Opening statement by the ITC Executive Director at the 48th session of the Joint Advisory Group (en)
Delivered on 11 June 2014 - WTO headquarters, Geneva, Switzerland
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Ladies and Gentlemen
Let me start by thanking Director-General Azevêdo for hosting us at the World Trade Organisation today.
It is a great pleasure for me to address you today at my first Joint Advisory Group meeting after assuming the role of Executive Director nine months ago and in the year that the International Trade Centre celebrates its 50th anniversary. The testimonials we have just seen from the United Nations Secretary-General and many more friends are but one illustration of the specific role of the ITC in the United Nations family.
Fifty years is a milestone. The rich discussions yesterday in the high level panel debate and the launch of the “ITC at 50” publication confirmed this. A number of important 50th anniversary events are being commemorated in 2014. 1964 was something of a revolution in many respects. We share this occasion with UNCTAD which also celebrates 50 years of ‘prosperity for all’. 1964 was also the year that Martin Luther King was awarded the Nobel peace prize and the Civil Rights Act was signed; it was the first time that women’s’ volleyball was played in the Olympics; it has been 50 years since the introduction of the Duracell battery and Nutella; 50 years of Ford Mustang automobile production and it’s the golden anniversary of Roald Dahl’s ‘Charlie and the Chocolate Factory’ and of Disney’s ‘Mary Poppins’. As I said, 1964 was a year of revolution and obviously a year of creativity!
ITC is what I have often termed a ‘strange animal’. It is a development agency which brings together three different but inter-related strands:
- the WTO focus on trade opening through multilateral negotiations;
- the United Nations focus on poverty reduction and development;
- and the on the ground focus of the private sector on leveraging growth through trade and investment.
We are a hands-on, pragmatic and technical organisation that focuses on providing solutions to SMEs. The context that we are operating in is clear: the post 2015 discourse and renewed multilateralism very much led by the adoption of the Trade Facilitation Agreement in Bali.
You have all been provided with the ITC Annual Report 2013 detailing our activities as well as development and corporate results. In the interest of transparency and in order to ensure greater accountability, we have provided more detailed information both regarding our projects as well as at the corporate level. Last year we spent close to 84 mio USD, slightly up from 2012, with close to 40 mio USD in projects funded by extra budgetary support. This represents a slight decrease reflecting consolidation, planning for the next generation of projects and transitioning to a new management.
As you have seen from our Operational Plan 2014 which for the first time was shared with ITC’s members, we have set ourselves an ambitious but achievable expenditure target of extra-budgetary resources of US$ 51.8 million in 2014 representing a 30 % increase over last year. I am pleased to inform you that mid-way through the year we are well on track to achieve this target. I do not intend to walk you through the Annual Report but will, instead, focus on the most salient points of the last months of ITC’s work.
For any organisation that enters its 50 years there is a degree of soul searching that occurs. I welcome the trust that you continue to have in the ITC as we continue to deliver trade impact for good.
The fact that we have had an independent external evaluation this year has helped us undertake that internal assessment. This evaluation has been an important input for me since I took up the post and has been a useful platform from which we can benchmark our expertise and better measure our improvement going forward.
One of the two central conclusions of this evaluation depicts the organization as “providing high-quality services, that are relevant and responsive, effective and having achieved their intended immediate capacity-building outcomes with clear prospects in most cases of contributing to their higher level goals”. This type of independent validation provides fuel to move forward. The evaluation will be discussed in greater detail at a later stage over these two days but I felt it important to log its importance as a management and guidance tool for me and the staff at the ITC.
On the subject of the ITC staff I must place on record how much of an honour it is to work with so many talented experts who have demonstrated creativity and commitment to innovate and deliver results. I am also very pleased to take this occasion to introduce you to the new additions to the Senior Management team at the ITC. Ms. Dorothy Tembo whom many of you know well, has been appointed by the United Nations Secretary-General as the new Deputy Executive Director. Mr. Ashish Shah is the new Director of the Division of Country Programmes; and Mr. David Curry is the Director-designate of the Division of Programme Support. As this is her last JAG I take this opportunity to thank Ms. Eva Murray, Director of the Division of Programme Support for all of her years of solid commitment to the ITC.
ITC has grown in reach and in impact yet we remain a relatively small, lean and compact organisation with a clear mandate and a dedicated focus to assist small and medium sized enterprises to enhance their international competitiveness.
What I am proposing to you today is that we firmly remain within our remit, within our clearly defined mandate. But it is also clear that there is still much room for us to grow within this mandate and we look to you, our partners, to collaborate with us to maximise results and multiply impact. There are a multitude of elements where we can focus just as there are a series of steps which SMEs must undertake to reach the market and benefit from trade. Focused and balanced growth is therefore our proposed way forward.
Given the estimates that more than 95% of enterprises across the world are SMEs accounting for close to 70% of employment- with this even greater in low income countries where the employment share is close to 80%, our focus on SME competitiveness is sound. We know that 85% of total employment growth between 2002 and 2010 was attributable to SMEs. But we also know that in the SME ecosystem, there are many that never make it past the first year of business. There is a high mortality rate amongst start-ups. We must ensure that the survival rate improves. We also know that high-growth enterprises play a disproportionate role in job creation. The two major distinguishing characteristics of high-growth SMEs are their export orientation and their innovation capabilities. We must work to help survivors move up the value chain and internationalise. ITC is your partner in doing this.
