By Roberto Azevêdo
GENEVA, Jul 20 2016 (IPS)

Trade is sometimes thought of as an economic activity that only favours the large corporations. While we may disagree, the reality of international trading is often harder and more expensive for Micro, Small and Medium Enterprises (MSMEs). The smaller the business, the bigger the barriers can seem.

Roberto Azevêdo

MSMEs are responsible for the largest share of employment opportunities in most economies, up to 90% in some countries, this is especially true when looking at equal opportunities for young workers and women.

The economic importance and centrality of MSMEs is at odds with their ability to participate in international trade. This is true in both developing and developed countries. There is a significant opportunity to provide a truly inclusive trading system- offering MSMEs a chance to develop their potential and help transform many lives around the world.

This means tackling the barriers they face when participating in trade, these include tariffs, costly border procedures, and trade financing, in addition to the fixed costs involved with meeting particular national standards or other non-tariff barriers, all of which can become particularly difficult demands for MSMEs. All these are larger obstacles to MSMEs than bigger firms.

Slow and costly border procedures place a greater burden on MSMEs than larger firms. Additionally, MSMEs often struggle to access trade finance. Globally, banks reject over 50% of all requests for trade financing placed by smaller firms compared to just 7% of multinational companies.

Now the World Trade Organisation members want to explore more options to remove the above mentioned barriers, which is a promising start.

Since the Nairobi Ministerial Conference in December last year, WTO members have been discussing a number of issues, with MSMEs as a constant feature. But so far the discussion has been quite broad.

I think it would be useful to establish a detailed sense of what the major barriers and priorities are for MSMEs and what we can potentially do to help. This could be through Aid for Trade support, through the regular work of the WTO, through negotiating new trade agreements, or a whole range of other avenues.

Due to the success of Bali and Nairobi, the interest in our work here is extending to other constituencies. In response to requests, we have facilitated meetings with the private sector and the academic community in recent weeks.

About sixty business leaders attended the private sector discussions. I ensured that the organisers of the event invited representatives from a variety of small and large businesses, developed and developing countries, and a wide range of sectors. They debated the challenges they face in conducting trade operations and how the WTO can help in dealing with them.

Their suggestions included:
● improving the regulatory environment for MSMEs through the digitalization of government processes, improvement of access to public procurement markets, and reduction of compliance costs,
● developing coordinated capacity-building and certification programmes to facilitate the inclusion of MSMEs in global production networks,
● and conducting research on how MSMEs can fit into these global value chains.

These points are in line with those raised in the conversations between representatives and while a great beginning, will still need to be further developed. There are however, three elements where the debate is perhaps slightly more advanced.

Firstly, the quickest, simplest step we can take to support MSMEs, would be implementing the Trade Facilitation Agreement.

MSMEs often cite burdensome customs procedures and regulations as major obstacles to their participation in trade. This is because large firms, especially multinational firms, are better equipped to navigate complex regulatory environments. The more time it takes to export, the more exporting is dominated by larger firms. Indeed, the evidence suggests that when the time spent to clear exports is reduced, MSMEs are more likely to increase their export shares than large firms.

So the Trade Facilitation Agreement has the capacity to boost MSMEs’ trading capacity. The latest ratification was received from Madagascar, taking the number to 83, and we expect to receive more in the coming days. We need to keep up the momentum on this front.

Furthermore, it’s clear that being technology-enabled helps small firms to export. A survey conducted by eBay in over 22 countries found that, on average, 97 per cent of tech-enabled firms export. In contrast, among more traditional MSMEs, the proportion of exporters ranged between 2 and 28 per cent. This highlights the importance of encouraging the further use and implementation of e-commerce technologies in MSMEs.

However, we can’t just assume that MSMEs will continue to benefit from greater opportunities once they are connected. Connectivity is fundamental, but not sufficient. The reality is that, if we just cross our arms and do nothing, we may see the opposite effect. E-commerce may actually promote the concentration of opportunities for big companies and services suppliers.

It is therefore useful to look at how new technologies can facilitate the participation of small players in digital trade, and in global value chains. We should look at how we can ensure that, through multilateral rules, MSMEs benefit from harmonized procedures, improved connectivity, and reduced operational costs.

In short, we should look to ensure that small suppliers can market their products, goods and services in a timely fashion, with competitive prices and reliable customer support. Only then will consumers have full confidence in buying from MSMEs in the digital environment.

Lastly, there are huge gaps in trade finance provisions for MSMEs, and this is a major trade barrier. Members will be aware that the WTO recently published a report setting out some of these issues in detail.

And we proposed some possible actions which included:
● working with partners to enhance existing trade finance facilitation programmes to reduce the gaps in trade finance,
● addressing the knowledge gaps in local institutions to help improve the capacity of local financial sectors,
● increasing dialogue with regulators to help ensure that trade and development considerations are fully reflected in the implementation of regulations,
● and improving the monitoring of trade finance provision, as better market intelligence would enable us to be more responsive to problems as they emerge.

These are just some reflections, based on the recent debates in and around the trading viability of MSMEs and the role WTO can play in encouraging and implementing new trade practices and regulations to boost support for MSMEs.

Excerpt:

By Roberto Azevêdo
GENEVA, Jun 10 2016 (IPS)

This is a challenging time for global trade. According to the current World Trade Organization (WTO) new trade forecasts, global goods trade is expected to grow by 2.8%, making 2016 the fifth consecutive year of sub 3% growth. The gross domestic product (GDP) is still the most critical variable in the trade expansion equation, and as long as GDP growth remains low, trade numbers are likely to follow a similar trend.

Roberto Azevêdo

This sort of dip in the numbers is not unprecedented, and we have experienced low trade growth in the early 1980s. Though we expect to come out of this pattern of low growth in the coming years- with trade growth forecast to pick up to 3.6% in 2017, it is nevertheless of some concern.

While the level of trade growth has stayed fairly constant in recent years, it is interesting to note that its composition is changing. A key driver of trade growth from 2011-2013 was import demand in Asia.

In the last two years this has shifted, with the US and Europe as the driving force of today’s modest growth, making up for slowdowns in Asia and elsewhere. In fact, if Asia’s contribution to trade had matched its average of recent years, world trade would have grown 3.5% in 2015, rather than 2.8%.

Rather than being an abstract indicator, trade growth, often matters because trade can act as a driver of broader economic growth and job creation. It certainly isn’t the only driver, but is an essential component of any strategy for sustainable economic growth.

And so the current downturn leads us to the question: what can we do to respond?

Governments have pushed monetary and fiscal policies to their limits in recent years but there is still room to move on trade. A more proactive approach could help to stimulate global demand.

One step would be for governments to remove the restrictive barriers introduced in recent years. Currently only 25% of these measures put in place by WTO members since the 2008 financial crisis have been removed. A shift in strategy here could help make a big difference.

We can also put in force trade agreements we have reached recently. By implementing the Trade Facilitation Agreement alone we could add another trillion dollars to global trade. This would include exports of about $730 billion dollars from developing countries.

Another step is, of course, striking new trade agreements. And we are seeing a lot of activity on this front both at the regional level, and through the World Trade Organization. While they have grown rapidly in recent years, bilateral and regional trade initiatives are not a new thing, pre-dating the creation of the global trading system.

These two different approaches are frequently portrayed as incompatible, however, they do not require an “either/or” strategy and can be created and implemented to complement each other. These different kinds of initiatives have long co-existed and complemented each other and I have no doubt that they will continue to do so.

Today, virtually all WTO members are involved in at least one of these initiatives. Today there are 270 regional trade agreements or RTAs in force and have been notified to the WTO with over a third in the Asia-Pacific region.

The most recent examples in the region are the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership. And of course there are other important initiatives such as the Silk Road Economic Belt and the Maritime Silk Road, which attempt to build and develop links between several partners.

To take the example of the TPP, many of the 12 partners involved already have existing bilateral agreements with each other. The added advantage of this broader agreement is the potentially enormous market it creates. Instead of dealing with a number of different sets of rules or standards, the TPP could help to homogenize rules between all the parties.

