A new UNDP report states, the trade war between the US and China has negated almost three to five years’ worth of growth achieved by global value chains in affected countries. As per this report, trade within those supply chains shrank in absolute terms along with other types of trade. Still, these supply chains are likely to remain at the core of economic recovery in the Asia-Pacific region even as global manufacturers consider moving production closer to home.

Beside the trade war, restrictive trade policies during the COVID-19 pandemic have also amplified shocks as producing countries restricted exports, the report states. The cost of shipping goods across the globe has skyrocketed threatening to boost consumer prices and compounding concerns in global markets already bracing for accelerating inflation. The report says the two mega agreements, the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), have significant potential to boost trade.

Nations participating in the CTPP may enjoy the equivalent of 12 years of additional global value chain integration based on the rate observed between 2000 and 2018, while RCEP countries may see a boost equal to around five years, according to the report. The report urges Asian economies to focus on developing general redistribution policies and social-safety nets to promote human development objectives.