unctad.org | Sixtieth session of the Trade and Development Board - Item 7: Evolution of the international trading system
Statement by Mr. Mukhisa Kituyi, Secretary-General of UNCTAD
Sixtieth session of the Trade and Development Board - Item 7: Evolution of the international trading system
Geneva
22 sept. 2013

Opening statement by the Secretary-General of UNCTAD
[AS PREPARED FOR DELIVERY]

Thank you Mr. President,
Good morning Excellencies,

Distinguished Panellists,
Ladies and Gentlemen,

It is a great pleasure to welcome you to the Trade Day of this year's session of the Trade and Development Board. To start off our discussions, allow me to make a few comments on the theme of the post-2015 United Nations development agenda, since I have just returned from New York where I participated in a number of high-level events related to this issue.

But before I do so, I would like to take a brief historical tour of the contribution of UNCTAD to development, to set the stage for our discussion. UNCTAD was created in 1964, alongside the Group of 77, to address what was perceived by developing countries as a gap in the governance structure of the multilateral trading system at the time of the then GATT - namely, the lack of a 'development' perspective. UNCTAD was able to articulate analyses, and to propose policy measures, to enhance the development impact of trade and interrelated policies. UNCTAD's work on trade preferences, for example, led to the launching of the Generalized System of Preferences (GSP) in 1968 at UNCTAD II. In 1979, the Enabling Clause was adopted by GATT to provide permanent legal cover for the provision of trade preferences under the GSP, and for economic integration agreements among developing countries. I could also mention that in response to the call for a greater orientation towards development in the international trading system, Part IV on Trade and Development was adopted by the GATT. Subsequently, over the years, UNCTAD has continued its mission of promoting trade policies and measures that can increase participation by developing countries in international trade, in order for them to realize the benefits from it.

It is also noteworthy that during the Uruguay Round of multilateral trade negotiations, UNCTAD's analytical and policy work was instrumental in supporting the negotiations on services that led to the adoption of the General Agreement on Trade in Services (GATS).

As we are on the threshold of articulating a new United Nations development agenda, I think it is fitting that we should ask ourselves what our role and contribution could be to that new global governance tool. In this context, I consider that UNCTAD can again play a leading role, as it has in the past, in helping member States to envision how to reconnect trade with development.

Firstly, we might ask: Why a post-2015 development agenda?

It is clear that the importance of constructing a post-2015 United Nations development agenda derives from the evidence that while there has been much progress in poverty reduction, and in achieving the other Millennium Development Goals, great needs remain in many areas. In addition, we need to adapt the development agenda to address new challenges. It is clear that without proper governance, globalization is socially, economically and environmentally unsustainable. Allow me to mention just a few examples:

  • 700 million fewer people were living in conditions of extreme poverty in 2010 than in 1990. However, at the global level, 1.2 billion people are still living in extreme poverty. In sub-Saharan Africa, the absolute number of poor people has increased, and overall, three quarters of the world's poor live in what are now categorized as middle-income countries.

  • Income and wealth inequalities within countries have generally increased since 1980, including in high-income countries.

  • Gender inequalities persist, as shown in wage earnings, access to work and education, and participation in positions of decision-making.

  • Global emissions of carbon dioxide (CO2) have increased by more than 46 per cent since 1990.

  • Biodiversity has been enormously reduced, with up to 70 per cent of the world's known species at risk of extinction if average global temperatures rise by more than 3.5° Celsius.

The increased human activity brought about by the growth of the world's population - 7 billion currently, and expected to rise to 8 billion by 2020 - as well as by growth in incomes and in energy and resource use, is causing unprecedented environmental degradation.

Secondly, what process has been set up to address these challenges and opportunities so we can prepare adequately?

Given the challenging background, and with the Millennium Development Goals that were set in 2000 coming to an end, the 2010 United Nations Summit on the Millennium Development Goals and the Rio+20 Summit agreed to launch a process to develop a set of sustainable development goals to take effect from 2015. The United Nations post-2015 development agenda seeks to deepen and extend the efforts undertaken pursuant to the 2000 Millennium Summit and the Millennium Development Goals.