Like several other agreements today, the TPP is an example of deep integration initiative through regional trade agreements. While earlier RTAs concentrated on only liberalizing tariffs, more recent RTAs have gone further.

Empirical evidence suggests that RTAs with deeper integration between signatories provide greater potential for the development of production chains which span national borders. WTO members in the Asia-Pacific region in particular have greatly benefited from these global value chains.

As production networks expand and regional and global value chains become more important, it is critical to minimise significant differences in legislation, rules and infrastructure, which impact international trade and investment between trading partners. This appears to be the case more and more in current RTAs and other regional trade networks.

The silk-road economic belt, for instance, is rebuilding traditional links by concentrating on issues of connectivity such as improved infrastructure including port facilities, roads, and rail links. By improving these infrastructural networks connecting Asia and Europe, it is likely to improve trade by facilitating upgraded trade routes with landlocked areas of Central Asia.

These are all important steps that need to be taken to free up international trade and facilitate greater integration in value chains.

But how does all of this regional activity fit within the global framework of the World Trade Organization?

Currently the WTO has 162 members with increasing numbers. The rules and regulations of the WTO covers 98% of global trade, therefore by and large, RTAs operate within these rules.

Indeed, our analysis of regional agreements have shown that a large number of them fall within the guidelines set by the WTO with no obvious conflicts between overlapping agreements.

Perhaps a bigger consideration is where such initiatives touch on areas that are not currently covered by the WTO, whereby different RTAs deal with the same issues in different ways. This is not to suggest that regional agreements should not venture into these areas. But I think conversations in the WTO could help us establish whether a multilateral approach is feasible or desirable. Through discussions with the WTO, we’re likely to have a much more balanced, and inclusive framework.

A healthy trading system requires progress and engagement at all levels. And we have to acknowledge that one reason for the proliferation of regional agreements over recent years was a lack of progress in striking trade agreements globally through the WTO.

I’m pleased to say that we are now changing this situation. The WTO has actually delivered an impressive amount over the last couple of years.

But it’s also important to note that a healthy trading system isn’t just about negotiating trade agreements, the WTO’s work extends far beyond negotiations. We also monitor trade policies, build trading capacity in developing and struggling countries, and we have built one of the most effective dispute settlement systems in international law.

Indeed, although some RTAs have provisions on disputes, most of the dispute settlement mechanisms provided are rarely used. Meanwhile the level of activity in the WTO’s dispute settlement system is rising very rapidly. We have dealt with over 500 disputes in the WTO’s 21 year history. And of course most of the disputes brought to the WTO involve parties who are also themselves part of an RTA.

Excerpt:

By Roberto Azevêdo
CAPE TOWN, South Africa, Apr 12 2016 (IPS)

There is a misconception, by some, that the World Trade Organization (WTO) is a barrier to regional integration. It is one of a number of misconceptions that do not match up with the facts like the perception that the WTO is a rich man’s club. Today the WTO has 162 members and rising at all stages of development. 43 of those members are African countries and rising. The organization now covers around 98% of world trade. It is a truly global organization, one where everybody has an equal say. And it is an organization which supports regional integration in Africa. Indeed, I would say that the need for better integration across the continent is indisputable.

Roberto Azevêdo

We need to tackle these barriers. And I would argue that doing this will help drive Africa’s integration globally. The statistics I just quoted show that the vast majority of Africa’s trade is with the rest of the world. And existing WTO rules give a great deal of flexibility for members to pursue regional agreements. This is plain in the proliferation of such agreements that we have seen in recent years. But they are not a new phenomenon.

Indeed, regional initiatives such as the Southern African Customs Union predate the multilateral system by some decades. Different kinds of trade initiatives have always co-existed with the multilateral system. It is important that they are coherent and compatible, so that they can all help to spread the benefits of trade.

The economic map of Africa today is defined by these efforts: from Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), Economic Community of West African States (ECOWAS), and the East African Community (EAC) to the Tripartite Free Trade Agreement and, in due course, the Continental Free Trade Area.

The WTO supports these efforts. And the WTO’s Trade Facilitation Agreement provides a very practical mechanism for taking them forward. This Agreement, finalised in 2013, is about simplifying and standardising customs procedures, thereby reducing the time and cost of moving goods across borders. We expect that, when fully implemented, the Agreement could reduce trade costs by an average of 14.5%.

The East African Community has already applied a range of trade facilitation reforms, which have delivered remarkable results in cutting the time and expense of moving goods between countries. Rolling out such measures would unlock the potential of many traders across the continent especially small and medium-sized enterprises. But, in order to benefit from the Agreement, first it must be ratified.

The Trade Facilitation Agreement is notable for the benefits it will deliver but also because it was the first multilaterally agreed deal in the WTO’s history. We held another ministerial conference in December last year, in Nairobi and WTO members agreed to eliminate agricultural export subsidies. This helps to level the playing field, so that farmers in developing countries may compete on better terms.

Of course domestic subsidies still exist, so there is much work still to do. But that doesn’t change the fact that abolishing export subsidies is a big step. This is something which developing countries have been fighting for over many years.

In fact, it is the biggest reform of agricultural trade rules for 20 years. And it is a key target of the United Nations’s new Sustainable Development Goals delivered just three months after the goals were agreed. In the context of regional integration it is important to recognise that results like this could only be delivered at the global level. That’s why we need trade initiatives on all levels to be working well.

And this brings me to the other topic before us today the Doha round of world trade negotiations. This action on export competition was part of the Doha round as were other elements that were delivered in Nairobi, relating to food security and Least Developed Countries (LDCs).Notwithstanding these outcomes, clearly progress on the round as a whole has been too slow. It has not delivered as we had hoped when the round was launched in 2001.

The future of Doha was a major feature of the debate in Nairobi, and in the end members could not agree on a common position. Members are committed to keeping development at the centre of our work. They are also committed to addressing the remaining Doha issues, such as agriculture (particularly domestic subsidies), market access for industrial goods and services.

But, they do not agree on how to tackle them. And, at the same time, some members would like to start discussing other issues, in addition to the remaining Doha issues. Members have wisely decided to reflect on how these differences might be overcome and how we might collectively move the agenda forward.

So we are in a very important period right now. Members are talking to each other about how to advance the Doha issues and, potentially, how to move forward on other issues as well. Of course the economic outlook is tough at present, not least given the slump in commodity prices.

To recall Nelson Mandela’s words, there is much ’wise work’ to be done.

(End)

Excerpt:

By Roberto Azevêdo
GENEVA, Jan 22 2016 (IPS)

In 2015 the international community took some huge strides forward on a number of vital issues.

There was the agreement on the United Nations new Sustainable Development Goals.

There was the remarkable breakthrough in Paris in the fight against climate change.

Roberto Azevêdo

And, late in December, at the World Trade Organization (WTO) ministerial conference in Nairobi, members agreed a set of very significant results. In fact, they delivered some of the biggest reforms in global trade policy for 20 years.

We must seek to capitalise on this progress in 2016.

Let me explain in a bit more detail what was delivered in Nairobi.

The Nairobi Package contained a number of important decisions ­ including a decision on export competition. This is truly historic. It is the most important reform in international trade rules on agriculture since the creation of the WTO.

The elimination of agricultural export subsidies is particularly significant in improving the global trading environment.

WTO members ­ especially developing countries ­ have consistently demanded action on this issue due to the enormous trade-distorting potential of these subsidies. In fact, this task has been outstanding since export subsidies were banned for industrial goods more than 50 years ago. So this decision corrected an historic imbalance.

Countries have often resorted to export subsidies during economic crises ­ and recent history shows that once one country did so, others quickly followed suit. Because of the Nairobi Package, no-one will be tempted to resort to such action in the future.

This decision will help to level the playing field in agriculture markets, to the benefit of farmers and exporters in developing and least-developed countries.

This decision will also help to limit similar distorting effects associated with export credits and state trading enterprises.

