JOB/MA/173  
 
17 January  2024 
(24-0361) Page: 1/33 
Committee on Market Access  Original: English  
 
 
THEMATIC SESSION ON SUPPLY CHAIN RESILIENCE:  
INTRODUCTORY  SESSION WITH INTERNATIONAL ORGANIZATIONS  
1  INTRODUCTION  
1.1.  The Committee on Market Access (CMA) held its first thematic session on supply chain 
resilience with the participation of international organizations on 21 November 2023 .1 As agreed by 
Members, t he session focused on the following topics:  
1) Definition of supply chain resilience;  
2) How shocks affect the movement of goods through supply chains;  
3) What affects how quickly the flow of goods can be restored after a shock; and  
4) Where can government action and international coordination help to prepare supply chains for 
shocks or help to restore the flow of goods following a shock.  
1.2.  The session was moderated by Prof. Mar celo Olarreaga (University of Geneva), and 
presentations were delivered by Victor Stolzenburg ( WTO Secretariat ), Daria Taglioni  (World Bank ), 
Jan Hoffmann  (UNCTAD ) and Lazzat Daniyarova ( World Customs Organization (WCO) ). 
The presentations are reproduced i n the Annex to this document . 
2  DEFINITION  OF SUPPLY CHAIN RESILIENCE  
2.1.  The Speakers presented several different definitions of supply chain resilience, which looked at 
different aspects of resilience.  
2.2.  In its World Trade Report 20212, the WTO Secretariat def ined resilience as  "the ability of a 
system to prevent and prepare for, cope with, and recover from shocks ". This broad definition does 
not focus only on the performance during the shock , but also takes into account how a system  is 
able to prevent , prepare for,  and recover  from shocks . It differs from narrower definitions , which 
consider resilience  as the ability of the system to "return to normal operations " over an acceptable 
period after a shock occurs  and separates  it from the concept of "robustn ess" of supply chains, which 
is the ability to "maintain operations " during a crisis.  
2.3.  At its meeting in October 2023, the WCO Permanent Technical Committee  discussed, a concept 
note prepared by the WCO Asia/Pacific Region and Asia/Pacific Regional Private Sector Group, which 
defined resilience as "an entity 's preparedness and readiness to anticipate, prevent, absorb, adapt, 
recover, and evolve from the full spectrum of natural and human -induced crises to ensure the 
continued delivery of critical goods and services ". This definition seeks to reach a cohesive and 
proactive response to future challenges in the customs domain. The WCO Permanent Technical 
Committe e endorsed this definition of resilience and agreed to include it  in the WCO Glossary of 
Customs terms .3 
 
1 At its formal meeting on 16 -17 October 2023, the Committee agreed to organize a series of thematic 
sessions on supply chain resilience based on a proposal by the United Kingdom ( JOB/MA/164 ). 
2 https://www.wto.org/eng lish/res_e/publications_e/wtr21_e.htm . 
3 https://www.wcoomd.org/ -/media/wco/public/global/pdf/topics/facilitation/ressources/permanent -
technical -committee/241 -242/pc0737ea.pdf?la=en . JOB/MA/173  
 
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  3  HOW SHOCKS AFFECT THE MOVEMENT OF GOODS THROUGH SUPPLY CHAINS  
3.1.  Presenters recognized that global supply chains are subject to different sources of disr uptions, 
which may include both localized shocks (i.e. shocks that originate in a specific location) and global 
shocks. Some examples, which could fall in one or both categories of shocks depending on their 
nature, are climate and environmental shocks, sho rtage of resources, financial distress, increasing 
food prices, trade fragmentation and decoupling, and security considerations. In recent years, more 
evidence has become available showing that supply  chain  bottlenecks have had global propagation  
effects  and that these shocks are costly for trade, investment and innovation . Some of the elements 
that tend to worsen such propagation effects include a high concentration of production in very few 
firms or economies, certain types of relationships among firms, the introduction of non -tariff 
measures, and other measures that promo te uncertainty or lack of predictability in policy making.  
3.1  High concentration of production  
3.2.  A high concentration of production in very few firms or economies can negatively affect the 
flow of goods during supply chain shocks. As an illustration, the WTO S ecretariat pointed to the  
infant formula shortage  in the United States  in 2022, which resulted from the temporary s hutdown 
of the largest factory producing infant formula  and led to a severe shortage  of this product  in the 
domestic market . Regulations on infant formula had  led the United States to relying almost 
exclusively on domestic production  to supply the US market,  resulting in an over-concentration of 
production , which aggravate d the effects of the shock. In response, the United States adopted  ad hoc 
measures to facilitate the import ation of infant formula, which led to an  increase  in imports  by a 
factor of more than 300 within a period of several months and helped to  meet the local demand 
while the factory was closed , demonstrating that international  trade offered a solution to the 
domestic supply  crisis. 
3.3.  On a more general note, the WTO Secretariat noted that there ha s been an increase in 
concentration  of production  at the global level  in recent years, where approximately  20% of all goods  
traded were currently being produced by a limited  number  of exporters.4 While international t rade 
can provide solutions  to supply chain bottlenecks  at any given point in time  and play a role in 
reducing such risks, this role is significantly diminished i f there is no sufficient diversification of  
suppliers and production is concentrated in a few economies  only. 
3.2  Relationship s among firms  
3.4.  Another aspect that was analysed by the speakers was the nature of firm r elationships  and 
how such relationships can influence resilience.  
3.5.  In a recent study by the World Bank5, the authors observed that modern economies are often 
structured as "massively modular ecosystems". These ecosystems we re on the one hand bound 
together through complementarities and interdependencies, a force that drives concentration at the 
sector level. At the same time inputs of some highly specialized firms, in diverse global locations, 
are needed in the supply chains , which acts as a fragmentation force.  
3.6.  In such modular ecosystems, the se contradictory tendencies of concentration vs fragmentation 
matter particularly in  times of crisis  and may ultimately cause a dilemma for policy makers. Policy 
makers may wish to limit  exposure to foreign partners through  decoupling, but at the same time 
their firms are strongly interdependent through the supply chain.  
3.7.  The speaker pointed out that i n a world of massive modularity, partial decoupling would be 
costly or even unattainable while full decoupling could result in possible  systemic failure s as no single 
economy has the necessary skills and technology to produce technology intensive goods needed in 
modern industries. Data also showed that trade wars  can hurt innovation,  lead to  higher costs and 
to increas ed concentrat ion of  trade , and as a result less connected  firms tend to exit the market . 
 
