Updates from the World Bank's Trade Policy and Facilitation Team

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The field of global trade continues to be very dynamic, with changes across many fronts. Amidst trade policy uncertainty, developing countries’ exports continued to grow steadily in recent months, benefiting from a significant drop in maritime transport costs, and opportunities to redirect their exports away from the United States. This is good news as export revenue volatility represents a major threat to developing countries’ debt sustainability. Further strengthening developing countries’ trade resilience will require tapping services trade opportunities (including digital trade) through regulatory reforms, and developing the quality infrastructure needed to comply with the increasingly complex and stringent regulatory standards and traceability requirements of large trading partners.   Sébastien C. Dessus Practice Manager, Trade Policy and Facilitation   TRADE AND DEBT Swings in export earnings can bring debt distress in LICs A country’s ability to repay external debt depends on its ability to earn foreign exchange. Usually, that occurs through exports. This means that volatility in export earnings can have an important impact on the ability to make debt payments. The 2025 International Debt Report from the World Bank makes this connection. It reports that LICs’ external debt has grown far faster than export earnings and that countries at high risk of debt distress, or already in distress, experienced the greatest volatility in export earnings. This calls for integrating trade volatility into debt sustainability analyses, while pursuing reforms that strengthen export resilience. Read more here.   SERVICES JOBS Uncovering the path to more employment through services trade Services account for more jobs and a larger share of GDP than manufacturing, globally. Yet the kind of restrictions that impede services trade are harder to measure than the border barriers that often block goods. This can mean that it is difficult to know how to access those potential jobs. Newly-released data from the World Bank and the World Trade Organization provide significantly more detailed information than previously available on the kind of measures impeding services trade. The database now covers 134 countries, rather than the previous 68, as well as more detailed sectoral coverage. Read more here.   GREEN COFFEE Coffee growers work to meet new EU environmental requirements Woman coffee worker A new World Bank report looks at how developing countries can maintain their export of commodities like coffee in the face of EU rules aimed at preventing deforestation. For Ethiopia, coffee represents up to 60 percent of export earnings and supports millions of families. Farmers now have to provide the exact location of their plots to show that the coffee is not coming from deforested land. Those data and traceability requirements are particularly challenging for small producers. Read more here.   TRADE & DEVELOPMENT CHART Data localization rules are a key feature of countries’ digital policies

As the importance of digital trade grows, so do the diverse approaches to regulating that trade. One prominent aspect is the degree to which countries require that data are kept local – either stored or processed within national borders. Trends in data localization requirements are depicted in an interactive chart.

Developing countries redirect their goods exports Amidst rapidly changing trade policies, developing countries saw exports grow, comparing the first seven months of 2025 to the same months in 2024. But there was a notable change in destination, as fewer exports went to the United States and more went to the rest of the world. See chart here. Freight rates held trade costs down since 2024 While tariffs are important for determining the cost of moving goods across borders, so are freight rates. While some countries have increased tariffs and while overall trade stress has risen, freight rates have fallen. The rate drop is partly due to increased shipping capacity and partly due to increased competition. See chart here. WHAT WE'RE READING The new year brings a scheduled review of the United States-Mexico-Canada Agreement (USMCA). The Chicago Council on Global Affairs presents an interview with Julián Ventura, a former Mexican economic official, on what this will likely mean for trade in a region that represents almost 30 percent of global GDP. Ventura identifies key areas for negotiation as tighter rules of origin, supply chain transparency, and enhanced enforcement mechanisms for regional content rules. He also expects discussions about the extent of the countries’ economic interactions with China, which is Mexico’s third-largest export market and second most important trading partner. He says that failure to reach a deal would weaken the region’s position in a fragmenting global environment, but believes there is enough political will to conclude a “USMCA 2.0.”

The World Bank Trade Policy and Facilitation Team’s work is supported by the Trade Facilitation Support Program and the Umbrella Facility for Trade 2.0.   To subscribe to Trade Matters, please click the button below Subscribe Connect with us on social media!

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