And it will provide a better framework for international food aid ­ maintaining this essential lifeline, while ensuring that it doesn’t displace domestic producers.

Members also took action on other developing-country issues, committing to find a permanent solution on public stockholding for food security purposes, and to develop a Special Safeguard Mechanism.

And members agreed a package of specific decisions for least developed countries, to support their integration into the global economy. This contained measures to enhance preferential rules of origin for these countries and preferential treatment for their services providers.

And it contained a number of steps on cotton ­ helping low-income cotton producers to access new markets.

Finally, a large group of members agreed on the expansion of the Information Technology Agreement. Again, this was an historic breakthrough. It will eliminate tariffs on 10 per cent of global trade ­ that’s 1.3 trillion dollars worth of trade, making it the WTO’s first major tariff cutting deal since 1996.

Altogether, these decisions will provide a real boost to growth and development around the world.

This success is all the more significant because it comes so soon after our successful conference in Bali that delivered a number of important outcomes, including the Trade Facilitation Agreement. (TFA)

The TFA will bring a higher level of predictability and transparency to customs processes around the world, making it easier for businesses ­ especially smaller enterprises ­ to join global value chains.

It could reduce trade costs by an average of 14.5 per cent – with the greatest savings being felt in developing countries.

The Agreement has the potential to increase global merchandise exports by up to 1 trillion dollars per annum, and to create 20 million jobs around the world.

That’s potentially a bigger impact than the elimination of all remaining tariffs.

So the challenge before us is very significant.

For instance, during or the last two years, we have been trying to reinvigorate the Doha agenda on development, exploring various ways of overcoming the existing difficulties. We tested different alternatives over several months of good engagement, but the conversations revealed significant differences, which are unlikely to be solved in the short term.

But the challenge is not limited only to the question of what happens to the Doha issues, it is about the negotiating function of the WTO. It is about what members want for the future of the WTO as a standard and rule-setting body. And the challenge is urgent.

The world won’t wait for the WTO. Other trade deals will keep advancing.

The wider the gap between regional and multilateral disciplines, the worse the trade environment becomes for everyone, particularly businesses, small countries and all those not involved in major regional negotiations.

But the outlook is not bleak. I said at the outset that 2016 was full of promise. I truly believe that ­ because, while we face real challenges, there are also real opportunities before us.

(End)

Excerpt:

By Roberto Azevêdo
NAIROBI, Dec 23 2015 (IPS)

World Trade Organization (WTO) members concluded the Tenth Ministerial Conference in Nairobi on 19 December by securing an historic agreement on a series of trade initiatives. The “Nairobi Package” pays fitting tribute to the Conference host, Kenya, by delivering commitments that will benefit in particular the organization’s poorest members.

Roberto Azevêdo

The elimination of agricultural export subsidies is particularly significant.

WTO members, ¬especially developing countries,¬ have consistently demanded action on this issue due to the enormous distorting potential of these subsidies for domestic production and trade. In fact, this task has been outstanding since export subsidies were banned for industrial goods more than 50 years ago.

WTO members’ decision tackles the issue once and for all. It removes the distortions that these subsidies cause in agriculture markets, thereby helping to level the playing field for the benefit of farmers and exporters in developing and least-developed countries.

This decision will also help to limit similar distorting effects associated with export credits and state trading enterprises.

And it will provide a better framework for international food aid ¬ maintaining this essential lifeline, while ensuring that it doesn’t displace domestic producers.

There are also important steps to improve food security, through decisions on public stockholding and towards a special safeguard mechanism, as well as a package of specific decisions for Least Developing Countries (LDCs).

This contains measures to enhance preferential rules of origin for LDCs and preferential treatment for LDC services providers.

And it contains a number of steps on cotton, such as eliminating export subsidies, and providing duty-free-quota-free market access for a range of LDC cotton products immediately.

In addition, we have approved the WTO membership of Liberia and Afghanistan, and we now have 164 member countries.
And I think we are all committed to supporting these two LDCs to boost their growth and development.

We also saw continued commitment to help build the trading capacity of LDCs through the excellent support shown at the Enhanced Integrated Framework (EIF) pledging conference.

And, finally, a large group of members agreed on the expansion of the Information Technology Agreement (ITA). Again, this is an historic breakthrough. It will eliminate tariffs on 10 per cent of global trade ¬ making it our first major tariff cutting deal since 1996.

While we celebrate these outcomes, we have to be clear-sighted about the situation we are in today.

Success was achieved here despite members’ persistent and fundamental divisions on our negotiating agenda – ¬ not because those divisions have been solved.

We have to face up to this problem.

The Ministerial Declaration acknowledges the differing opinions. And it instructs us to find ways to advance negotiations in Geneva.

Members must decide, the world must decide, about the future of this organization.

The world must decide what path this organization should take.

Inaction would itself be a decision. And I believe the price of inaction is too high.

It would harm the prospects of all those who rely on trade today ¬ and it would disadvantage all those who would benefit from a reformed, modernized global trading system in the future ¬ particularly in the poorest countries.

So we have a very serious task ahead of us in 2016.

We came to Nairobi determined to deliver for all those we represent ¬ and particularly for the one billion citizens of Africa.

At the outset, I warned that we were not looking at a perfect outcome. And what we have delivered is not perfect. There are still so many vital issues which we must tackle.

But we have delivered a huge amount. The decisions taken in Nairobi this week will help to improve the lives and prospects of many people ¬ around the world and in Africa.

When we left Geneva, the international media had already written their headlines:

-‘WTO talks break down’

-‘Another failure at the WTO’

That’s exactly how it was in the Ninth Ministerial Conference in Bali two years ago. And we saw it again this year.

Well, we’re getting used to proving those catastrophic headlines wrong.

In the past, all too often, WTO negotiations had a habit of ending in failure.

But, despite adversity ¬ despite real challenges ¬ we are creating a new habit at the WTO: success.

(End)

Excerpt:

By Roberto Azevêdo
GENEVA, Dec 11 2015 (IPS)

The Ministerial Conference of the World Trade Organization (WTO) is now just a few days away, from 15 to 18 December in Nairobi.

This is the first time that the WTO has held a Ministerial Conference in Africa­ and therefore expectations are high that it should deliver for Africa ­ and for all developing countries, particularly the least-developed.

This work is happening mainly through two processes.

The first process is that of the negotiations group. Members are working through these groups on a range of specific issues. However, despite intensive efforts on all of the core issues of the Doha Development Agenda (DDA) of world trade negotiations, started in November 2001, I must report that little progress has been made. Gaps between members’ positions remain huge.

This means we haven’t been able to advance in many of the major DDA issues such as agricultural domestic support, for example, or any aspect of market access ­ whether agricultural, non-agricultural, or services.

Nevertheless, a general sense has emerged that consensus might be achievable on some issues ­if, and only if, we work very hard on all of them.

This includes a package of measures for Least Developed Countries (LDCs), which could contain a number of possible elements, such as further steps on Duty-Free and Quota-Free (DFQF), services, cotton and rules of origin.

Another issue which we may be able to harvest is a possible agreement on export competition in agriculture, which may include steps on export subsidies, export credits, the role of state trading enterprises and food aid, for example. Any achievements here would be especially important for developing and least-developed countries.

We are also working on issues such as special safeguard mechanisms and public stockholding for food security purposes, though progress is lacking here as well.

Indeed, at present, nothing is guaranteed. There is still a long way to go, significant gaps still to bridge, and little time remaining.

So, that’s the first process. The second is focused on drafting a Ministerial Declaration. There has been intensive work going on here as well.

In this regard, a majority of delegations made reference to a “Bali-like” Ministerial Declaration (December 2013) in three parts. The first part would have the introductory language, focusing on the importance of the multilateral trading system, the second part would cover the Nairobi deliverables, and the third part would look to the future work of the WTO after Nairobi.

There has been some progress. Clearly, however, we will need to take a different approach for the most contentious issues.

This process on the declaration shows the importance of Nairobi ­ but it also underlines the fact that our work will not end there.