4 See World Trade Report 2 023, page 34.  
5 Massive Modularity: Understanding Industry Organiz ation in the Digital Age — The Case of Mobile 
Phone Handsets (worldbank.org) . JOB/MA/173  
 
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  3.3  Non-tariff measures , including regulatory issues  
3.8.  The WTO speaker mentioned that empirical evidence showed that whi le some non -tariff 
measures (NTMs) are legitimate trade policy tools, some of these measures may have a negative 
impact on trade and resilience, and, hence, the ability of trade to mitigate the effects of crises can 
be reduced by such measures. During the COVID -19 pandemic, for example, port of entry 
requirements, that is the requirement to import specific goods at certain ports only, in combination 
with underinvestment in port infrastructure aggravated the impact of the crisis in some cases .6 
3.9.  Similarly, U NCTAD pointed out that diversification  of supply chains implies the use of more 
ports, improved transport  and logistics , and the introduction of trade facilitating measures. After 
some simulations conducted at the start of the COVID -19 pandemic, UNCTAD obs erved that trade 
costs increased significantly, and in particular container shipping costs, which had contributed to 
inflation. According to UNCTAD, S mall Island Developing States (SIDS) seemed to have been  the 
most significantly affected by the COVID -19 crisis, while the sector s which had been  hit the hardest 
by these disruptions  were " deep" supply chains . Taking the example of high -tech products, where 
the linkages across the  supply chains are generally very  deep, the Pandemic demonstrated that even 
small change s in freight and shipping  costs on the intermediate inputs have an impact on the price 
of the final product, and any interruption or disruption in these supply chains can have ripple effects . 
3.4  Uncertainty an d unpredictability in policy making  
3.10.   The WCO highlighted that supply chain  shocks can be caused or exacerbated by  border 
closures, travel restrictions , and intensive screening procedures.  Customs play a crucial role in 
maintaining operations, ensuring the s afety of the society, collecting duties and other taxes, 
controlling goods and people crossing borders and the clearance of goods and people involved in 
international trade and travel. Uncertainty and unpredictability at borders, coupled with increased 
demand for critical goods, such as medical supplies during the COVID -19 pandemic, can lead to 
considerable difficulties in maintaining the regular trade flow and the movement of essential goods  
needed to mitigate the impact of such shocks.  
3.11.   UNCTAD also pointed  to the effects of uncertainty on global supply chains, as illustrated by 
the case of the shipping industry and the link to the decarbonization of production and transport. 
While more and new ships are needed to sustain global trade, the shipping industry was waiting for 
policy makers to agree on clear decarbonization measures before making  new invest ments . 
Uncertaint y in the global econom y, trade, and international relations,  but also in technology and the 
regulation for maritime transport , may lead over t he next decades to supply chain cris es in which 
shipping capacity  is insufficient and hence  freight rates would spike . 
4  FACTORS THAT DETERMINE RESILIENCE OF SUPPLY CHAINS  
4.1.  Many factors are relevant for the resilience of supply chains, such as how involved fi rms are in 
global trade in general, how integrated they are in global value chains, the availability of business 
continuity plans and digitalized trade solutions.  
4.1  Trade in global  supply chains helps mitigate the effects of shocks  
4.2.  According to the WTO Secretariat, evidence had consistently shown that trade and global 
supply chains were highly resilient , even in times of crisis . The most telling example was the constant  
increase in the volume of trade in goods over the past 20 years . Even  during recent  trade disruptions, 
international trade had continued to grow . Over the past 20 years , there had only been two periods 
where trade had not grow n: during the global financia l crisis in 2008-2009 and the COVID -19 
pandemic  in 2020 . Even during these periods,  trade was able to  recover  from these shocks shortly 
afterwards and return to the predicted increases that it would have had in the absence of the shock.  
4.3.  UNCTAD shared the s ame long -term positive outlook  with regards to trade in goods and 
observed that today's landscape  of trade was totally different from the past with more and more 
 
6 Ghose,Devaki; Montfaucon,Angella Faith Lapukeni . Firms in Global Value Chains during C OVID -19: 
Evidence from Indonesia (English). Policy Research working paper; no. WPS 10514; COVID -19 (Coronavirus) 
Washington, D.C.: World Bank Group . JOB/MA/173  
 
