although its early development has been unduly affected by international trade law.

Public Health Science and practice expanded during the course of the 20th century. Initially focused on controlling infectious disease through basic public health programs regulating water, sanitation and food, by 1988 the Institute of Medicine broadly declared that “public health is what we, as a society, do collectively to. assure the conditions for people to be healthy.” Commensurate with this definition, public health practitioners and policymakers today work on ;in enormous range of issues. The 2002 policy agenda of the American Public Health Association reflects positions on genomics’ role in public health; national health and safety standards for child care programs; sodium in Americans’ diets; the health and safety of emergency rescue workers; and war in Central Asia and the Persian Gulf.

Abstract International law addresses the relationship between autarchic national public policy, including but not limited to national economic policy, and international cooperation. This address makes three related points. First, in order to achieve efficient levels and types of international cooperation, it will be necessary to overcome international legal fragmentation, both in international legislation and in international adjudication. Second, WTO dispute settlement has avoided making cross-sectoral trade-offs that would effectively overcome fragmentation, in part because it generally avoids evaluation of regulatory rationales, and in part because its mandate does not allow application of international law beyond the WTO covered agreements. Third, even if we overcame the fragmentation problem in legislation and adjudication, we would still need to move toward majority voting to reach an efficient level of international law-making.

By constituting the existence of transnational public policy, the author tends to spread its scope on economic area as well, treating it as a universal principle of various fields of International law and commerce, serving the highest and utmost goals of world community. Trade competition and protection of the weaker party in a law-suit are also at stake. Economic ethics finds its protection by accepting legitimacy of transnational public policy. Being a special form o f legal cosmopolitism, it is responsible for yielding protection of basic rights of participants in international trade

Includes bibliographical references.
This dissertation aims to examine one major issue: namely, the most appropriate competition law for developing countries from the perspective of ‘looking from the inside out’.1 Reference is made particularly to Tanzania, with a close evaluation of its Fair Competition Act, 2003 and some case law, so as to assess the efficiency and effectiveness of competition policy and law within its Tanzanian context. This involves taking into consideration the inherent characteristics of the Tanzanian economy since it is necessary that Tanzania have a competition law that reflects and addresses its particular needs. So the basis of this dissertation is to analyse the efficacy of the Fair Competition Act to deal with the specific requirements of Tanzanian society; and if the result is found to be in the negative, then the dissertation goes on to suggest what type of competition law model Tanzania should develop that will best suit the country’s needs.

The Constitution of the Republic of South Africa, 1996 (hereafter referred to as "the Constitution"), outlines the different roles and functions of the arms of government, namely the Executive, Judiciary and Legislature. In terms of international agreements, Section 231 of the Constitution provides the parameters within which the Executive and the Legislature are responsible for when entering into international agreements. The Executive is responsible for negotiating and signing all international agreements, which must then be approved by the National Assembly and the National Council of Provinces in order to be ratified. Furthermore, the Constitution requires the Legislature to oversee the work of the Executive. In this regard, Parliament, as the representative of the people of South Africa, has a duty to ensure that even international agreements will benefit the citizenry and not undermine national objectives. However, due to the democratic principle of separation of powers, Parliament has little control over the outcomes of the negotiations which the Executive undertakes on behalf of the nation. Signed international agreements may not always be in the national interest. In these instances, Parliament cannot alter the terms of the agreement. It can at best approve this for ratification with reservations or reject it once it has been tabled. Several challenges arise in relation to the approval for ratification of international agreements. This is primarily related to Parliament's capacity and the time available to consider signed agreements, and its knowledge and understanding of the content and implications of international agreements. This study, therefore, considers how Parliament can effectively oversee developments during international trade negotiations. This is to circumvent situations where the trade agreements do not support national strategic objectives. A grounded theory approach was used to develop a theory on how to strengthen Parliament's oversight role during international trade negotiations. Grounded theory is a qualitative research method, which uses a mainly inductive approach. Data was gathered through conversational interviewing with a number of stakeholders such as Members of Parliament and parliamentary officials, as well as technical and nontechnical literature. These were analysed to develop key concepts or variables. Next, a literature review was conducted to determine the parent body of knowledge within which the research study falls. This process yielded further variables. It also assisted in determining the linkages between the key concepts. Finally, I undertook a theory building process to determine the relationships between the key concepts and the key concern variable. From the analysis, this study proposes that the Executive and Members of Parliament need to understand the importance and relevance of holding the Executive accountable for its actions in relation to international trade negotiations. Once this is clearly established, there will be an incentive to develop institutional capacity to perform oversight over this type of Executive action. This enhanced capacity will lead to more effective oversight over the Executive's involvement during international trade negotiations and thus greater accountability by the Executive to ensure that these negotiations support national strategic objectives.