The conversation about the future of the DDA is surely just as important as any deliverables that we will achieve in Nairobi.

The DDA has seen slow progress since its launch in 2001 and when negotiations are slow in the WTO, countries will explore other avenues such as regional trade agreements.

These initiatives are positive, but the WTO must advance as well.

The risk of doing everything in regional forums is that most of the time developing countries and LDCs will be left out of the conversation.

It is only at the multilateral level where all voices are heard, and where the biggest development issues can be properly addressed.

This brings the spotlight back to the WTO, and to our capacity to negotiate.

Nevertheless, I think we cannot disregard important commonalities when thinking the way ahead.

For instance, I think all members agree that:

– We want to deliver in Nairobi.
– Whatever we deliver will not be enough to formally and consensually conclude the Doha Round.
– And members are willing to keep the big Doha issues on the table, agriculture being the most pre-eminent of these.

This discussion on how we move forward will be vitally important for the future of the WTO.

So there is a lot at stake, in terms of the potential deliverables ­ and in terms of what success, or failure, would mean for the future of the multilateral trading system.

Nairobi will be a very important moment in many ways. And I should say that there could be a number of other positive outcomes there.

Ministers of the 162 country members will be asked to approve the membership of Liberia and Afghanistan, for example ­ which will deliver a big boost for growth and development in those two countries.

It is also possible that the deal to expand the Information Technology Agreement will be finalized, which will deliver more economic growth around the world.

And we may see some further progress on the Environmental Goods Agreement.

In addition, we hope to see a strong vote of support for the Enhanced Integrated Framework (EIF) at their pledging conference which will be held on the eve of the ministerial. Indeed, the EIF provides essential support for LDCs, and so this will be another important outcome from the Ministerial Conference.

In conclusion, we have a lot on the table ­ but a lot of work is still required to achieve successful outcomes in Nairobi.

So how do we take forward the outstanding Doha issues after Nairobi? Opinions are quite divergent on this point.

Some members argue that we must keep working on Doha because it is vital for development ­ and that while Doha is not concluded we must not divert our focus to discuss anything else.

Others argue that after years of limited success under the Doha architecture, it is unlikely that this framework could yield any further progress, especially on the more difficult issues.

Therefore, these countries are reluctant to continue engaging in negotiations under this current framework.

These members also believe that for the Organization to function properly, it has to evolve and address whatever new issues members want to talk about. For these members, it is critical that the WTO addresses new concerns; otherwise it risks losing its relevance.

Obviously, it is difficult to reconcile these views.

(End)

Excerpt:

By Roberto Azevêdo
GENEVA, Nov 4 2015 (IPS)

Trade and the multilateral trading system can help in creating a more favourable global environment for public health policies and the implementation of a balanced and effective intellectual property system.

Roberto Azevêdo. Credit: World Trade Organization (WTO)

The TRIPS Agreement introduced substantive and comprehensive disciplines on intellectual property rights into the multilateral trading system. And it impacted deeply on national intellectual property rules across the world.

It is a key tool for balancing the need of ensuring fair access to medicines, while also supporting the necessary innovation.

In these 20 years, more than 130 WTO members have notified intellectual property laws and regulations under TRIPS ­ and they have shown considerable diversity in how they have applied the broad principles of the agreement.

And, understandably, TRIPS has been an important feature of any debate about innovation and access to medicines.

This became even clearer in 2001, with the Doha Declaration on the TRIPS Agreement and Public Health.

With this declaration, WTO members reaffirmed that TRIPS can­ and should­ be part of the solution in tackling the public health challenges that confront developing countries. And they identified flexibilities in TRIPS as an important instrument in enabling access to medicines.

Moreover, members agreed to add a new flexibility to the agreement. They adopted a waiver that enabled the export of lower cost generic medicines to countries which could not produce the medicines themselves.

Led by African countries ­ and with unanimous political support ­ members subsequently decided that this issue was too important for just a waiver. They decided to provide a permanent legal instrument.

And so, in 2005, it became the first amendment agreed to the WTO’s rulebook.

Two-thirds of the membership has to confirm acceptance before the amendment comes into force. Around half of our members have already taken this step and we need 21 more acceptances to meet the threshold amount.

And it’s important to note that this amendment does not require members to take on any new obligations ­ precisely because it concerns a new flexibility, not a new obligation. It simply means that they affirm the right of all members to use this legal protection if and when they wish to.

The work of the WTO also touches on public health issues in a broader sense.

The world is more connected than ever before, and this is no different for trade in medicines and related technologies.

Worldwide imports of pharmaceutical products exceeded half a trillion dollars last year.

Trade in electro-medical apparatus ­ such as ultrasound and MRI equipment ­ exceeded 100 billion dollars.

So impediments to trade, be they uncoordinated customs processes or high trading costs, ­ can be more than just an economic burden. They can be a drag on public health, delaying access to these goods and adding to their cost. This is a very serious issue ­ and one which deserves our attention.

Implementing the WTO’s Trade Facilitation Agreement can be an important step in that direction.

In a nutshell, this agreement will help to expedite the movement of goods across borders. It aims to simplify customs procedures, increase transparency and limit fees and charges. Estimates show that full implementation of the agreement could reduce trade costs by an average of 14.5 per cent.

This can have a big impact across the board ­ including for access to medicines.

For example, the agreement contains provisions for expedited handling of perishable goods, which is vital in the cold chain management and transportation of medicine, such as vaccines.

So this agreement can bring a lot to the table.

And, of course, there are many other examples that show the impact of trade policy here.

Barriers to trade, from tariffs to standards and regulations, impact the costs and competitiveness of producers. They also affect the choices, prices and information available to consumers ­ and patients.

So an important part of our job here is to offer a place for dialogue on these subjects, and to increase transparency.

Some WTO committees, for example, deal with very sensitive standards and regulations, such as levels of toxins in food, caffeine labelling on energy drinks, or test procedures for medical devices and pharmaceuticals.

Some WTO disputes have touched upon related issues ­ for example, looking at policies to discourage tobacco consumption, or packaging information for consumers.

In addition, in many national health systems, access to medicines is supported by public funds, often through public procurement.

The WTO’s revised Agreement on Government Procurement addresses this sector, promoting transparency and good governance in public procurement activities.

Parties to this Agreement have agreed to bind their central health related agencies to these provisions, ensuring that medicines are obtained via a competitive and transparent procurement process.

So I think this illustrates how prominent health is in WTO agenda.

(End)

Excerpt:

By Roberto Azevêdo
GENEVA, Oct 14 2015 (IPS)

The World Trade Organisation (WTO) is a relative newcomer on the international stage. This year we are marking our 20th anniversary.

Roberto Azevêdo. Credit: World Trade Organization (WTO)

So has that prediction or that ambition­ proved accurate?

Over these two decades, the organisation has certainly faced major challenges.

Our negotiating arm, especially the Doha Development Round, has made slow progress. A growing number of trade conflicts is putting real pressure on our dispute settlement system.

With the expansion of regional trade agreements, some of them among major trading blocs­, many have questioned whether they could actually replace the WTO. And, of course, the WTO has been the focus of some discontent ­ particularly in the form of anti-globalisation protests which came to a head at our Seattle ministerial meeting in 1999.

These challenges should not be underestimated. But actually, in some cases, rather than being a consequence of the WTO’s shortcomings, I think they are ­ for the most part ­ a result of its achievements.

And despite these challenges, I would argue that the open, transparent and rules-based trading system, as embodied in the WTO, has become an essential and unassailable pillar of global governance.

To appreciate this, I think it is important to look at the origins of the system.

In 1947, a group of 23 nations signed the General Agreement on Tariffs and Trade (GATT).

The GATT was not a fully-fledged organisation; its membership was limited and so was the scope of its mandate. And so the WTO was created in 1995.

And, as I see it, by founding the WTO and agreeing on the legal texts, our members provided the equivalent of a “constitution” for global trade.