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  developing countries participating in global supply chains.  Another positive trend related to logistics . 
Broadly  speaking, there are  two types of costs  associated to logistics , which relate either to  transport 
or inventory holding , and where one can be replaced by the other . Citing the example of logistics 
costs in the United States, it was noted t hat in the past the  share of inventory costs was higher than 
that of transport  costs. However, in more recent years  transport costs ha d a higher share than 
inventory costs in terms of overall logistics costs , which suggested that  more efficient transport a nd 
the WTO Agreement on Trade Facilitation had contributed to reducing logistics costs  hence increasing 
resilience of supply chains .  
4.2  Global value chain  integration help s firms and economies recover faster from shocks  
4.4.  Trade also helps mitigate the impact of shocks affecting supply chains. According to the WTO  
Secretariat , evidence show s that the global GDP contraction in 2020 caused by the pandemic would 
have been substant ially larger if supply chains had been more localized. This was true also at the 
firm level, as demonstrated by the fact that  firms that were integrated into global supply chains 
recovered faster from the shock than firms that relied solely on domestic sup ply chains.  
4.5.  Although t he COVID -19 pandemic had been a  global shock, it had not been fully synchronised  
across different locations : there were some economies where lockdowns and restrictions were less 
severe or were implemented at different times, and so it  was possible to continue  to produce and 
source  inputs during the crisis through global supply chains. On the contrary, in the case of national 
lockdowns, localized supply chains performed on average worse during the crisis than those 
integrated in global supply chains.  
4.3  Firms with global connections tend to perform better in turbulent  times  
4.6.  The World Bank analysed long-term relationship s between firms and governments and 
observed that even  in a world where there are risks  for firms integrated in global supp ly chains , it 
is not obvious that deglobalization or fragmentation is the optimal policy response . 
4.7.  Evidence showed that firms that are more connected with other firms, and have more global 
connections, tend to be better performing both in stable times and in more volatile times. The World 
Bank looked at the elasticity to a shock of a given economy and sector that would come from across 
the borders versus a domestic shock. It was noted that while it was true that the elasticity of gross 
output to a  Global Va lue Chain  (GVC) shock increases with the share of GVC participation of that 
economy and sector, it was also true that, at the same time, an economy that is more integrated in 
GVCs reduces by a similar amount the elasticity of gross output to domestic or mo re local shocks. 
In other words, while it is true that GVC participation makes a firm vulnerable to specific shocks to 
this value chain, it lessens a firm's vulnerability to localized shocks.  The World Bank found that for 
more than 90% of so -called country -sector pairs worldwide, output volatility generated by GVC -
related demand shocks is lower than under alternative scenarios of a lower market  differentiation.  
For most economies and sectors, the e xposure to domestic shocks is more important because 
domesti c production is less diversified and regional trade  (e.g. trade with areas that are more 
economically integrated ) is an intermediate solution.  
4.4  Trade and global supply chains provide options for substitution  
4.8.  The WTO Secretariat provided evidence that trade and global supply chains facilitate  
substitution  across products and suppliers , which can contribute to increasing resilience. Two 
examples were provided .7 The first one looked at the effects of the war in Ukraine on trade in food 
products, more specifically trade in sunflower oil which had been  particularly affected in 2022. 
Despite this shock, net food importing economies had been  able to substitute imports of sunflower 
oil with imports of rapeseed oil , which had registered a strong immediate increase in its trade volume 
as a substitute for sunflower oil. Similar patterns had been observed for wheat and rice, which are 
also substitutable to some degree . In both cases, international trade had provided ac cess to 
substitute inputs. The same had happen ed to substitution across trade partners . For example, 
Ethiopia and Egypt, two economies that were highly dependent on imports of wheat from the Black 
Sea region, had been  able to substitute their imports of wh eat from the United States and Argentina, 
 
7 See also WTO World Trade Report 2023: 
https://www.wto.org/english/res_e/publications_e/wtr23_e.htm . JOB/MA/173  
 
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  in the case of Ethiopia, and from the European Union and the United States,  in the case of Egypt, 
without major changes in trade volume of these imports.  
4.5  Flexibility and adaptability  
4.9.  The speakers pointed out that trade and global supply chains  provide better options to respond 
to demand volatility  than, for instance, domestic or regional  supply chains , which is a result of  
economies of scale.  As an illustration, the WTO Secretariat recalled that d uring the  COVID -19 
pandemic, there was a sudden increase in the demand for medical goods.  Trade in medical goods 
exhibited a yearly growth rate of 14.4% between 2019 and 2021, and in 2020  alone , world exports 
of personal protective products alone rose by 44 .6%. In order to achieve this increase in scale over  
such a short period of time, WTO Members could not rely on the production  capacity of a single 
economy but , rather, had to rely on efforts by a number of economies, and this could only be 
achieved through international trade. 
4.10.   Taking the example of  high-tech and novel products, the WTO Secretariat observed that  trade 
in global supply chains is crucial to the production and distribution of these products. For example , 
exports of COVID -19 vaccines increased from zero in 2020  (i.e. because the product did not exist ) 
to 4.4 billion doses in 2021.  In this case, only a small number of WTO M embers had the capabilities 
to produce these goods, because the  necessary know -how and technology  to produce the goods  was 
not available everywhere.  
4.6  Diversification  is essential to bolster resilience  
4.11.   According to the  World Bank , over the last 20 years , the economic literature on diversification 
had considered the different dimensions of diversification in isolation. However, diversification needs 
to take into account the correlation  among firms, sectors and markets . An ongoing project by the 
World Bank, the University of Geneva and the University of Paris, was trying to translate the concept 
of "phylogenetic biodiversity ", whi ch is used in biology to measure biodiversity, into economics  
("phyloeconomic " diversity)  to analyse the level of diversity of firms and export markets  and their 
economic performance . Lessons learned from this project showed that firm diversity (firms that  sell 
in several markets) matters the most, and  that firm variation  was the main driver of export diversity 
and resilience at the level of an individual economy . At the same time, the level of development , 
both of the exporter and the importer, plays a ver y important role, and greater firm export diversity 
is correlated with lower firm export volatility and less exit from markets.  
4.12.   The WTO Secretariat pointed to evidence which showed that flexibility was a determinant of 
resilience. Firms and economies with more flexib ility, in particularly in their purchasing options  from 
several partners, or buying products that can be substitute s, were generally more resilient . In 
addition, a ccess to scale  abroad can replace  capacity that is not available in the domestic e conomy . 
4.7  Availability of business continuity plans  
4.13.   The WCO Secretariat explained that the quick restoration of flow of goods in the aftermath of 
a supply chain shock was influenced by the level of preparedness of the different actors and by 
business continuity plans. The effectiveness of these plans is tested through stress tests. For 
example, the readiness of customs, including their emergency and business continuity management 
systems and procedures, plays a crucial role in how quickly the flow of g oods can be restored. The 
speed at which the flow of goods can be restored includes the implementation of simplified and 
harmonised customs procedures, and the procedures in the case of a crisis. The use of technology 
for efficient processing and alignment  with international standards and the establishment of, for 
example, emergency operation centres, procurement of fast deployable emergency infrastructure 
and improvement of staff readiness through training and standards operating proc edures , were also 
vital factors  to ensure business continuity in case of shocks . 
4.8  Digitalization  
4.14.   One of the lessons learned from the  COVID -19 pandemic had been  the importance of 
digitalization of trade -related procedures , including the  automat ion of  procedures, the use of 
electr onic documents , and the need to undertake other reforms which help reduce costs and make 
supply chains more agile in their responses to crises. While digitalization has a positive impact on JOB/MA/173  
 