Today, there is broad agreement that both of these efforts should ultimately converge in one post-2015 development agenda centred on the global achievement of sustainable development and eradication of poverty.

Two reports have been produced which provide some initial ideas on possible goals. These are the UN System Task Team report entitled Realizing the Future We Want for All, and the report of the United Nations Secretary-General's High-level Panel of Eminent Persons on the Post-2015 Development Agenda, entitled A New Global Partnership: Eradicate Poverty and Transform Economies through Sustainable Development. As the UN System Task Team reports, the purpose of such a global development agenda is not to prescribe specific development strategies or policies, but rather to provide guidance for priority-setting at all levels (global, regional, national and local) in order to meet shared objectives and hence support global solutions to global problems.

A member State-driven process through an open working group was set up to define the sustainable development goals as mandated by Rio+20. The group has met several times.

We, for our part in UNCTAD and in Geneva, are also called to contribute to this open process.

Thirdly, what is the role of trade in the post-2015 development agenda?

Trade was part of the Millennium Development Goals and the overall strategy in 2000. It was integrated into MDG-8 in the form of the following two best-endeavour targets:

8A: Develop further an open, rule-based, predictable, non-discriminatory trading and financial system. And,
8B: Address the special needs of the least developed countries, including through tariff- and quota-free access for their exports.

In terms of progress towards these market-access targets, the following can be stated:

  • About 83 per cent of the value of the exports (excluding arms and oil) that developing countries send to developed-country markets is now imported free of duty;

  • In 2010, for developing countries as a group, no duties were paid on 79 per cent of exports, 60 per cent of which were admitted under MFN treatment and 19 per cent under true preferential access;

  • Most LDCs enjoy "true"1 preferential access to developed-country markets: 53.5 per cent of LDC exports entered developed-country markets duty free under true preference in 2010, compared with 35 per cent in 2000.

A realistic assessment of the indicators and progress on these targets nevertheless reveals that distortions (tariffs and non-tariff barriers) are still present to the detriment and marginalization of many developing countries and LDCs. Agricultural tariffs are still high and complex, particularly in the developed countries, and numerous domestic and export-related subsidies still affect the domestic and export markets of developing countries and LDCs.

In fact, just last Thursday, the Organization for Economic Cooperation and Development (OECD) reported rising levels of government support to agriculture. In the OECD area, support to producers stood at $258.6 billion in 2012, compared with $241 billion in 2010. These growing figures are striking when viewed in terms of total OECD aid delivered in 2011, which amounted to $133.5 billion.

In this context, the slow progress in the Doha Round negotiations at WTO is a major concern for all today. A positive outcome on the Doha Round negotiations is expected to address distortions such as agricultural subsidies, tariff escalations, tariff peaks, non-tariff barriers, and duty-free quota-free exports from LDCs.

This situation has been aggravated by costly trade finance at the global level due to the recent economic downturn.

The existing targets may be missed quantitatively, thus demonstrating the need for further efforts. However, a future agenda should not be limited to setting quantitative targets, but should also include a qualitative assessment. This means that a mere enumeration of the targets would certainly not be sufficient to meet the developmental needs, in the absence of a holistic approach whereby the targets were linked upwards to broader economic and social development areas. This linkage would warrant a fresh approach, to harmonize trade-related targets and revise the indicators for an inclusive and meaningful sustainable development.

So how do we see trade in a future governance agenda?

Trade is an important development enabler that can contribute significantly to the attainment of a development agenda. In such a framework, trade would serve not only as a goal in itself, but also as an enabler for potential goals such as poverty eradication, inclusive growth and job creation, universal healthcare and education, and a healthy environment. Trade in services, in particular, could provide avenues for productivity, and simultaneously increase access to and availability of essential services to end users. A case in point is the mobile payments service that was trialed in Kenya and then spread across Africa, which has proven to be a significant driver of economic activity.