Magister Legum - LLM
Trade and climate change intersect in many ways. Aside from the broad debate as to whether economic growth and trade adversely affect the environment, linkages are recognized between existing rules of the World Trade Organization (WTO) and rules established in various multilateral environmental agreements (MEAs). Controlling greenhouse gas (GHG) emissions promises to be a top priority on both national and international agendas, and special attention has been given to the relationship between the WTO and the emerging international regime on climate change. The unilateral use of carbon-related import restrictions risks triggering retaliation by trading partners. It also raises questions about whether such trade measures are consistent with countries’ obligations under the WTO. The WTO status of measures imposed not on products directly but on the methods by which they were produced, which is the case in carbon-related trade restrictions, is not clear. Whether such violations can be excused by exceptions for measures taken with the purpose to protect human life or health, or the environment, is an open question. There is also the question of whether solutions to the problem of the WTO’s inconsistency with regard to trade-related measures in climate change policy can be found. This paper explores the relationship between trade and climate change regimes, the potential areas of conflict, and what can be done to promote mutual gains. Apart from exploring the key issues and examining the conceptual underpinning of the two regimes, revealing important symmetries as well as some divergence, the paper is aimed at finding a more universal and long lasting solution to the WTO’s inconsistency of carbon-related to GHG emissions, both within and outside the WTO.

Antidumping policies have developed into essential trade elements in the local and global markets as they can facilitate the adoption of favorable trade policies. The introduction of antidumping policies in South Africa across GVCs has remained instrumental as they have directly influenced the social and economic structures of GVCs and local businesses operating in the region. Anti-dumping policies remain crucial in the development of a competitive and fair business environment. The study explores the impact of anti-dumping policies on GVCs in South Africa through a review of the economic, financial, cultural and social influences of the policies on the local businesses and environment. The review of anti-dumping policies and consequent impact on GVCs remained crucial in the identification of the importance and impact of policy on local and global businesses. The analysis provides an exploration of the impact of globalization and a changing business environment on the workings of an organization and the global market. The study adopts a quantitative analysis that utilized correlation analysis in identifying the impact of anti-dumping policies on GVCs. The results highlight the importance of anti-dumping policies and consequent impact GVCs in South Africa. The majority of the study respondents maintain that the adopted anti-dumping measures remained in-line with the adopted global trade objectives, but also highlighted the existence of a shortfall within the policy implementation process in South Africa. The majority of the respondents maintain that there was no need to remove the historically adopted policies as they remain relevant to the modern day trade processes. However, the study respondents maintain that several additions and changes may be incorporated to cater to the changing trade needs presented by the market. The adoption of recommendations would facilitate the development of a strong trade policy that would promote the strengthening of regional ties. Therefore, the majority of respondents remained in favor of the AD policies in relation to competitive policies and promoted the adoption of additional policies relating to the reduction of labor disruptions, improved infrastructure and the education system. The development of effective manufacturing and implementation systems together with adoption of effective logistical processes would facilitate the adoption and success of the existent trade regulations.

Magister Legum - LLM
This paper explores the relationship between trade and climate change regimes, the potential areas of conflict, and what can be done to promote mutual gains. Apart from exploring the key issues and examining the conceptual underpinning of the two regimes, revealing important symmetries as well as some divergence, the paper is aimed at finding a more universal and long lasting solution to the WTO's inconsistency of carbon-related to GHG emissions, both within and outside the WTO.

