International Parliamentary Conference on Growth for Development
19 November 2014
Ladies and Gentlemen,
I feel greatly privileged by your invitation to participate in the International Parliamentary Conference on Growth and Development at this august venue.
The discussion on the role of parliamentarians in managing economic growth for equitable development is quite timely. Your focus today on mobilizing domestic resources is particularly important, especially as we in the United Nations system prepare to engage in a post-2015 development era, where our efforts will be directed at achieving the ambitious sustainable development goals, currently under discussion by the United Nations Member States.
Let me share with you a few points on what I believe are four central issues. First, on what I see as the current state of international trade. Second, on the role of UNCTAD and the type of trade that enables sustainable development. Third, on UNCTAD's technical assistance work in developing countries. And fourth, on the important role parliamentarians can play in ensuring that trade lives up to the expectation of delivering prosperity for all.
Trends in International Trade
Let me start with a brief outlook on the current state of global trade.
The trade winds have not been picking up since the big plunge of 2008-2009. Trade in goods and services remains far below its pre-crisis dynamism.
In the two decades preceding the global financial crisis, trade was expanding more than twice as fast as the world economy. While the global economy expanded at an annual average rate of 3 per cent, global trade was expanding at a pace of 6.8 percent. Today, six years after the crisis, trade is still growing slower than the world economy as a whole. Merchandise trade grew slightly above 2 per cent in volume in 2012-2013, which remains below the growth of global output of 2.3 per cent.
Our concern at UNCTAD is that trade alone will not be able to kick-start a global recovery, and that the recovery from the crisis remains weak.
We are encouraged, of course, by two breakthroughs last week at the WTO. First, as you may know, India and the United States came to an understanding on two decisions made at the Bali Ministerial Conference last December on trade facilitation and on public stockholding for food security purposes. Secondly, China and the United States reached an understanding on an expansion of the WTO Information Technology agreement. Most importantly for us at UNCTAD, WTO members will now move forward to implement the Trade Facilitation Agreement, and will also chart a roadmap to address the unfinished business of the Doha Development Agenda.
Despite these encouraging steps however, we must keep in mind that facilitating trade flows by simplifying customs procedures will be helpful in making the trading system more efficient over the long term, but it will not address the main constraints on trade today. International trade has not slowed in recent years because of higher trade barriers or supply-side difficulties: mostly, it has slowed down because of weak global demand.
For this reason, at UNCTAD we think that in the current situation, to expand trade at the global level, a stronger domestic-demand-led output recovery is needed at the national level. Supporting the types of national level policies that can both enable stronger domestic demand and that can help countries get more out of their trading relationships is one of the key pillars of our work at UNCTAD.
UNCTAD and Trade for Sustainable Development Outcomes
Let me now tell you a little more about UNCTAD and what we do.
The United Nations Conference on Trade and Development - was founded exactly fifty years ago in Geneva. Back in 1964, it was the largest conference ever held. According to some commentators, the conference was the scene of global bargaining between poor and rich nations.
Since then UNCTAD has had the explicit responsibility of formulating principles and policies on international trade and related problems of economic development. To identify those principles and policies and then implement them, research, debate, and technical cooperation have been the hallmark of our work since day one. Or, as I like to sum up our functions: Think, Debate, and Deliver.
Over the years UNCTAD has acted as a forum that brings together people, countries and organizations with differing views and experiences.
Needless to say, we do believe that trade is fundamental for sustained economic growth. But if you allow me, I will share with you some of the lessons we have learned over our half a century of history on when trade can contribute to development.
Trade can be an important engine of growth, but in the absence of complementary economic and social policies, it will not necessarily lead to development that is lasting, inclusive and environmentally sustainable.
This is why we do not look at trade in isolation, but rather in relation to investment, technology and innovation, overall human development.
When we speak of trade as an enabler of development, we are not only talking about liberalization of trade rules or export-led growth, although these have proven successful in certain instances. We are talking about trade as a commercial exchange that can contribute to development. This trade happens both within countries and across borders.
