unctad.org | Commemorative event to mark the 100th session of the WTO's Committee on Trade and Development
Statement by Mr. Joakim Reiter, Deputy Secretary-General of UNCTAD
Commemorative event to mark the 100th session of the WTO's Committee on Trade and Development
Geneva
24 Nov 2016

 
Current and future perspectives on Trade and Development
 
[AS PREPARED FOR DELIVERY]
 

Mr. Roberto Azevedo, Director General of the WTO
Ambassador Aparr (Uganda), Chairman of the CTD
Excellencies,
Distinguished delegates,
Dear Friends,

Good morning.

It is my great pleasure to be with you today, on behalf of UNCTAD, and celebrate the 100th sessions of the Committee on Trade and Development.

It is already more than two decades since you met for the first time. And here we are 99 sessions later in a world that has been touched by the blazing trail of globalization.

20 years ago, trade as percentage of GDP was 20%. In 2015, this figure was nearly 30%.

20 years ago, global FDI accounted for US$341 billion. In 2015, reached US$1.7 TRILLION, with FDI stock tripling as a percentage of global GDP since 1990.

20 years ago, we were 123 countries at the WTO. Today, we are 164.

To put it differently: We have never traded as much as we do today. Firms have never invested as much abroad as they do today. And we have never been as many as we are today in the global trading system.

We are living in an age of unprecedented interdependency, where the destiny of each of us is more than ever tied to the destiny of others.

This is no coincidence. Our economies did not become ever more intertwined by chance. And, as WTO members, you know it better than anybody else.

It is the result of heated debates, long days -- and even longer nights-- at the negotiation table, including in this room.

It is the result of a conscious international effort, for which WTO has been a key champion, to open up trade and investment. And not opening for the sake of opening, but because the important opportunities and benefits that every one of us - individually and collectively - recognizes that integration into the global economy could bring to our societies.

And here, let me borrow the words of a great speaker, whom I also have the honor to call my friend: Axel Addy, the Minister of Commerce and Industry of Liberia.

In 2015, at the verge of Liberia's accession, Axel was here, before us in this room, and expressed the commitment of his brave nation to international trade and WTO membership. And in doing so, he summed up, in a powerful phrase why trade is important, not only for his nation, but to any nation.

He said: "For us, trade matters, because people matter".

This is it: We should not care about trade for the sake of trade, but because the power it has to transform the lives of our peoples and their standards of living.

And trade, in many ways, has lived up to that expectation. Recent history has proved that the power of trade is not an empty promise.

Trade's expansion during the last few decades enabled the profound geopolitical and economic transformation we have witnessed in our lifetimes: the rise of the south, the emancipation of the developing world.

Many developing countries emerged and became powerhouses of growth. You can think about South Korea, China, India, Brazil, among others. But also on Costa Rica, Thailand, Vietnam, and many more, whose economic structure changed forever.

Five decades ago, developing and transition economies accounted for less than a quarter of global trade. Today, they account for nearly half of all trade. Even the least developed countries, still far too marginalized in the global economy at large, have seen an almost fivefold increase in their exports of goods.

This trade-driven transformation helped to pave the way to a remarkable story of social progress: a massive reduction of poverty around the world.

In only 20 years, nearly 1 billion people have been lifted out of poverty. Global standards of living have risen faster than at any point in history. Middle classes are swelling in emerging markets. We have witnessed progress in promoting literacy, life expectancy extending life, empowering women, and combating hunger.

Even the poorest people in the industrialised world have seen their purchasing power, and thus their living standards, go up thanks to trade.

And yet, despite all this, trade is today under fire, and - some would fear - globalization under siege.

In some developed countries, popular anxieties seem to have gained ever greater momentum and built up to a tsunami, taking the world by surprise.

The rhetoric that now also fuel growing anti-trade sentiments has had a surprising advantage: the luxury of not confronting their arguments against facts.

Yet, these sentiments - and these anxieties - about trade, about openness and about "the other" are gaining ground. And we have to ask ourselves why?

Around the world, there are mounting concerns that globalization has not lived up to its promises; that the gains from openness have not been shared equitably or fairly; and that it could exacerbate inequalities within countries.

And we know they have a point. In fact, this has been the essence of the work of this committee, and - indeed - the essence of the development agenda of trade.

We knew, from the outset, countries - especially the poorest - needed more support to better capture the benefits from trade, in a more equitable manner.

We knew, from the outset, very well that trade created winners and losers. But - if we are honest - we focused more on telling the story of the winners and neglected the story of the losers.