Sri Lanka's trade regime has been gradually liberalized over the last two decades with the aim of deeper integration into the global economy. The purpose of this study is to present a quantitative assessment of the impacts of major unilateral, regional and multilateral trade liberalization on Sri Lanka, and rank the trade policy options in terms of their welfare effects. This study contributes to the empirical literature on trade liberalization. The Global Trade Analysis Project (GTAP) model is used to analyze the welfare effects of trade liberalization in a multi-country, multi-sector general equilibrium framework. The results show that if Sri Lanka implements the South Asian Free Trade Agreement (SAFTA), while maintaining 15 percent external tariffs for the rest of the world, this combined policy would provide the highest welfare gain to Sri Lanka. The SAFTA by its own would provide the second-highest ranked gain from the trade reforms due to the benefits of preferential access to the large SAARC market. The third-highest ranked policy option comes under the unilateral reduction of import tariffs to 15 percent scenario. As results indicate, the Indo-Lanka Free Trade Agreement (ILFTA) offers the fourth-highest policy option for Sri Lanka. Finally, the phasing-out of MFA on Textiles and Clothing under the Uruguay Round Agreement, rank as the fifth-highest policy option for Sri Lanka. Thus, regional trade liberalization is far more preferable to unilateral and multilateral liberalization. However, as the GTAP model permits, these rankings based on only to the static welfare gains, ignoring the dynamic effect of trade liberalization. In addition, the gravity model has been employed to examine the determinants of Sri Lanka's bilateral trade flows with her selected trading partners, in order to sort out the influence of geographical proximity versus preferential trading policies in creating a regional concentration in trade. Our results confirm the validity of geographical factors such as proximity and cultural familiarity, as determinants of Sri Lanka's trade with neighbouring countries. They suggest that the selected trading partners are “natural trading partners” of Sri Lanka.
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Addressing complex global health challenges, including the burden of noncommunicable diseases (NCDs), will require change in sectors outside of traditional public health. Contemporary regional trade and investment agreements (RTAs) like the Trans-Pacific Partnership (TPP) continue to move further ‘behind-the-border’ into domestic policy space introducing new challenges in the regulation of health risk factors. This dissertation aimed to clarify the pathways through which RTAs influence NCDs, and to explore points along those pathways with the intent of improving the existing evidence base and supporting policy development. This work develops a critical theoretical framework exploring the ideas, institutions, and interests behind trade and investment policy; it also develops a conceptual framework specifying how trade and investment treaty provisions influence NCD rates through the effects of trade and investment on tobacco, alcohol, and ultra-processed food and beverage products, as well as access to medicines and the social determinants of health. Using health impact assessment methodology, three analytical components were designed to examine pathways of influence from RTAs to health outcomes as mediated by the interests of transnational corporations (TNCs). The first component explored the influence of industry during the TPP negotiations and how its health-related interests were reflected in the final TPP text. The second component examined the role of trade and investment liberalisation in health-harmful commodity markets, finding a rise in TNC sales after a period of liberalisation. The third component demonstrated how investor rights and investor-state dispute can challenge the state’s right to regulate if it damages the profits of TNCs, which may threaten effective health regulation, and provides opportunities to strengthen the right to regulate. The work in this dissertation provides support for the thesis that trade and investment policies are a fundamental structural determinant of health and well-being, which are highly influenced by TNCs that guide such policies in the interest of maximising their profits and protections, often to the detriment of public policy and population health. This work identifies the need for more robust health impact assessments of RTAs before future agreements are ratified, as well as an imperative to challenge vested interests that entrench neoliberal policy preferences that have hindered sustainable and equitable development.