Trade can energize the economy. Trade can tie countries to each other, regionally and internationally. As such, trade among countries helps to promote peace and security.
For individual countries, international trade can contribute to economic development by enlarging markets, creating economies of scale, promoting export led growth, transferring technology and knowledge, among others.
However, the benefits from trade are not automatic and it can also have negative impacts. When not accompanied by social and economic policies, trade can create as well as destroy jobs.
Without industrial policies, trade can create enclaves, with benefits failing to feed into the wider economy or population.
The extent to which trade does contribute to sustainable development depends most of all on wider, complementary policies and strategies in other domains. These strategies should aim to deliver development and consider trade as part of the bigger picture. And this is the approach to trade that we should weave into the Sustainable Development Goals and the means of their implementation.
What UNCTAD does to support developing countries?
This brings me to my third point. What forms of assistance does UNCTAD offer to developing countries? What specific policies do we address?
Given our vision on trade and its connections to investment, finance, technology and sustainable development, UNCTAD assists countries in a wide range of issues.
Besides our research and consensus building activities, technical assistance is one of the three pillars of our work. My intention here is not to give you an exhaustive list of everything we do, but just some examples that show the breadth of our work.
We assist countries to improve and automate custom procedures, which facilitate trade and help fight corruption. Our ASYCUDA program is currently deployed in more than 90 countries worldwide. We also assist more than 50 countries on debt management, improving significantly the way developing nations can manage their economies.
Our technical assistance work also includes tailor made analysis and recommendations in areas of UNCTAD's expertise, based on our research and consensus building activities.
For instance, our investment policy reviews have provided 36 countries with an objective evaluation of their legal, regulatory and institutional framework for foreign direct investment. These reviews also offer advice on how to attract increased direct investment, and maximize the benefits from it.
Similarly, a number of developing countries have benefitted from UNCTAD's expertise and review of their national science, technology and innovation policies, amongst them countries like Angola, Ghana, or Mauritania, here represented. Our work has an impact in policy making. Just as an example, the recommendations of our most recent review in Oman are being used by the Government to feed into its long-term development plan, called Vision Twenty-Forty.
We cover a very wide spectrum of issues related to trade that I cannot enumerate if I am to comply with the time allocated.
But before going to my last point, I think it may be interesting to tell you about a new product that UNCTAD is about to launch: an in-country training for Cabinet members on global macroeconomic and development issues. The training would aim at helping cabinet members to have a better view of global macroeconomic issues and what policies can assist them in their decision making process.
What parliamentarians can do?
Ladies and Gentlemen,
Creating the type of trade that is needed to deliver on the post-2015 agenda is the challenge before all of us. And I would like to use this opportunity to mention some of the ways in which you could help to build the sustainable trading system we need for the future.
First of all, parliaments are pillars of democratic governance, with a critical role in spurring and sustaining national action towards the Sustainable Development Goals. You are powerful agents of change.
You do and can do more to guide the executive branch by providing trade policy vision and strategic guidance, rather than just approve the results of the treaty making process.
You can help ensure that there is policy coherence, and design the complementary policies that are needed to take the gains from trade to the vast majority of the population. This effort includes making sure that trade policy is coherent with industrial, fiscal, social and educational decisions, in a context of shifting global trade patterns.
Parliamentarians can help fill in education, labor and social gaps arising out of job losses or distortions caused by trade shifts.
You can be very effective on many fronts.
And your role is fundamental in ensuring that trade openness leads to more competition, and not to the entrenchment of singular economic interests.
When trade is not fostering progress in your constituencies, but only in the pockets of a privileged few, parliamentarians should be there to take action and enact laws that ensure trade works for everyone.
Ladies and Gentlemen,
In the words of Pope Francis who has called on the international community to combat what he called "the globalization of indifference", you are fundamental in ensuring that legislation "puts people and their wellbeing at the centre of economic and political life". Doing so will make trade and the other means of growth result in prosperity for all, which coincidentally is the motto of the UN Conference for Trade and Development.
Thank you very much.