That “constitution” enshrines the basic, perennial principles of trade. Non-discrimination, for example, is embodied in an important premise: most-favoured nation treatment, which prohibits a member from discriminating between trade partners by offering more favourable treatment to one member over another.

It is no coincidence that as the rule of law in trade has spread, average tariffs have fallen dramatically. In fact, they have been cut in half. Average applied tariffs were 15 percent in 1995. Today they stand at less than 8 percent. And trade volumes have more than doubled.

Many argue that the difficulties in advancing the Doha Round of world trade negotiations,­ the latest in a long line of trade “rounds,” ­ show that the organisation has lost its ability to negotiate.

And while these difficulties are very real, the reality is that members are negotiating all the time ­ and, actually, they have delivered a great deal.

The clearest proof that the multilateral system can deliver new negotiated outcomes is the Bali Package.

Negotiated in 2013, the Bali Package contains a set of decisions that include steps on agriculture, measures for least developed countries (LDCs), and the first multilateral agreement since the WTO was created:­ the Trade Facilitation Agreement.

The Trade Facilitation Agreement will simplify, standardise and speed up global customs procedures, which can lead to an average cut in trade costs by around 14 percent an impact potentially greater than the elimination of all remaining global tariffs.

And while the economic gains of Bali are indeed significant, it has had a broader systemic impact.

Right now, we are working hard to deliver meaningful outcomes in our next Ministerial Conference in Nairobi this December.

These conferences, which happen at least every two years, are the highest decision-making body of the WTO.

However, gaps in some key negotiating areas are still very big. The big issues of the Doha Round, such as agricultural subsidies and market access, have proved to be extremely contentious. The situation may change, but there are few signs of this at present.

But, despite differences on major issues, I think there is potential for a meaningful agreement in Nairobi.

And crucially, there is a broad understanding that those deliverables must include significant steps on development and LDC issues.

So, where does the WTO stand after 20 years?

The WTO was seen as a key pillar of a new kind of global economic order ­ open, inclusive, cooperative ­ that was taking shape at the end of the Cold War.

And through much hard work, I think this vision has been made into reality:
Global trade barriers are historically low, and international trade has grown significantly. Trade is underpinned by solid rules, and most importantly ­ rules which are respected. Participation in the trading system has become nearly universal, and support is provided for those members most in need. More members are making use of the dispute settlement system and ­ with each new case ­ a more relevant body of trade law develops. And more members are using WTO councils, committees and working groups to coordinate policies, head-off disputes, using the “soft power” of the system to complement the “hard power” provided by the dispute settlement mechanism.

If the WTO did not exist, it would have to be invented.

In the end, the WTO represents the willingness of its members to cooperate. It represents the recognition that their national interests are increasingly intertwined with their collective interests.

(End)

Excerpt:

By Roberto Azevêdo
GENEVA, Jun 29 2015 (IPS)

The latest report by the World Trade Organisation (WTO) on G20 trade measures shows a slight deceleration in the application of new trade-restrictive measures by G20 economies, with the average number of such measures applied per month lower than at any time since 2013.

According to the thirteenth such WTO report, issued on Jun. 15, G20 economies had applied 119 new trade-restrictive measures since mid-October 2014, an average of 17 new measures per month over the period.

Roberto Azevêdo

A slight decrease in the number of trade remedy investigations by G20 economies has also contributed to this overall figure.

But it is not yet clear that this deceleration will continue and the WTO calls on G20 leaders to show continued vigilance and reinforced determination towards eliminating existing trade restrictions.

The longer term trend remains one of concern, with the overall stock of trade-restrictive measures introduced by G20 economies since 2008 continuing to rise.

Of the 1,360 restrictions recorded by this exercise since 2008, less than one-quarter have been eliminated, leaving the total number of restrictive measures still in place at 1,031. Therefore, despite the G20 pledge to roll back any new protectionist measures, the stock of these measures has risen by over seven percent since the last report.

The broader international economic context also supports the need for continuing vigilance and action. According to the WTO’s most recent forecast (14 April 2015), growth in the volume of world merchandise trade should increase from 2.8 percent in 2014 to 3.3% percent 2015 and further to four percent in 2016, but remaining below historical averages.“The longer term trend [vis-à-vis protectionism] remains one of concern, with the overall stock of trade-restrictive measures introduced by G20 economies since 2008 continuing to rise”

The overall response to the 2008 financial crisis has been more muted than expected when compared with previous crises. The multilateral trading system has proved an effective backstop against protectionism.

During this period, G20 economies also continued to adopt measures aimed at facilitating trade, both temporary and permanent in nature.

These developments confirm that G20 economies overall have shown a degree of restraint in introducing new trade restrictions. However, it is not yet clear that the deceleration in the number of measures introduced will continue in future reporting periods. It is also relevant that the slow pace of removal of previous restrictions means that the overall stock of restrictive measures is continuing to increase.

The broader international economic context also supports the need for continuing vigilance and action.

Trends in world trade and output have remained mixed since the last monitoring report, as merchandise trade volumes and GDP growth picked up in the second half of 2014 but appear to have slowed in the first quarter of 2015.

Economic activity remained uneven across countries as the United States and China slowed in the first quarter, while growth in the Euro area and Japan picked up.

Plunging oil prices and strong exchange rate fluctuations, including an appreciation of the U.S. dollar and a depreciation of the Euro contributed uncertainty to the economic outlook.

Lower prices for oil and other primary commodities were expected to provide a boost to importing economies, but reduced export revenues weighed heavily on commodity exporters.

In light of these developments, our most recent forecast (14 April 2015) predicted a continued moderate expansion of trade in 2015 and 2016, although the pace of recovery was expected to remain below historical averages.

In the area of government procurement, work from the Organisation for Economic Cooperation and Development (OECD), identifying 65 measures implemented since the financial crisis, suggests that discriminatory government procurement policies have become increasingly popular and potentially affect 423 billion dollars of government procurement in the implementing economies.

This report shows that G20 economies implemented 48 new general economic support measures during the period under review, with the majority targeting the manufacturing and agricultural sectors through various incentive schemes, often, but not exclusively, in the context of exports.

The overall assessment of this thirteenth report on G20 trade measures is that the continuing
increase in the stock of new trade-restrictive measures recorded since 2008 remains of concern in the context of an uncertain global economic outlook.

Individually and collectively, the G20 must show leadership and deliver on the pledge to refrain from implementing new measures taken for protectionist purposes and to remove existing ones. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

By Roberto Azevêdo
GENEVA, May 2 2015 (IPS)

Up to 80 percent of global trade is supported by some form of financing or credit insurance. Yet in many countries there is a lack of capacity in the financial sector to support trade, and also a lack of access to the international financial system. Therefore the ability of these countries to use simple instruments such as letters of credit is limited.

The impact of these limitations on a country’s trading potential can be very, very significant.

WTO Director-General Roberto Azevêdo. Credit: WTO/CC BY SA-2.0

After the financial crisis, the supply of trade finance has largely returned to normal levels in the major markets, but not everywhere and not for everyone.

The structural difficulties of poor countries in accessing trade finance have not disappeared – indeed the situation may well have declined due to the effects of the crisis.

There are indications that markets are even more selective now. Under increased regulatory scrutiny, many institutions have lowered their risk-appetites and are focusing more on their established customers. Some are deliberately decreasing their number of clients in a so-called “flight to quality”.

In this environment, the lower end of the market has been struggling to obtain affordable finance, with the smaller companies in the smaller, less-developed countries affected the most.

I was particularly struck by the fact that the financing gaps are the highest in the poorest countries, notably in Africa and Asia. And I was struck by the size of those gaps.

A survey by the African Development Bank of 300 banks operating in 45 African countries found that the market for trade finance was somewhere between 330 and 350 billion dollars.

It also found that this could be markedly higher if a significant share of the financing requested by traders had not been rejected.“The lower end of the market has been struggling to obtain affordable finance, with the smaller companies in the smaller, less-developed countries affected the most”

Based on such rejections, the estimate for the value of unmet demand for trade finance in Africa is between 110 and 120 billion dollars.