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  making customs procedures more efficient and less costly, it was also important for  transparency, 
as more digitalization can lead to enhanced transparency for firms and market players.  
5  GOVERNMENT AND INTERNATIONAL COORDINATION TO STRENGTHEN SUPPLY CHAIN 
RESILIENCE  
5.1.  On what governments and international cooperation could d o to improve resilience, it was 
pointed out that the world was  witnessing a transition from a highly integrated global economy to a 
world of "muddling through"  (i.e. to manage to do something although you are not fully organized 
or prepared to do it ). Governments were required  to find answers to more complex questions, and 
there were more possibilities for mistake, as the measures taken may have undesired economic 
effects, both at home and abroad. Against this background, the speakers mentioned the followin g 
actions that could be taken to strengthen supply chains.  
5.2  Enhancing international cooperation  
5.2.  As empirical evidence had shown , trade and supply chains had prove n to be highly resilient 
during crises due to the flexibilities provided by the multilateral trading system.  The resilience of 
trade supports broader economic resilience and to further improve this, cooperative solutions tend 
to be a much more efficient mea ns to address bottlenecks because the sources of shocks are by 
definition unknown.   
5.3.  In a world which is undergoing a transition from a highly integrated global economy to a "world 
of muddling through ", policymakers were under pressure from constituencies to accommodate  and 
implement rapid and substantive measures to address all the existential threats of our time, which 
included inequality, over dependence on a few trade partners, environmental damage, or shifts in 
global economic dominance. In this situati on, the role of international  cooperation and  international 
organizations is seen as important to help policy makers taking informed decisions .  
5.4.  International organizations, like the WTO, could serve as convenors between stakeholders and 
communities  that traditionally have not met in order to facilitate discussions on issues that are 
interlinked (e.g. trade and security, trade and environment, etc.). In addition , international 
organization s should  promote  discussions among Members to find  new approaches to address  supply 
chain resilience . 
5.3  Multilateral r eduction of trade costs  
5.5.  Investing in the multilateral trading system , embedded by the WTO, provide s importers and 
exporters with as many options as possible during crises , contributing to  lowering trade costs 
multilaterally . On the contrary, raising trade costs selectively to address concentration and to force 
diversification could have the effect of reducing options and might not strengthen supply chain 
resilience in the fu ture. In addition, addressing regulatory bottlenecks, increas ing information flows 
and transparency and setting up more robust crisis response mechanisms  might be additional 
aspects to strengthen supply chain resilience . 
5.4  Strengthening  transparency  
5.6.  Governme nts could help mitigate the impact of supply chain disruptions by  being more 
transparent  and sharing more information  as greater transparency translated into better analysis 
and thus better policy targeting. In a world of increasing interdependence, trade partners should 
continue to interact and foster enduring relationships to arrive at mutually beneficial solutions and 
forge trust. Trade partners should avoid miscommunication: "cheating" could be used sometimes 
with the intent  to recalibrate the balance o f powers, the terms of trade between members, and to 
challenge established norms, but this could be  a very dangerous long -term strategy because it might 
significantly erode constructive cooperation  and eliminate trust . 
5.5  Data as a public good  
5.7.  All speakers po inted out that better data, in particular at the firm level and in an international 
comparative manner was required to better analyse supply chain resilience. It was important for this 
data to be freely accessible to international organizations and academi c researchers in order to JOB/MA/173  
 