This omission was the refuge of populist politicians for many years. And this omission has come to haunt us.

We must now acknowledge that lack of inclusiveness comes with a high risk of eroding the legitimacy of trade policy. And this, has fed the feeling of those who see globalization as a project by the elites, and for the elites.

We now know that we have to do a better job in addressing the concerns and grievances of those affected by trade everywhere -- in developed and developing countries.

But we must also recognize and take much more seriously the challenge of including the people in the world whose life has remained broadly untouched by globalization, who continue to be sidelined from any progress the world has witnessed. We have to do a better job for them.

In fact: The paradox of today's world is that, despite unprecedented prosperity, still almost one billion people live in absolute poverty. That, despite growing problems of obesity and food-related diseases, 800 million people remain hungry. That, despite increased motorization and 1.2 billion cars worldwide, 1 billion citizens lack access to roads. And that, despite some 6.5 billion mobile phones globally, some 4 billion people remain unconnected.

All these marginalized and vulnerable citizens are not concerned about excessive globalization or excessive change brought about by trade. If anything, they have not been afforded the possibility of benefitting from trade. They need more, not less.

Doing a better job on trade also implies a more balanced assessment of the effects of trade. This means also recognizing what trade can and cannot do. Not to exempt it for responsibility, but to find the proper solutions.

Trade is often blamed for job losses, but this is to find a convenient scapegoat. This claim ignores not only the benefits of trade, but the disruptive nature of technology.

For example: Trade does not explain the relative decline in labour productivity. And trade does not account for the erosion in social protection.

Trade is not a silver bullet, but it cannot be the usual suspect. As developing countries know all too well, trade requires other policies to enhance its benefits and counter its side effects.

And this time it is not enough just to say we need complementary policies. This time we have to mean it - we have to deliver it.

We have to open the Pandora box of the so-called complementary policies. Trade needs effective competition policies, consumer protection, skills development, good governance, among other policies. Otherwise, the benefits of trade will be eroded or diluted and our negligence will come to haunt us again.

Also, while the winds of trade may be changing, we must acknowledge that it is not the case everywhere. The support for trade, and the willingness to promote further trade openness, is possibly stronger than ever in many countries in the south. Ambitous trade projects in pipeline are testimonies to that:

Such as Africa's Continental Free Trade Area, that will unite 54 African nations in a single market. It will combine a population of more than one billion people and a total GDP of more than $3.4 trillion.

Or, for example, China's One Belt One Road project is connecting some 60 countries with road and rail. It will cover about two thirds of the world's population and one third of its GDP. These, and other such initiatives, are all in the name of trade.

So while we must be vigilant in defending trade against strong headwinds in some quarters, we must never lose sight of the fact that we still have a lot of work to do to further enhance trade, especially for the benefit of the poorest among us. There is still ample scope for a forward-looking trade and development agenda, including in this house - as the global legislator for trade.

Allow me, in the interest of time, to just mention three examples:

First, the critically important WTO Trade Faciliation Agreement has yet to enter into force. We must now urgently get to this point, and beyond, to help developing countries to better integrate into global value chains. As you know, trade costs are still - on average - 1.8 times higher in developing than in developed countries. And in some Landlocked Developing Countries, trade costs are as high as 40%. Trade facilitation is increasingly shaping the frontier of competitiveness.

Second, we need to unleash the power of digital trade to the benefit of all. Ecommerce is - contrary to overall trade - growing very fast, up to six times faster than global GDP growth. Also, importantly, e-commerce also reduces the advantage of both geography and size in traditional trade. It therefore may offer new and unique opportunities to SMEs and developing countries trying to get a foothold in global markets, making trade more inclusive.

And, third, we need trade policy and trade rules to do its part to stop the tragedy of commons currently unfolding in our oceans. Tackling fisheries subsidies does not only help protecting the resources of a nation. It helps ensuring that we do not compromise the resources of future generations. And this matter is of far wider importance than merely from a trade perspective: if we fail, we may jeopardize the capacity to feed our children and grandchildren, especially in many poorer countries.

And so, my friends,

We have a lot to do for the future of trade. Restoring the legitimacy of trade policy is one of the pressing items in the agenda, but there are also many other issues.

We need trade to deliver on an ambitious 2030 Agenda.

We need trade to achieve what for long was thought unachievable: the end of poverty, the end of hunger.

And we have to make sure that trade does not falter when we most need it.

We have to make sure that we, in this room, do not falter when trade most need us.

At the end, trade matters, because people matters.

Thank you very much.


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