This gap represents one-third of the existing market.

The main reasons for the rejection of requests for financing were:

• the lack of creditworthiness or poor credit history
• the insufficient limits granted by endorsing banks to local African issuing banks
• the small size of the balance sheets of African banks, and
• insufficient U.S. dollar liquidity

Some of these constraints are structural, and can only be addressed in the medium to long term. The retreat of global banks from Africa, and from other poor countries, is one such issue.

The Asian Development Bank conducted a similar survey in Asia, looking at countries like Viet Nam, Cambodia, Bangladesh, Pakistan and India.

According to preliminary estimates, the unmet demand there is around 800 billion dollars.

Small and medium-sized enterprises are the most credit-constrained as 50 percent of their requests for trade finance are estimated to be rejected. This is compared with just seven percent for multinational corporations.

Moreover, two-thirds of the companies surveyed reported that they did not seek alternatives for rejected transactions.

Therefore, these gaps may be exacerbated by a lack of awareness and familiarity among companies – particularly smaller ones – about the many options which exist.

A large majority of firms stated that they would benefit from greater financial education.

These findings are particularly striking as Africa and developing Asia are two areas of the world in which trade has grown fastest in the past decade.

But the potential evolution of new production networks is faster than the ability of the local financial sectors to support them.

In this way the lack of development of the financial sector can be a significant barrier to trade.

It can prevent developing countries from integrating into the trading system and accessing further trade opportunities.

And it can therefore prevent them from leveraging trade as a powerful source of development.

So we need to respond to this problem.

The exchanges that we have here can form part of this response. We need to join together in order to advocate action in this area and to devise practical solutions.

Of course, there is no magic bullet. This is a complex issue. However, that should not discourage our efforts.

The trade finance facilitation programmes that I outlined earlier are one example of practical action that we can take.

Of course this only fills part of the gap, so our response needs to be more fundamental.

In July this year, the United Nations’ major ‘Financing for Development’ conference will take place in Addis Ababa. And I think it is essential that we put trade finance on the agenda there.

In this way we can ensure that this issue is given its proper prominence in the development debate, especially at a time when the all-important U.N. Sustainable Development Goals are being finalised.

Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

By Roberto Azevêdo
GENEVA, Oct 15 2014 (IPS)

Regional trade agreements have grown very rapidly in recent years, and today the World Trade Organisation (WTO) has been notified that 253 are in force.

Clearly RTAs are not a new phenomenon.

In fact they pre-date the multilateral system because, in a sense, they were the seeds which grew into the General Agreement on Tariffs and Trade. Created in 1947, GATT was replaced in 1994 by the WTO.

WTO Director-General Roberto Azevêdo. Credit: WTO/CC BY SA-2.0

GATT was effectively a multilateralisation of the network of reciprocal trade agreements that countries had been pursuing for some years previously, so the system as we know it today has its roots in these agreements.

But of course things have changed in recent years. These agreements are not only more numerous, they are becoming increasingly complex.

While over 80 percent of RTAs notified are bilateral agreements, we are seeing more and more large regional agreements.

And we are seeing more agreements between countries in different regions, rather than between neighbours. This is very different from the pattern we saw during the GATT years.

In addition we see many more developing countries negotiating RTAs today.

This proliferation of agreements, each with their own sets of rules, has been dubbed a “spaghetti bowl” ­and I would certainly agree that we are seeing a significant increase in the level of complexity inside the agreements and in their relations with each other.

Most RTAs today make deeper and more extensive commitments, and have moved beyond commitments only in the sphere of market access for goods.“Although these initiatives [regional trade agreements] show that WTO members continue to liberalise trade, fragmentation of the trading system cannot be a substitute for the benefits of negotiating one set of rules for all”

A question which requires further consideration is how RTA provisions can be complementary to the multilateral trading system.

For some issues such as market access for goods and services, most RTAs grant their partners a higher level of market access than that available through the WTO.

For other issues, the picture is less straightforward.

Take, for example, RTA provisions on anti-dumping rules. In general, RTAs do not appear to have gone much further beyond where we are in the WTO today. Meanwhile, for issues such as investment, which is touched on by some RTAs, there are no WTO rules.

Another trend that has been noted in the past few years is negotiations that could potentially bring together a number of existing RTAs in so-called “mega-regional” negotiations.

While the trend to negotiate new RTAs continues, liberalising trade bilaterally or regionally is only a part of the picture.

As I have said many times,­ these initiatives are important for the multilateral trading system ­ but they cannot substitute it.

To start with, there are many big issues which can only be tackled in an efficient manner in the multilateral context through the WTO.

Trade facilitation was negotiated successfully in the WTO because it makes no economic sense to cut red tape or simplify trade procedures at the border for one or two countries. If you do it for
one country, in practical terms you do it for everyone.

Financial or telecommunication regulations cannot be efficiently liberalised for just one trade partner ­ so it is best to negotiate services trade-offs globally in the WTO. Nor can farming or fisheries subsides be tackled in bilateral deals.

Disciplines on trade remedies, such as the application of anti-dumping or countervailing duties, cannot significantly go beyond WTO rules.

The simple fact is that very few of the big challenges facing world trade today can be solved outside the global system. They are global problems demanding global solutions.

Another important aspect, leaving aside the content of the agreements, is their geographical scope. RTAs tend to exclude the smallest and most vulnerable countries. That is a major source of concern.

And, as our economies become more interconnected across borders and regions, RTAs do not – and probably cannot ­– fully address the gains from trade that can be obtained through global value chains.

Indeed, the strict, product-specific rules of origin that often accompany RTAs may actually be detrimental to value chains and therefore exclusionary for some. The smaller the country, the smaller the company, the smaller the trader, the bigger the likelihood that it will be excluded.

There is also concern that by creating different sets of rules and regulations, RTAs may be burdensome for traders and business. This is the point of complexity that is a concern for many.

Finally, although these initiatives show that WTO members continue to liberalise trade, fragmentation of the trading system cannot be a substitute for the benefits of negotiating one set of rules for all.

Ideally, this is where we should be putting our focus.

But in order to ensure this, one thing we clearly need to do is to deliver on what we agreed during the WTO word trade negotiations in Bali in December last year.

We are now halfway through an intensive consultation period to resolve the current impasse on this ­but, as things stand today, at this point in time we do not have a solution.

While this situation persists, I think the risk of disengagement increases exponentially. And this point is underlined by the proliferation of these other approaches.

For the sake of the multilateral system, and all those who stand to benefit from it, I think we have to find a solution to our current problems and put our work here at the WTO back on track. And we have to do it quickly. Time is not on our side. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

Excerpt:

By Roberto Azevêdo
GENEVA, Jul 29 2014 (IPS)

In the 1960s, there were high hopes for the development of the newly-independent sub-Saharan African countries but these hopes were quickly dashed following a series of shocks which began in the mid-70s, with the first oil price spikes, followed by a severe decline in growth and increase in poverty in the 80s and early 90s. However, by the mid-1990s, economic growth had resumed in certain African countries. Economic reform, better macroeconomic management, donor resources and a sharp rise in commodity prices were having a positive effect.

WTO Director General Roberto Azevêdo. Credit: WTO/CC BY SA-2.0

In the 2000s, many African countries witnessed high economic growth performance and during that period some of the world’s fastest growing economies were in sub-Saharan Africa. Angola, Nigeria, Chad, Mozambique and Rwanda all recorded annual growth of over 7 percent.

In 2012 Africa’s exports and imports totalled 630 billion dollars and 610 billion dollars respectively, ­ a fourfold increase since the turn of the millennium. And the long term prospects for growth are good. The Economist Intelligence Unit has forecast average growth for the regional economy of around 5 percent yearly from 2013-16.