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  improve the understanding of how supply chain resilience can be achieved, while safeguarding 
business confidentiality of individual firms. It was pointed out that international organizations, like 
the WTO, could cooperate to creat e a data repository in this regard.  
5.6  Collaboration with the private sector  
5.8.  Collaboration of both governments and international organizations with the private sector 
played a critical role  during the COVID -19 pandemic, as the private sector has detailed  know ledge 
of the  most pressing  problems.  During the response phase, c reating a disaster task force, adjusting 
work environments, expediting clearance procedures, and incorporating stress testing can improve 
the quality, stability and reliability of cross -borde r trade.  In the recovery phase, designing a recovery 
planning team, assessing the situation and revising business continuity plans can aid in restoring 
the flow of goods.  
5.7  Implementation of the WTO Trade Facilitation Agreement  
5.9.  From UNCTAD's perspective , there is a strong correlation between those WTO Members  that 
had implemented provisions of the Trade Facilitation Agreement (TFA), such as in particular those 
on electronic payments (Article 7.2), risk management (Article 7.4), authorised operators (Articl e 
7.7) and border agency cooperation (Article 8), and a higher "C ountry Container Port Performance 
Index ". In addition, there seems to be a need to invest in port infrastructure and logistics to ensure 
that cross border trade remains open and smooth.  
_____ __________   JOB/MA/173  
 
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  ANNEX  
PRESENTATION BY VICTOR STOLZENBURG – WORLD TRADE ORGANIZATION  
Committee on Market Access –Thematic Session on Supply Chain Resilience
Insights from research on supply chain resilience
Victor Stolzenburg
World Trade Organization
Geneva , 21 November 2023
 
 
Definitions
•There is no consensus on the definition and concept of “resilience”, nor on how to measure it.
•The WTO World Trade Report 2021 adopts a broad definition: 
Resilience is the ability of a system to prevent and prepare for, cope with, and recover from shocks.
•This differs from narrower definitions (e.g. Miroudot , 2020) that define: 
•resilience as the ability of a system to return to normal operations over an acceptable period after a shock 
in contrast to 
•robustness , the ability to maintain operations during a crisis.
1
 
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Definitions
•A broader definition is sensible because 
•the primary aim is to minimize output losses which can be achieved both by resilience and 
robustness.
•data typically does not allow to differentiate.
•differences mainly reflective of specific industry characteristics.
•Differences in definitions provide insights into better policy responses.
2 
 
The evidence on supply chain resilience
•Despite disruptions, evidence shows that trade and global supply chain s are 
highly resilient.
Source: WTO3100110120130140150160170180
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Merchandise trade (2005Q1=100)Global 
Financial 
Crisis
Covid -19
 
 
The evidence on supply chain resilience
•As a result, trade and global supply chain s mitigate the impact of shocks.
•Global GDP contraction during the pandemic would have been larger in case of 
nationalized supply chains ( Bonadio et al. 2021, OECD 2021) .
•Firms integrated in global supply chains were on average more resilient than 
domestic firms (Ghose and Montfaucon, 2023).
•More localized supply chains do not result in a significant increase in the stability of 
GDP , production and consumption relative to interconnected regimes ( Caselli 2020, 
OECD 2021).
4
 
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The evidence on supply chain resilience
They do so by providing options for substitution across products…
Source: WTO
500.20.40.60.811.21.41.61.82
03/2022 04/2022 05/2022 06/2022 07/2022 08/2022 09/2022 10/2022Trade volume (3/2022=1)
Sunflower oil Rapeseed oil 
 
The evidence on supply chain resilience
…
Source: WTO
600.20.40.60.811.21.41.6
01/2022 02/2022 03/2022 04/2022 05/2022 06/2022 07/2022 08/2022Trade volume (1/2022=1)
Wheat Rice
 
 
The evidence on supply chain resilience
… and across exporters, especially via the multilateral trading system.
Source: WTO
7-120.0%-100.0%-80.0%-60.0%-40.0%-20.0%0.0%20.0%40.0%
Total Russia Ukraine USA ArgentinaChange in Trade Volume of Ethiopia's Wheat Imports
-200.0%0.0%200.0%400.0%600.0%800.0%1000.0%
Total Ukraine EU USAChange in Trade Volume of Egypt's Wheat Imports
 
 JOB/MA/173  
 
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The evidence on supply chain resilience
•Due to scale requirements, supply chains are particularly crucial to 
respond to demand volatility.
•Trade in medical goods exhibited a yearly growth rate of 14.4 per cent between 
2019 and 2021. In 2020, world exports of personal protective products alone 
rose by 44.6 per cent (WTO, 2022). 
•Due to technological requirements, supply chains are particularly 
crucial to distribute high -tech and novel products.
•Exports of COVID -19 vaccine doses increased from nearly zero in 2020 to 4.4 
billion in all of 2021 (World Bank and WTO, 2022).
8 
 
Determinants of resilience and issues
•Flexibility (options) and adaptability (access to scale and capabilities).
•NTMs such as port of entry requirements severely aggravated the impact of the 
pandemic on Indonesian exporters (Ghose and Montfaucon, 2023).
•Uncoordinated policy responses aggravated the impact of the pandemic (Baldwin and 
Evenett , 2020).
•Underinvestment in central infrastructure and regulatory issues can create bottlenecks 
(Baldwin and Evenett , 2020).
•High concentration of production severely aggravated the 2022 infant formula crisis in 
the United States (WTO, 2023).
9
 
 
Determinants of resilience and issues
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Determinants of resilience and issues
11
 
 
Solutions
•Some solutions require highly context -specific approaches.
•Different solutions exist to further increase resilience: diversification 
(WTO, 2021), inventories ( Lafrogne -Joussier , 2023), strong relationships 
(Khanna et al. 2022).
•Optimal solution tends to depend on industry characteristics: relationship -
specificity.
12
 
