ITC Executive Director remarks at the opening plenary of the Aid for Trade Global Review (en)

4 julio 2019
ITC Noticias
Speech delivered by ITC Executive Director Arancha González at the opening plenary of the Aid for Trade Global Review
Geneva, Switzerland

Prime Minister Hun Sen
WTO Director General Azevedo
OECD Secretary General Gurria
Ministers and heads of agency
Ladies and Gentlemen

There is a strange contradiction about the world we live in. By many objective measures – extreme poverty, hunger, child mortality, literacy levels- we’re doing better than ever before. And yet, the world sees itself mired in geo-politics, with the value of multilateralism questioned and with the working poor increasing, especially in middle income countries.

My intention is not to argue either case. But the fact is that three major revolutions are giving people everywhere reason to feel uneasy about their lives and future prospects:

First, a digital revolution that is fundamentally changing the way we produce, we trade, but more importantly we work. New business models, and a fourth industrial revolution that combines digital and physical technology, come with risks for job creation, as well as opportunities.
Second, an ecological revolution: climate change and other kinds of environmental degradation are exacerbating existing inequalities. We cannot let this happen.

Third, a social revolt. Economic insecurity drives angry politics. Sluggish growth, or growth that has been unequally shared, has fuelled voter dissatisfaction across the world, in developing and developed countries alike.

Our response to each of these revolutions has the potential to lead us towards a more equitable, sustainable, and prosperous future. The question facing us this week is “How can trade contribute to getting us there?”

We should be very clear. When it comes to the challenges we face today - on economic and social exclusion, on environmental protection, and on governing the digital economy - trade and the trading system can be part of the solution. We must ensure it is part of the solution.

Trade has played a key role in the 'structural transformation' process that is at the heart of economic development. This transformation is about shifting people and resources out of subsistence activities and into work that is more productive. Over the past forty years, many countries were able to grow much faster than they otherwise might have by being open to using trade as a route to growth. Millions exited poverty.

Trade-led development was enabled by the predictably open global markets. The rules-based multilateral trading system allowed countries to diversify their economies and export baskets. Businesses could invest in moving up the value chain, or in new sectors, and be relatively confident that unexpected trade barriers were not among the risks they faced.

But not every country was able to seize the opportunities presented by trade. Many developing countries remain reliant on a single export product, making their economies deeply vulnerable to price volatility, climate change and even political violence. Dependence on a single service like tourism is risky for Small Island and coastal countries cruelly exposed to extreme weather events and a changing climate.

Particularly among least developed countries, landlocked developing countries, and fragile states, too many have remained on the margins of the global economy, exporting raw commodities if anything at all. This is why the Aid for Trade initiative was set up in the first place in 2005.

Even in countries that were more successful at tapping into global markets, the gains were not always widely shared. That is why it matters so much to connect micro, small, and medium-sized enterprises to international value chains. When they thrive, the benefits of trade and growth are spread across society. This is why MSME competitiveness is at the heart of ITC's work.

Trade-led development today faces two serious challenges.

The first one is in the news every day. The open global economy is under threat. Trade restrictions are growing. The very notion of rules-based cooperation on trade has come under sustained political pressure. We risk the fragmentation of markets.

An unsupportive global economic environment would make it much harder, if not impossible, for marginalized countries to generate jobs, and end extreme poverty by 2030. We would miss the Sustainable Development Goals.

The second challenge gets less attention, but could be even more profound. Technology is changing the face of structural transformation.

Once it was about workers moving from farms and into factories, starting from textiles and clothing. Then it was about the fragmentation of factories into multi-country value chains, with component production, processing and assembly located wherever it could be done most competitively. Now sophisticated machines mean that factories don’t need as many workers as they once did. Industry is less labour-intensive. The market case for locating production in developing countries is also shifting.

In response to the first challenge, we must make the case for open markets within a framework of rules. They- you- should invest in creating the rules, also in the WTO, whether on fisheries subsidies, on e-commerce or on investment facilitation.
To the second challenge, we must respond by promoting greater value addition across the board, in agriculture, industry, and services.

On both, we must ensure the gains from trade and value addition are socially inclusive. MSMEs are an important part of this, as is smarter social safety nets. But it is also supporting women in trade by correcting the policy and market failures that keep them out of our mainstream economies.

It is not about ‘talking to feel good’. It is about ‘acting smart’. Governments, the private sector, and civil society all need to act to empower women as economic equals – as it delivers results in terms of growth and equity. When you do, you get amazing results like this first ever chocolate bar made by women small farmers in Liberia.

The trade community can help.

It can create a better domestic enabling environment for women to trade. This is why we have created the ‘She Trades Outlook’, a dashboard with over 90 indicators helping countries understand where to focus a priority in support of women’s economic empowerment. But also by ensuring women are not discriminated in trade policies.

This is where we must ensure concrete steps we could take at MC12 on women and trade. The Buenos Aires Declaration was a beginning, not an end. We can also invest more Aid for Trade resources to support women in trade.

We can also help change stereotypes. Many people still ask: are there women experts in trade and economic governance matters? We are determined to ensure this question is not asked again. Therefore, we invite you to join us at the launch of ‘Women Shaping Economic Governance’- a book with contributions from 28 women from all around the world with suggestions to shape our economies.

It has never been better to be a young entrepreneur than today. And yet skills mismatch and lack of access to affordable finance prevents many youth from thriving in trade. This is what ITC’s contribution to ‘At A Glance’ shows. Here is another clear role here for aid for trade.

Nobel Prize winner Amartya Sen famously argued that development is really about giving people opportunities to use their capabilities. When you empower a young women entrepreneur to connect to overseas buyers, when you help make it possible for a youth-run firm to expand into neighbouring countries it does more than create jobs. It enables people to pursue their aspirations and capitalise on their abilities. And that is why we are here this week. This is why it matters that we keep investing in Aid for Trade.

Thank you to the WTO Secretariat for brining all of us here. I wish you a successful AfT Global Review.