Despite all this, the continent still plays a marginal role in the global market, accounting for barely 3 percent of world trade. One significant reason – although, of course there are others – is that African economies are still narrowly based on the production and export of unprocessed agricultural products, minerals and crude oil.“There is little doubt that the regional [African] market offers good scope for African firms to diversify their production and achieve greater value addition”

Now, due to relatively low productivity and technology, these economies have low competitiveness in global markets – apart from crude extractive products. The low productivity of traditional agriculture and the informal activities continue to absorb more than 80 percent of the labour force. And growth remains highly vulnerable to external shocks.

This story of half a century of struggle, set-backs and progress shows two things:

One, the road to meaningful and inclusive development still seems long.

Two, we are in a better position than ever to make real, sustainable progress.

Many countries are striving to do more in turning their strength in commodities into strengths in other areas,­ using commodities as a means of spurring growth across various sectors. The United Nations Economic Commission for Africa’s 2013 Economic Report echoes this ­ calling for the continent’s commodities to be used to support industrialisation, jobs, growth and economic transformation.

In line with this, I think there are a number of essential steps to take:

– diversification of economic structure, namely of production and exports;

– enhancement of export competitiveness;

– technological upgrading;

– improvement of the productivity of all resources, including labour; and

– reduction of infrastructure gaps.

Only by delivering in these and other areas can policymakers ensure that growth enhances human well-being and contributes to inclusive development. But how can we take these steps?

Of course I should say that although African countries share some common features, no unique set of policies, including those on trade and industrial policy, could ever fit for all in a uniform way. Even among the least-developed countries (LDCs), some are already exporters of manufactured products, although often they rely on a single product  while others are more dependent on commodities. Nevertheless, I think it is clear that some preconditions of success are universal.

African regional integration is of course very high on the policy agenda. There is little doubt that the regional market offers good scope for African firms to diversify their production and achieve greater value addition. Already now, manufactures constitute as much as 40 percent of intra-African exports, compared with 13 percent of Africa’s exports to the rest of the world.

The Bali Package, which World Trade Organisation members agreed in December last year, will help to resolve some problems. Inclusive, sustainable development was at the heart of the whole Bali project ­ and our African members played a crucial role in making it a success. It brought some progress on agriculture. It delivered a package to support LDCs. It provided for a Monitoring Mechanism on special and differential treatment.

And, in addition, Bali delivered the Trade Facilitation Agreement and this is a direct answer to some of the problems of fragmentation. Costly and cumbersome border procedures, inadequate infrastructure and administrative burdens often raise trade-related transaction costs within Africa to unsustainable levels, creating a further barrier to intra-African trade.

This Agreement will help to address some of these bottlenecks. It will support regional integration, and therefore complement the African Union’s efforts to create a continental free trade area. And it will begin to remove some of the barriers which prevent full integration into global value chains. As such it will create an added impetus for industrialisation and inclusive sustainable development.

And it is worth noting here that the Trade Facilitation Agreement broke new ground for developing and least-developed countries in the way it will be implemented.

Another vital issue here is the importance of agricultural development in industrialisation, and the role of industrial collaboration through regional cooperation. The contribution of the agriculture sector is of utmost importance for the establishment of a sound industrial base. It can provide a surplus to invest in industrial capacity building, and supply agricultural raw materials as inputs to the production process, especially for today’s highly specialised food processing industry.

Moreover, it can also significantly contribute to industrialisation by providing an ample supply of food products. This is because food constitutes a large share of what wage earners in African countries spend their money on. Its availability at low prices contributes to increase the purchasing power of wages, and therefore raise the competitiveness of a country in international markets. (END/IPS COLUMNIST SERVICE)

Excerpt:

By Roberto Azevêdo
GENEVA, Apr 22 2014 (IPS)

Although some people don’t see the connection, the global trading system is aimed at creating some of the essential conditions needed to improve children’s lives and their prospects in the future.

We can identify three flash points where trade and children’s interests intersect, and where perhaps we can do a bit more to maximise our impact. One relates to developed countries, and two to developing nations.

The first point is this: the crisis in recent years has hit many western economies hard — and one of the most worrying effects has been very high levels of youth unemployment.

WTO Director General Roberto Azevêdo. Credit: WTO/CC BY SA-2.0

Levels have topped 50 percent in some countries. The effects of this are very significant – and are much more damaging than simply the loss of productive capacity in the economy.

Surveys of young people highlight the corrosive effect that unemployment can have on their confidence, motivation, and view of the future – raising the spectre of a “lost generation”.

Trade can be part of the solution, because one of the key differences that trade makes is through job creation.

The World Trade Organisation (WTO) reached a major multilateral trade deal in Bali last December which could make a big difference here, as economists predict that it could create 21 million jobs.

Of course the relationship of cause and effect is complex. The WTO conducted a major study on this issue with the Organisation for Economic Cooperation and Development (OECD) and others in 2012. The evidence shows that trade can play a powerful role – but to be effective, trade reforms have to be embedded in supportive policies.

Countries where trade openness has failed to stimulate growth commonly have unstable macroeconomic policies, inadequate property rights, insufficient public investment in overcoming supply-side constraints, or other socio-political limitations.

So for the positive effects of trade to be realised in tackling youth unemployment, we need to recognise the inter-linkages to other areas of policy.

Export-orientated jobs typically pay higher wages to their workers. In Western Europe those working in export-focused companies collect a 10-20 percent premium over the average wage. And in sub-Saharan Africa that figure is even higher, at 34 percent.

Of course there are challenges here too in ensuring that low-skilled workers are not left behind.

My second point is about the persistent tragedy of child poverty.

By supporting economic growth and poverty alleviation, trade can be an important engine for change, and therefore can make a significant difference to children’s prospects.

The leaders of the Young Lives survey conducted by Oxford University over 15 years in India, Ethiopia, Peru and Vietnam found that growth provides financial space for governments and families to invest in children and create improved infrastructure and opportunity.

The fact that the Millennium Development Goal to halve the rate of extreme poverty by 2015 was met well ahead of time was illustrative of this.

Take China, where the pursuit of an export-led growth model has led it to become the world’s second largest economy and now the world’s biggest trading nation. At the same time it has reduced the poverty level from 60 to 12 percent between 1990 and 2010.

Other economies have followed a similar trajectory, using the trading system to rapidly expand economic growth and slash rates of extreme poverty.

Look at Vietnam or the recent graduates from least developed country status: Samoa, Cape Verde and the Maldives. They show again the difference that trade and increased investment can make in achieving more inclusive socio-economic development.

However the rate of poverty reduction as a whole is not always matched in the area of child poverty. Again, the Young Lives survey argues that while economic growth is important, what matters more for children is the nature or quality of that growth.

We have to harness growth more effectively and convert it into social change that benefits poor children and their families. This is an urgent challenge for policy-makers at the international level to provide the right frameworks and mechanisms to support quality growth, and at the domestic level to ensure that no-one falls behind, particularly children.

So the debate that is currently underway to design the successors to the Millennium Development Goals will be crucial here, not least as it will dictate the agenda until 2030.

My final point is that lifting children out of poverty is essential, but it is not enough.

We need to look at children’s lives in a more holistic way.

Robert F. Kennedy warned of the narrowness of economic measurements. He said: “The gross national product does not allow for the health of our children, the quality of their education or the joy of their play… It measures everything, in short, except that which makes life worthwhile.”

Of course this is what the Human Development Index is all about – the need to place people at the centre of policy-making.

Trade is not just about dollars and cents. We need to look at the wider environment.

I believe that trade can help to create the conditions in which children can lead better lives. And at the most fundamental level, we can do this through supporting the family – by reducing the potential for conflict, helping to create a stable environment and predictable conditions, and supporting higher income levels.

This, in turn, can support better education and healthcare, while improved connections through trade also support wider access to medicine.

Amartya Sen, one of the creators of the Human Development Index, argues that true development comes through freedom.

And I believe that by encouraging openness, cooperation and democracy, trade supports this as well.
(END/COPYRIGHT IPS)

Excerpt:

By Roberto Azevêdo
GENEVA, Mar 20 2014 (IPS)

The Bali Package, approved on Dec. 7 by the World Trade Organisation (WTO) members, was a historic achievement, representing a significant boost for trade, growth and development around the world. But its true significance lies in what it allows us to do next to conclude the Doha Development Agenda.