 
Solutions
•Other solutions are more generic.
•Investing in the multilateral trading system to provide importers and exporters as 
many options as possible during crises.
•Lowering trade costs multilaterally increases options and allows for ex -post diversification 
(WTO 2023, Lafrogne -Joussier et al. 2023).
•Raising trade costs selectively to force diversification tends to reduce options.
•Addressing infrastructure and regulatory bottlenecks identified during the 
pandemic.
•Increasing information flow and transparency and set up robust crisis response 
mechanisms.
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Takeaways
1.Trade and supply chains are highly resilient due to the flexibilities provided 
by the multilateral trading system.
2.The resilience of trade supports broader economic resilience by providing 
options during crises.
3.Cooperative solutions are the most efficient means to address bottlenecks 
and concentration, especially when the source of shocks is unknown .
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  PRESENTATION BY DARIA TAGLIONI – WORLD BANK  
Research on Supply Chain 
Resilience at the World Bank: 
Some Insights
Daria Taglioni, World Bank
November 21, 2023
 
 
 
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1. 
Many dimensions to the vulnerability 
and resilience problem  
 
 
 
 
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Solutions to existential threats are required at a 
time in which the global economy is severely 
under stress
•Near Term : Higher than expected global growth in 
2023 due to strength of US economy and EMDEs 
minus China -but overall weak growth due to 
inflation concerns and geopolitical tensions.
•Medium Term : Falling potential growth due to 
weakening structural factors –increase natural and 
man -made shocks, adverse demographics, record 
high debt levels, and investment shortfalls in most 
parts of the world.
•Many risks : financial distress, debt overhang, food 
prices, climate and environmental shocks, trade 
fragmentation.
•Trade specific risks : US-China decoupling and 
fragmentation are costly for trade, investment and 
innovation; supply bottlenecks have global 
propagation.
 
 
 
 
2. 
Some conceptual and measurement 
considerations to the evaluation of 
exposure and resilience to shocks
 
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2.1 
Lot of talk about resilience to foreign 
shocks. But what is the cost of excessive 
exposure to domestic shocks?  
 
Even in a world where 
there is risk, it is not 
obvious that 
deglobalization is the 
optimal policy response
Source: Borin , Mancini, Taglioni ( World Bank 2021 and VOXEU 2022 )Output elasticity to GVC and non -GVC demand 
shocks 
 
 
For more than 90% of 
country -sector pairs 
worldwide, output 
volatility generated by 
GVC -related demand 
shocks is lower than 
under alternative 
scenarios that post lower 
market differentiation.
Source: Borin , Mancini, Taglioni ( World Bank 2021 and VOXEU 2022 )Output elasticity to GVC and non -GVC 
demand shocks 
 
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GVC participation is 
associated with greater 
market diversification
Source: Borin , Mancini, Taglioni ( World Bank 2021 and VOXEU 2022 )Normalised Herfindal -Hirschman Index (HHI) of 
final market concentration, by GVC 
participation intensity
 
 
More interconnected firms have posted better economic 
performance even in turbulent times
Firm log sales Volatility of firm’s log sales
Source: Beck and Taglioni, work in progress
 
 
2.2 
Importance of measuring diversity in 
a way that accounts for the 
covariance between dimensions 
(firm, sector, market)
 
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Source: Crozet et al., work in progress
 
 
Source: Crozet et al., work in progress
 
 
Source: Crozet et al., work in progress
 
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Source: Crozet et al., work in progress
 
 
Source: Crozet et al., work in progress
 
 
Lessons from phyloeconomic diversity
•Firm diversity matters most: firm variation is the main driver of export 
diversity at the country level
•Level of development matters
•Greater firm export diversity is correlated with lower firm export 
volatility
•Greater firm export diversity reduces exit from export markets
 
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2.3 
Can policy makers influence firm 
dynamics (and through this channel 
resilience) in a world of increasing 
massive modularity?  
 
Modern industries are massively modular ecosystems
Source: Thun, Taglioni, Sturgeon and Dallas, 2022 “ Massive Modularity: Understanding Industry Organization in the Digital Age –The Case of Mobile Phone Handsets ”. World Bank Policy Research 
paper 10164 and VOXEU column .
 
 
Complexity and Scale: performance improved greatly and both the 
average number of components and the average number of 
suppliers per device grew significantly
Source: Thun, Taglioni, Sturgeon and Dallas, 2022 “ Massive Modularity: Understanding Industry Organization in the Digital Age –The Case of Mobile Phone Handsets ”. World Bank Policy Research 
paper 10164 and VOXEU column .
13%21%37%
13%39%
26%
7%54%
42%
5%24%22%
12%15% 16%
10% 9%33%
0%10%20%30%40%50%60%
Clockspeed Avg. Mhz
Processing cores
Cache mem Giga
GPU
Main memory
Resolution
Pixel density
Scale
Video resolution
Optical Zoom
Primary Camera
Secondary camera
Capacity
Talk time
Frequency bands
supported
Cellular data links
supported
Wifi standards supported
Wireless charging
CPU Mem Display Camera Battery Connectivity OtherSmartphone functions performance, CAGR 2009 -2020
 
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Concentration and fragmentation: global firms have 
fewer suppliers to choose from, particularly in 
smartphones and other ICT products.
00.10.20.30.40.50.60.70.80.9
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Herfindahl –Hirschman index (HHI)Herfindahl –Hirschman index (HHI) by Function in Smartphone Industry
CPU Memory
Display & Camera Network Connectivity
Other wireless USA DoJ "Highly Concentrated Market" Threshold
Source: Thun, Taglioni, Sturgeon and Dallas, 2022 “ Massive Modularity: Understanding Industry Organization in the Digital Age –The Case of Mobile Phone Handsets ”. World Bank Policy Research paper 10164 and 
VOXEU column .
Note:  The study is based on evidence from pooled longitudinal data from 456 mobile phone handsets introduced between 2008 an d 2019; 15,544 hardware components; nearly 10 million company contributions to 
various releases of Google’s Android operating system from 2008 -2020, and data on about 16,000 company contributions to each gen eration of mobile telecom standards from 2001 -2019 
 