In terms of fishery policy in the Republic of Korea (hereinafter Korea), efficient resources management and the improvement of the infrastructure have been main targets of the industrial policy for a long time. On the other hand, fishermen’s society has maintained an exclusive and conservative socio-economic structure based on fishery cooperatives. However, with the advent of the new global trade order, the so-called Uruguay Round (UR), Korea’s fishery policy was requested to change the existing paradigm. To address this change in circumstances, the Korea government has begun to emphasize a people-oriented policy, for example, welfare, safety, education and diversified income sources, etc., instead of a production-oriented policy. In particular, the new law — Act on Special Tax for Rural Development — was enacted in 1994 to provide financial funding for various policy changes, including the implementation of the Comprehensive Fishing-village Development Project (hereinafter CFDP) as a new measure to address fishermen’s difficulties originating from the new trade round. CFDP aimed at raising the competitiveness of the fishery and the improvement of the quality of life in fishing-villages. The present study was conducted as an interim evaluation of the socio-economic effects of the projects implemented in the early stage of the CFDP, from 1994 to 1998.

In this paper we analyze the changes of the EU’s investment policy provoked by the mixed trade agreements. The EU’s investment policy has turned towards attaining bilateral trade agreements. One of these “new-generation” agreements is the Comprehensive Economic and Trade Agreement (CETA). It is in a process of being ratified by the national parliaments of the EU members. This study is focused on the general characteristics of CETA and the eventual problems posed by its regulatory and wide-ranging nature. We prove that the significance of this agreement pertains not only to the economic influence, that it will have on the European and Canadian economies, but CETA is also the first trade agreement to have been negotiated with a focus on investment protection and a change in the EU’s investment policy. The current study reveals the influence arising from the conclusion of CETA on the Bulgarian economy with an emphasis on electronic industry, machinery industry and manufacturing. We estimate both – the direct and indirect effects on Bulgaria’s exports, imports, value added and employment. In order to estimate the influence, we apply the multi-regional input-output model. It is proved that CETA will have a low but positive impact on the Bulgarian economy. After constructing different scenarios of development, we prove that the influence of CETA on the Bulgarian economy will amount to 0.010% GDP. The average total employment will be increased by more than 172 jobs in Bulgaria, which in turn, relative to the labor market, represents less than 0.01% of the total employment.

Violence against women, which is accepted as a violation of human right in Turkey and in whole world for many years, causes physical and mental harms by practicing all kind of personal and collective behavior including force and pressure. Femicides have increased 1400% in the last seven years and one of every three women is subjected to violence. It is doubtful that in international law; Convention on the Elimination of All Forms of Discrimination against Women and Council of Europe Convention and in additional to this in national law; The 1982 Constitution and The Law to Protect Family and Prevent Violence Against Women can provide effective guarantee to protect the place of woman in Turkish Society or not? Despite all of the legislative regulations, the violence against women in Turkey increasingly goes on. For this reason it is crucial to evaluate the articles no 5th, 10th, 17th, 41st and 90th of Constitution which compose the legal basis for preventing violence against women. Republic of Turkey’s founding philosophy bases on equality of women and men, which means equal rights for every single citizen. To end this violence against women; can be achieve only through provide this equality legally and defacto, and also, apply social state’s principles in real life. Because in social states, struggling against this violence should be accepted as government’s policy. The state should be in cooperation with all women's organizations and provide training for related trade bodies.

This article aims to recognize the recent trends in the regional specialization according to changes in sectoral employment. The three New Economic Geography’s (NEG) agglomerative forces, namely: low transport cost, economies of scale and relevance of footloose productive factors, have been powerful determinants guiding the location of firms, in spite of policy intervention blatantly activist intended to reverberate artificially the geography of production (such as interventionist measures during the communist regime). Although, the most recent models of geography and trade recognize a bijective interaction between NEG forces and comparative advantages, to fully explain productive specialization. This contribution interprets the trends in the Czech Manufacturing inspired by the tenets of the NEG and the analysis of regional specialization of the Czech Republic in a context of inter-territorial inequalities regarding the distribution of manufacturing activity. Methods are used by application the Kim’s Divergence Index to detect the degree of similarity or not throughout the manufacturing structure, while observing the sectoral specialization of labor. The results of the Index suggest the specific role of each individual region (NUTS2) in a national hierarchy of manufacturing tasks that also shook up the Czech integration into the international production system.