As we prepare to seize this opportunity in 2014, it is timely to look back on the challenges which emerged in the international trading environment in 2013 and to consider how members might respond.

The WTO report on developments in the international trading environment which was circulated on Jan. 31 aims to provide an assessment of a range of trade and trade-related issues and trends during the period from mid-October 2012 to mid-November 2013.We must acknowledge that the stock of current trade restrictions and distortions continues to accumulate.

Put simply, it is a health-check on global trade and I think the diagnosis is cautiously positive although there are still reasons to be concerned about restrictive measures. We were not in great shape last year and we have picked up a few bad habits which we need to shake off. But overall trade growth is beginning to recover and we have a healthier outlook for 2014.

Let me mention some of the substantive findings of the report.

First, in terms of trade in goods, its volume expanded by less than 2.5 percent in 2013.

Growth projections for 2014 are much improved, hovering somewhere between 4 and 4.5 percent but this is still below the historical average since 1990 of 5.5 percent.

We are, of course, keeping a close eye on recent developments in the global economy and their impact on these projections.

Regarding developments in trade measures, there are two specific categories: trade remedy actions; and other trade measures.

Counting both categories together the report shows that overall 407 new restrictive measures were reported during the review period. This is compared to 308 in the same period a year earlier.

These new restrictive measures affect about 1.3 percent of world merchandise imports valued at 240 billion dollars.

Moreover, they add to the existing stock of restrictions and other impediments to the flow of international trade.

Looking specifically at trade remedy actions which were mostly anti-dumping and safeguard measures we saw 217 initiations of new trade remedy investigations. This covers around 0.2 percent of world imports, and compares to 138 terminations of either investigations or existing duties.

As was the case in 2012, therefore, more trade remedy actions were initiated than were terminated in 2013.Trade remedy activity is therefore clearly on the rise.

The number of new other trade measures also increased from 164 in the previous year to 190 during the review period.

The majority of such new measures were applied to imports mostly in the form of import tariff increases and customs procedures, covering around 1.1 percent of world goods imports.

Compared to the trend in new restrictive measures, the number of new trade-facilitating measures fell to 107 in 2013, well down from 162 a year earlier. These measures cover the equivalent of 1.4 percent of world merchandise imports which is approximately 258 billion dollars.

These measures, plus the number of terminations of trade remedy actions, represent little more than one-third of the total measures covered in the report.

This paints a rather unflattering picture of the ratio of trade restrictive measures to facilitation measures. We must acknowledge that the stock of current trade restrictions and distortions continues to accumulate.

I strongly believe we have a collective responsibility to attend to the risk posed by the cumulative effect of new and existing trade restrictions.

During the period covered by this report, members notified 23 new Regional Trade Agreements (RTAs) to the WTO, bringing the total number in force today to 250.

Negotiations on new RTAs are also continuing, in some cases between parties that collectively account for very substantial shares of world trade and GDP.

My view is that these initiatives are positive and are to be welcomed but they can only ever be one part of the wider picture. Agreements such as these cannot be sufficient on their own to ensure gains which can be realised on a global scale. In fact, the proliferation of regulations and standards could multiply costs rather than reduce them.

The multilateral trading system was never the only option for international trade negotiations. It has always co-existed with, and benefitted from, other initiatives. They are not mutually exclusive alternatives.

We must think about how the two processes – global and regional – can move forward together to reduce costs effectively and to curb protectionism.

As I have said before, 2014 is a pivotal year for the WTO. It is the year that we will implement our first negotiated outcomes and the year that the Doha Round is put back on track.

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By Roberto Azevêdo
GENEVA, Jan 20 2014 (IPS)

At the Ninth Ministerial Conference of the World Trade Organisation (WTO), held in Bali Dec. 3-7, a series of decisions was adopted aimed at streamlining trade, allowing developing countries more options for providing food security, boosting least developed countries’ trade, and bolstering development in general.

The first pillar of the “Bali Package” is agriculture. This is the cornerstone of the Doha Development Agenda, which the WTO has been working on since 2001. Agricultural issues are very dear to developing countries, and the Bali Package delivered some important outcomes.Agreements such as this cannot be sufficient on their own to ensure globalisable gains.

For example, it sets us on track for a reform of export subsidies and measures of similar effect, and it makes practical progress towards better implementation of the tariff quota commitments assumed in the Uruguay Round (1986-1994).

There is also a reaffirmation and a deepening of the political commitments assumed in Hong Kong in 2005 on trade liberalisation and the reduction of distorting support to cotton – a very important issue for the African countries that grow that crop.

The Package also provides temporary protection for food security programmes in developing countries, which allow for the stockpiling of grain for subsequent distribution to the poor. As we know, some of those countries could be exposed to legal challenges in the WTO for exceeding the limits stipulated in the Agriculture Agreement for certain types of domestic support.

So, in addition to the temporary protection against legal challenges, the Bali Agreement states that a permanent solution will be negotiated and concluded before the 11th Ministerial Conference in four years’ time.

The second pillar of the package is development. Here, a monitoring mechanism will provide for the review and strengthening of special and differential treatment provisions for developing countries, which are contained in all WTO multilateral texts. This achievement is vital for the equilibrium and efficacy of the multilateral system.

There are also a number of specific measures to support the least developed countries (LDCs). They include reforms that would enable services providers in LDCs to enjoy new export opportunities in developed country markets.

They also include steps to simplify rules of origin, which again will open up new export opportunities for those countries specifically.

Under this pillar we will also see improvements in trade preference arrangements which extend exemption from tariffs and quotas to LDC exports.

The third and final pillar is trade facilitation, which sets out to simplify and modernise customs procedures, and make them more transparent, thereby reducing transaction costs.

The Agreement on Trade Facilitation will be able to provide a significant – and today much needed – boost to the global economy, delivering growth and jobs. This could be worth as much as one trillion dollars per year to the global economy, generating up to 21 million jobs.

Significantly the Agreement also ensures the provision of technical assistance to support developing and least developed economies to implement these modernising reforms, and therefore help them integrate better into global trade flows.

Clearly estimates can vary, but once the Agreement is implemented, there could be an expansion in developing country exports of up to 10 percent – compared to a 4.5 percent expansion in developed countries.

It is true that the deal represents only part of the Doha Development Agenda. But there can be no doubt that this is a significant package that will provide a considerable economic boost and improve the lives of millions of people around the world  – particularly among the poorest and in countries whose economies have stalled and are suffering high levels of unemployment.

In the specific case of the European Union and its member States, the conclusion of the Bali Package reflects that grouping’s chief negotiating objectives. With the Agreement on Trade Facilitation, opportunities for expanding trade will clearly increase.

The Agreement also offers potential to facilitate the internationalisation of small and medium sized enterprises, which are important drivers of job creation and income distribution in many European countries.

But of course these outcomes do not fully reflect achievement in Bali. There was a great deal more at stake. I said at the start of the Bali Conference that the very future of multilateral trading system hung in the balance.

In recent months there has been a lot of talk about regional and bilateral agreements. The Transatlantic Trade and Investment Partnership between the United States and the European Union is one such potential agreement. My view of this is the same as of other potential agreements of this kind: it is a positive initiative to be welcomed – but it can only ever be one part of the wider picture.

Agreements such as this cannot be sufficient on their own to ensure globalisable gains. The proliferation of regulations and standards tends to multiply rather than reduce costs.

The multilateral trading system was never the only option for international trade negotiations. It has always coexisted with, and benefited from, other initiatives, whether regional or bilateral. They are therefore not mutually exclusive alternatives.

The WTO disciplines also need to evolve to reduce the gap that will exist between multilateral regulations and the new generation regulations negotiated outside Geneva.

The two processes, multilateral and bilateral, must move forward together to reduce costs effectively and to curb protectionism. Otherwise, we could see results that are exactly the opposite of what we are seeking.

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