There are, however, limits and conditions for trade being an effective enabler. The impact of trade on various developmental goals can be positive or negative; it is policies that determine the nature of the impact - particularly trade policies that are well targeted, and effectively implemented with other complementary policies. The positive contribution of international trade to development is not automatic. Institutional support at national and international levels is essential. It is a truism that trade liberalization alone is a necessary condition but not a sufficient one for trade growth to take place, or for development gains to be achieved.

In particular, there is a need for policy coherence. Economic policies (on monetary and fiscal issues, employment, trade, industry, the environment and transport) and social policies (on education and training, population and health and social protection) need to be coherent, reinforce each other, and be instrumental to achieving inclusive and sustainable development. Such coherence at the domestic level should be accompanied by the same coherence in the international sphere. Commitments taken by countries at the international level should not jeopardize their ability to reach goals established at the national level.

One challenge that is often encountered at the national level is compartmentalization, which is a situation where social issues are addressed in a different framework than economic issues and no sufficient synergies are established between the two frameworks. For example, strategies on social protection should be closely linked to policies on employment, education and training. Moreover, due consideration should be given to changes in employment and welfare brought about by international trade. While there are some "winners" from trade liberalization, there are also "losers", and their needs must also be addressed. An assessment of the sectors of the economy, and the segments of the population, that may be negatively affected by international trade can help in putting into place the right immediate strategies (e.g. cash transfer programmes, school feeding programmes) as well as the right long-term plans (e.g. training for workers to be relocated to the sectors that are expanding because of trade).

An example of unsatisfactory pro-development outcomes due to lack of coherence and coordination is the disconnect between commitments towards gender equality and women's economic empowerment on the one hand, and trade policy instruments on the other. By and large, all countries have made commitments to gender equality at the national level, for example by including these in their constitutions and other main legal texts. They have also ratified a number of gender-specific conventions at the multilateral level, such as the Convention on the Elimination of All Forms of Discrimination against Women. However, gender considerations seem to disappear or to become marginal once trade and other macroeconomic policies are designed and implemented, or trade agreements are negotiated and ratified. The inclusion of a gender perspective in the design and implementation of economic policies, including trade policy, is a way to give substance and meaning to gender equality and to the commitments for the empowerment of women taken at national and international levels.

In conclusion,

Trade has a key role to play as a potential enabler for sustainable development goals. This would imply adding some "qualitative issues" to the new goals, in order to go beyond the quantitative targets. As far as trade is concerned, these could include improving predictability, reducing policy conditionality, addressing fragmentation, and reducing the incidence of tied aid. And, in addition to assessing the fairness, predictability, openness and non-discriminatory nature of the international trading system, targets and indicators could evaluate and monitor how trade contributes to inclusive development and to reducing inequalities, including those based on gender. All of this would help countries to make the best use of policy space at the domestic level and ensure alignment and synergies between the national and the international levels.

In the design of the post-2015 agenda, we need to know better what the conditions, policy mixes and best practices are in order to make use of trade as a means for sustainable development.

This is the challenge before us today and on the road ahead to 2015.

UNCTAD stands ready to support member States in these endeavours, particularly with regard to specifying how trade can fit into the overall sustainable development goals and post-2015 development agenda framework. We will continue to analyse and identify - and help countries design and implement - trade-related policies that can maximize the gains for development. Likewise, we will continue to deepen the discussion at the international level on how to ensure that international trade delivers a positive and catalysing impact on development, via our active participation in the process of designing the post-2015 development agenda and the future sustainable development goals.

Thank you very much.


1"True" preferential duty-free access is defined as the percentage of exports offered duty-free treatment under the Generalized System of Preferences for least developed countries, and other preferential schemes, compared to products offered duty-free entry under most favoured nation (MFN) treatment.


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