There is an immense literature on the effects of exchange rate changes on macroeconomic indicators, specifically on the trade balance, growth, inflation, and overall productivity in open economies. One of the main attempts in the related literature is about ascertaining whether the exchange rate fluctuations alter domestic prices. This possible mechanism is called as the pass-through effect which is getting more important since the argument that exchange rate adjustment is a part of the solution for global rebalancing is empirically well-supported. Starting from this claim, this study purposes to explore whether there is an exchange rate pass-through effect in 19 high-income OECD countries over the period 1990-2015. To this end, using a panel data set of consumer price index, producer price index proxied by wholesale price index, the nominal effective exchange rates, and industrial production presented by the value-added share of industry sectors in gross domestic product, structural vector autoregressive (VAR) and autoregressive distributed lag (ARDL) models are estimated in an unbalanced panel data analysis procedure. Results reveal that exchange rate pass-through effects on the domestic prices are significant but not that strong in both the short-run and the long-run. Expectedly, the pass-through effects tend to diminish over time. The study concludes that policy-makers need to consider policy actions accompanying the exchange rate changes to ensure domestic price stability which consequently interacts with many macroeconomic indicators.

A well-established theory in macroeconomics is that governments running persistent deficits have sooner or later to finance those deficits with money creation, thus producing inflation. The fiscal view of inflation has been especially prominent in the developing country literature, which has long recognized that less efficient tax collection, political instability, and more limited access to external borrowing tend to lower the relative cost of seigniorage and increase dependence on the inflation tax. For this reason, the main factors which affecting inflation rate in developing countries are extremely important for policy makers as when the causes of inflation are correctly specified the appropriate policy change can be easily diagnosed and effectively implemented. The purpose of this study is to test the empirical relationship between inflation and the budget deficit for the Turkish economy by an autoregressive distributed lag model (ARDL) analysis for the period 1970–2010. The data is taken from Republic of Turkey Ministry of Development and World Bank’s Database. The empirical findings indicates that fiscal deficit is one of the important variables of the price level along with other variables like interest rates, exchange rate, per capita income, trade of GDP. The short-run analysis captured from error correction model (ECM). The results of the bounds test suggest that there is a long run relationship between fiscal deficit and inflation. These findings drive important inferences for implications of monetary and fiscal policies.

Nuclear standby safety systems must frequently, be submitted to periodic surveillance tests. The main reason is to detect, as soon as possible, the occurrence of unrevealed failure states. Such interventions may, however, affect the overall system availability due to component outages. Besides, as the components are demanded, deterioration by aging may occur, penalizing again the system performance. By these reasons, planning a good surveillance test policy implies in a trade-off between gains and overheads due to the surveillance test interventions. In order maximize the systems average availability during a given period of time, it has recently been developed a non-periodic surveillance test optimization methodology based on genetic algorithms (GA). The fact of allowing non-periodic tests turns the solution space much more flexible and schedules can be better adjusted, providing gains in the overall system average availability, when compared to those obtained by an optimized periodic tests scheme. The optimization problem becomes, however, more complex. Hence, the use of a powerful optimization technique, such as GAs, is required. Some particular features of certain systems can turn it advisable to introduce other specific constraints in the optimization problem. The Emergency Diesel Generation System (EDGS) of a Nuclear Power Plant (N-PP) is a good example for demonstrating the introduction of seasonal constraints in the optimization problem. This system is responsible for power supply during an external blackout. Therefore, it is desirable during periods of high blackout probability to maintain the system availability as high as possible. Previous applications have demonstrated the robustness and effectiveness of the methodology. However, no seasonal constraints have ever been imposed. This work aims at investigating the application of such methodology in the Angra-II Brazilian NPP EDGS surveillance test policy optimization, considering the blackout probability growth during summer, due to the electrical power demand increase. Here, the model used penalizes test interventions by a continuous modulating function, which depends on the instantaneous blackout probability. Results have demonstrated the ability of the method in adapting the surveillance tests policy to seasonal behaviors. The knowledge acquired by the GA during the searching process has lead to test schedules that drastically minimize the test interventions at periods of high blackout probability. It is compensated by more frequent tests redistributed through the periods of low blackout probability, in order to provide improvement on the overall average availability at the system level.

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.