Geographic Clustering and Dispersion: functions in these global 
industries are increasingly clustered in geographically dispersed 
locations
72.0
12.0
69.0
25.012.0
79.0
81.0
7.0
11.010.0
9.0
38.012.8
10.0
10.20% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
CPU (26%)
Memory (33%)
Display  (26%)
Network Connectivity (13%)
Other Wireless (2%)Mobile phone component cost share (percent)2019
USA South Korea Japan Europe China Taiwan No Data
 
 
Massively modular industrial organization contradictory 
tendencies
Source: Thun, Taglioni, Sturgeon and Dallas, 2022 “ Massive Modularity: Understanding Industry Organization in the 
Digital Age –The Case of Mobile Phone Handsets ”. World Bank Policy Research paper 10164 and VOXEU column .Complexity  
ScaleMarket Concentration 
Market FragmentationGeographic Clustering 
Geographic DispersalDecoupling 
POLICY DILEMMA 
AccomodationRelational coordination –agglomeration tendencies
Modular coordination –dispersion tendencies
 
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Partial decoupling costly or unattainable while full decoupling 
may be fatal, in massively modular industries 
Source: Thun, Taglioni, Sturgeon and Dallas, 2022 “ Massive Modularity: Understanding Industry Organization in the Digital Age –The Case of Mobile Phone Handsets ”. World Bank 
Policy Research paper 10164.Partial import substitution -risks: Full decoupling -risks:
•High capital costs •Very high capital costs
•Reshoring in one segment may create a spate of new import 
dependencies•Possible systemic failure
•Industrial segment selected by the policy maker may not be the 
correct one•Loss of export scale/revenue (walled garden), including in 
complements 
•Early obsolescence of lumpy, non -market -driven investments 
•Accelerated brain drain
•Loss of product and system functionality
In both cases:
•Interruptions in ongoing collaborative technological learning across the MME, possibly including learning from global standar d-setting 
activities and participation in open -source projects.
•Interruptions in human resource development. 
 
Trade wars hurt innovation
Source: De Nicola, Mattoo, Timmis (work in progress).
 
 
Higher costs lead to increasingly 
concentrated imports and exports 
 
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Source: Beck, Lin, and  Taglioni (2023). 
 
Source: Beck, Lin, and  Taglioni (2023).
 
 
3. What to do then? The role of 
international cooperation
 
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From a globally integrated economy to a 
world of muddling through
•We are witnessing a transition from a highly integrated global economy to a world of 'muddling through' .  
It would be a mistake to assume that this is due to a disconnect of policy makers from reality. We must 
acknowledge that the reality has changed. 
•Policymakers are under pressure to implement quick, big, and visible measures to address inequality and 
deindustrialization, overdependence on a few trade partners, environmental damage, or shifts in global 
economic dominance . Their citizens expect them to be active across complex agendas —from securing the 
supply of essential goods, to cushioning impacts of unexpected shocks, to solving global emergencies such 
as climate change.
•While the complexity and inter -relatedness of decisions that governments need to take is daunting, the 
scope for discretion (and distortions) in taking these decisions has increased proportionately. Rules and 
governance frameworks conceived in less turbulent times are easily side -stepped, and new actors such as 
the defense or the environmental community are called to contribute to economic decision making.
•This is a reality in which there is greater scope for mistakes, and in which measures adopted can lead to 
serious unintended economic effects, both at home and abroad.   
 
What should international organizations do in 
this changed political -economic context?
•It is lot harder for governments to navigate a world of “muddling through”, 
particularly under pressure to act fast. 
•It involves lot of case -by-case decisions, tough trade -offs, and ample scope for 
mistakes. 
•Since this is not going to go away any time soon, international organizations must 
produce ways to help decision makers take informed decisions.
•There are three roles for international organizations to play: 
•Conveners to discuss differences on issues at the intersection of previously distinct 
topics: such as economics and security, economics and the environment.
•Promoting new approaches to leveraging cross -border relationship -specificities  (in a 
world in which global interdependence is not going to go away). 
•Data and knowledge source to inform policies.  
 
 
How can governments help international 
organizations help them?
•Share transparently and in a timely fashion information about their economies, 
and policies.
•Internalize in their decision and negotiating process the risks of zero -sum game 
strategies.  World Bank ongoing research which utilizes evolutionary game theory 
identifies three pivotal factors in international trade relations to evade a 
destructive competitive downward spiral and to forge trust and mutually 
beneficial solutions:
a.Repeated Interactions: Amidst the political polarization and leadership changes of recent years, 
changing course has become indispensable. Fostering enduring relationships between global decision 
makers is necessary to establish the level of trust needed for collective action.
b.Mutually Beneficial Solutions: The prevalent zero -sum perspective on international economic relations 
must be supplanted by genuine, mutually beneficial concessions to circumvent a destructive 
competitive dynamic. 
c.Avoid Miscommunication: "cheating" is sometimes used with the intent to recalibrate balance of 
power between countries and challenge established norms, but analysis indicates that this erodes 
significantly constructive global cooperation.
 
