5th Global Review of Aid-for-Trade - Plenary session 1: Reducing Trade Costs for Inclusive, Sustainable Growth
30 June 2015
Excellencies,
Ladies and Gentlemen,
Distinguished Colleagues,
2015 is a special year.
It is the year when all of you - the governments of the world - will commit to dignity for all, prosperity for all and a sustainable planet for all.
The Sustainable Development Goals represent a massive leap of faith. They are an expression of individual and collective determination that probably exceeds anything that we, as a global community, have committed to in the history of the United Nations. And they involve an entirely new, comprehensive and coherent blueprint for development: One which will require profound transformation, and; One in which trade can, and must, play an important role if we are to achieve the world we want by 2030.
I wish to make three brief points in my remarks this morning:
First, on the magnitude of the challenge that the SDGs represent, particularly in terms of the trade and growth challenge facing LDCs.
Second, on how reducing trade costs improve the lives of people and builds productive capacity.
Third, on the role of Aid-for-Trade in meeting the challenge of this new ambitious and transformative agenda, both globally as well as nationally and regionally.
First: consider the scale of the challenge in the LDCs. The share of poor people living in China in 1994 was about the same as the share of poor people living in LDCs today - 46% of the population living on less than $1.25 per day.
China grew on average at 9.4% per capita per year for 15 years; yet by 2009 still 12% of China's population was living in poverty. This implies that to end poverty in the next 15 years, as the SDGs prescribe, the LDCs will require a bigger economic miracle than China's! And environmentally, LDCs must accomplish this growth miracle without China's carbon footprint!
If this was not enough: we are envisaging that the LDCs accomplish Chinese-like growth rates, at a time when the global economy is facing "secular stagnation".
Add to that a current investment gap of 2.5 trillion USD annually for the fulfilment of the SDGs in developing countries as a whole.
So, we will have our work cut out for us. And it will require our determined action. Trade can help us meet this challenge. Trade is not only one of the main engines of growth, it is also the single largest source of private and public external finance to LDCs. In 2013, export earnings to LDCs amounted to $213 billion. That's more than twice their combined receipts of ODA, FDI and remittances. Aid-for-Trade initiatives are vital for ensuring we harness these large sums for inclusive and sustainable development.
This brings me to my second point, which is how reducing trade costs improves people's lives.
High trade costs act as a double-edged sword: these costs squeeze citizens through lower wages in the export sector. At the same time, they lead to higher prices on imported consumer goods. And they deter investment.
At a time when every dollar counts to invest in sustainable development and when we are to eradicate poverty, no one can afford this waste.
Today, we know that the benefits of trade come not only from increased market access but trade can also - especially when accompanied by other measures - foster knowledge creation, increase productivity and promote more and better jobs for the population.
And it is this process that can structurally transform economies, to improve the lives of everyday people.
That is why reducing trade cost is so important. This is not about deregulation. It is about efficiency. And it even helps strengthen government capacities to collect domestic revenues and meet the needs of citizens.
For example: UNCTAD's ASYCUDA programme, which automates customs processes in more than 80 countries, helped Afghanistan increase custom's revenue from $50 million to more than $700 million over seven years, all while trade growth itself was only expanding 5-7 % annually. So by cutting red tape and improving efficiency, Aid for Trade has increased domestic capacity of the country to pay for government services that people need.
The same goes for non-tariff measures. Again, it is not about doing less, it is about being less trade-restrictive and trade costly. This is particularly important in light of the new post-2015 agenda. In many cases, national policy actions to achieve the SDGs may inadvertently constitute NTMs, such as sanitary and phyto-sanitary measures and technical barriers to trade. For LDC exporters in particular, this represents a formidable challenge.
My third and final message to this morning is how we at UNCTAD believe that Aid-For-Trade must help implement the post-2015 agenda.
When it comes to global action to reduce trade costs, the agreement last year on Trade Facilitation was a game changer, and we urge countries to ratify and implement this agreement. And the ball has been set in motion for further and hopefully decisive movement on DDA by Nairobi this December.
Aid-for-Trade is crucial in the implementation of the Trade Facilitation Agreement. We at UNCTAD work closely in partnership with others on this, notably with ITC and UNECE. We were also pleased to announce last week the launch of a new Aid-for-Trade vehicle to help developing countries speed up ratification and acceptance of the TFA. This new UNCTAD Aid-for-Trade initiative aims to support many poorer countries experiencing domestic legal and capacity constraints in ratifying the Agreement.
Aid for Trade at global, regional and national levels must go hand in hand. And it requires a comprehensive and integrated approach, linking doing business, with investment, with trade. UNCTAD will do its part. Our capacity building programs on entrepreneurship and investment, on e-regulation, our ASYCUDA customs automation solutions, our support to e-Commerce and ICT, and our Port Training programme all stand as examples of highly-tailored technical Aid-For-Trade activities. Not to mention the cluster on trade and productive capacity which helps us as UN System, deliver as one.
Regional Aid-for-Trade must also come into its own. Today's pragmatic regionalism provides the building blocks to tackle regional trade costs and for improved, revitalized trade growth. Such arrangements are the natural home for the regional value chains that many developing countries need to improve productivity and create good jobs for all. Aid-for-Trade initiatives have a key role to play for regional trade integration.
Ladies, Gentlemen,
Our Aid-for-Trade review is unique this year in that we must look more forward to the future, than backwards to our past activities. We are witnessing "once in a lifetime" negotiations in a number of fora to agree on how trade contributes towards the world that we all we want to live in 15 years from now.
We must ensure that these negotiations are successful. Once these negotiations are over, we will have answered the question what. Then, we will have to start answering the question how.
I welcome you all to join us at UNCTAD XIV from 14-18 March 2016 in Lima, Peru, in the first major global conference of the post-2015 era. At UNCTAD XIV in Lima we plan to move the discussion from negotiation and debate to action and implementation. I look forward to all of your contributions to these efforts, and to your continued engagement and support to Aid-For-Trade work.
Thank you.