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  PRESENTATION BY JAN HOFFMAN N - UNCTAD  
Perspectives from trade logistics
Jan.Hoffmann@UNCTAD.org
 
 
1)Supply chains matter
for prices, employment and development
2)Positive long -term trends
interrupted
3)Outlook
and what can be done in trade logistics
 
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1)Supply chains matter
for prices, employment and development
2)Positive long -term trends
interrupted
3)Outlook
and what can be done in trade logistics
 
 
SIMULATED IMPACT OF CONTAINER FREIGHT RATE SURGES
Hardest hit are SIDS
UNCTAD Review of Maritime Transport 2022
 
 
SIMULATED IMPACT OF CONTAINER FREIGHT RATE SURGES
Hardest hit are “deep” supply chains
UNCTAD Review of Maritime Transport 2022
 
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1)Supply chains matter
for prices, employment and development
2)Positive long -term trends
interrupted
3)Outlook
and what can be done in trade logistics
 
 
Seaborne trade: share of developing countries
UNCTAD Review of Maritime Transport, various issues (note: developing countries as of 1970)
 
 
Chart prepared by JP Rodrigue, based on data from Council of Supply Chain ManagementLogistics Costs, United States, 1980 -2022
 
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1)Supply chains matter
for prices, employment and development
2)Positive long -term trends
interrupted
3)Outlook
and what can be done in trade logistics
 
 
Total CO2 emissions by vessel types, tons, January 2012 —March 2023
Chapter 3 Decarbonizing shipping          Review of Maritime Transport 2023
 
 
Chapter 2 World shipping fleet, services, and freight rates         Review of Maritime Transport 2023
World tonnage on order, million dead weight tons and percentage change, 2005 –2023
 
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Country Container Port 
Performance Index values 2022 by 
implementation status of selected 
measures under the WTO Trade 
Facilitation Agreement
Chapter 4 Port performance and maritime trade and transport facilitation       Review of Maritime Transport 2023
 
 
https://unctad.org/conference/global -supply -chain -forum -2024
https://resilientmaritimelogistics.unctad.org/
Jan.Hoffmann@UNCTAD.org
 
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  PRESENTATION BY LAZZAT DANIYAROVA – WORLD CUSTOMS ORGANIZATIONS  
V 
www.wcoomd.org
Supply chain 
resilience
Compliance and Facilitation Directorate
World Customs Organization COMMITTEE ON MARKET ACCESS
THEMATIC SESSION ON SUPPLY CHAIN RESILIENCE:
INTRODUCTORY SESSION WITH INTERNATIONAL 
ORGANIZATIONS
21 November 2023
Trade Facilitation 1Lazzat Daniyarova
 
 
www.wcoomd.org
Customs -Industry Resilience
COVID -19 and WCO: lessons learned, and response provided:
•COVID -19 Crisis -WCO Guidance on how to communicate during a 
crisis.
•WCO Revised Kyoto Convention –Guidelines to SA J, Chapter 5 
“Relief consignment”.
•Convention on Temporary Admission (Istanbul Convention).
•Handbook -Convention on Temporary Admission (Istanbul 
Convention)
•WCO Guidelines on disaster management and supply chain 
continuity
•Guide to Stress Tests Design: implement and test plans for business 
continuity and enhanced resilience 
Trade Facilitation 2
 
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www.wcoomd.org
Customs -Industry Resilience
At the 241st/242ndSessions of the WCO Permanent Technical Committee (PTC), Australia, in its 
capacity as WCO APVC, presented the draft Concept Note: “Strengthening Customs -Industry 
Resilience” (24 -26 October 2023).
It recognizes that Customs was a critical first responder during the COVID -19 pandemic, with 
uncertainty caused by the rapid closure of borders and the suspension of travel.
The Concept Note suggests that a standard definition of resilience be endorsed and included in the 
WCO Glossary of Customs terms.
The document elaborates on the symbiotic relationship between Customs and industry.
The PTC expressed its general support for the draft Concept Note and endorsed a standard definition 
of “resilience” for inclusion in the WCO Glossary of Customs terms. Additionally, the PTC provided 
guidance on the way forward, stressing the importance of digitalization and of close partnership 
between Customs and the private sector.
Trade Facilitation 3 
 
www.wcoomd.org
Customs -Industry Resilience
•An entity’s preparedness and 
readiness to anticipate, prevent, 
absorb, adapt, recover and evolve 
from the full spectrum of natural 
and human -induced crises to 
ensure the continued delivery of 
critical goods and services (WCO 
Glossary of Customs terms) .Definition 
of 
“resilience”
Trade Facilitation 4
 
 
www.wcoomd.org
Customs -Industry Resilience
HOW
do shocks affect the 
movement of goods through 
supply chains?
•border closures
•travel restrictions
•intensive screening 
proceduresWHAT
affects how quickly the flow 
of goods can be restored?
•Business Continuity 
Plans (BCPs)
•stress tests
•Emergency Operations 
Centers
•Standard Operating 
Procedures (SOPs)WHERE
can government action and 
international coordination help to 
prepare supply chains for shocks, or 
help to restore the flow of goods 
following a shock?
•disaster management ( reviewing 
national Customs legal 
frameworks, and advocating for 
the licensing/registration of 
humanitarian actors )
•response phase (creating a 
disaster task force, adjusting 
work environments, and 
expediting clearance processes)
•recovery phase (designing a 
recovery planning team, 
assessing the situation, and 
revising Business Continuity 
Plans and SOP)
Trade Facilitation 5
 
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V 
www.wcoomd.org
Thank you
Lazzat Daniyarova
Compliance and Facilitation Directorate
World Customs Organization 
Lazzat.daniyarova@wcoomd.org
Trade Facilitation 6 
 
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