My vision for the ITC is a simple one ‘doing more and doing it better’. And this is precisely what we have started to do in the last ten months.
Doing more and better entails innovating to respond to the changing and growing needs of our partners – with our focus remaining on LDCs, LLDCs, SIDs and Sub-Saharan Africa - and our client base: the SMEs in developing countries, the trade support institutions such as trade and investment promotion offices, the chambers of commerce and the sector focused agencies, with a particular attention to women economic empowerment and youth employment.
It also means being more attuned to the transformations in the topography of trade. SME competitiveness issues are very much at the heart of the Post 2015 debate and are, in many respects, the growth incubators of the future. Changes in the way that goods and services are produced, traded and consumed have been brought about by advancements in transportation and technology. Harnessing the potential of value chains for SMEs will also increasingly guide our work going forward. Supporting regional value chains will be a particular focus as we situate this within the regional integration agenda, in particular in Africa. On this we will be guided by the direction given by African Union Ministers to ‘boost intra-African trade’ given the current low levels of trade between African countries, by helping to build the capacity of the private sector to produce more and improve quality and to understand the necessary metrics required to access markets both regionally and globally.
Doing more also means moving from products to offering solutions to address the demands of the market. It is clear to me that ITC is in the right lane. We offer tailored solutions based on needs assessment and constant dialogue with the member states, the trade promotion organisations and trade support institutions in the country or region. This suite of solutions is along the whole of the value chain ranging from product development and branding to market intelligence and capacity building to meet private standards. Our capacity building solutions are directed at SMEs, trade support institutions and policy makers.
We have grouped our solutions around six baskets, which will from now on inform our interventions and hopefully be a good basis for donors to finance these interventions. The six baskets are a clear signal that we intend to focus our actions and avoid “spreading ourselves too thin”. But it is also clear that we must be the best with regard to our technical expertise in these six baskets. For that we are working on improving our offer in several fronts: services, trade facilitation, strengthening trade support institutions and on SME competitiveness.
Services have become the backbone of our economies. For many developed countries, services account for more than 70 per cent of GDP; for LDCs alone in the six year period to 2011, LDC commercial services exports have more than doubled, growing twice as fast as the world average. We are investing in trade and market intelligence on services, on helping developing countries address regulatory barriers to services trade and in building the capacity of SMEs in the services sector.
Tourism services are a particular sector where demand is growing and ITC has a strong presence in linking local value chains to the tourism industry and creating backward linkages. We are growing this pipeline through partnership with the UNWTO.
The second area concerns non-tariff measures (NTMs) and in particular trade facilitation. A December 2013 ITC survey of SMEs in developing countries confirmed just how important it was to identify and address NTMs. Close to 70% of LDCs SMEs reported facing burdensome NTMs including difficulty in accessing finance and cumbersome administrative procedures. The WTO Agreement on Trade Facilitation is a critical response to addressing non- tariffs obstacles to trade faced by SMEs related to border procedures. ITC’s NTM and trade facilitation Programmes are already responding to these challenges.
A few days after the Bali Agreement we published a Business Guide to the Trade Facilitation Agreement which has been translated into seven languages and has become the most downloaded publication in ITC’s history. We have also recently published a handbook on notification timelines under the Agreement. We are helping WTO members and countries in accession to categorise their commitments under the Trade Facilitation Agreement. As of today we have received over 25 requests from developing countries to do this-15 of these from LDCs. By the end of July we hope to have completed this work giving these countries the tools they need to notify their measures to the WTO. This is how we will be able to move to helping those needing assistance to implement the deal. We are a trusted partner for many developing countries and we hope that the donor community will be responsive. And I want to reassure you that our technical assistance on trade facilitation is being provided in close partnership with other international organisations, starting with WTO, UNCTAD, WCO and many more, as well as with the private sector.
On trade support institutions, we have just developed a set of tools to help them improve their performance in assisting SMEs to internationalise. Strengthening institutions is an important contribution to ensuring the long term sustainability of ITC’s support.
On SME competitiveness, we have started developing an integrated programme under a value chain approach to help SMEs internationalise. In addition, we are working to develop an index where SMEs- in both developed and developing countries- can assess their level of ‘competitiveness’ against a set of indices. This would allow for a mapping of current fitness and create a roadmap to improving efficiency and contribution of SMEs to national growth.
In these areas and in many others such as WTO accession, rural development, access to finance, e-solutions, government procurement related to women owned businesses and the development of national and sectoral export strategies, the ITC is a neutral partner. There is no political agenda or parachuting of assistance. It is demand driven and focused on providing technical solutions and tools to our clients. This is a major strength on which we intend to build.
ITC is also very much contributing to the Post 2015 development agenda discussions, both in New York as well as here in Geneva around the excellent work initiated by Dr. Kituyi. We have a unique opportunity to shape our universal agenda for eliminating poverty and ensuring a sustainable future, firmly rooted around a set of goals and targets. The growth dimension must be central to this. The role that trade, SME development and entrepreneurship can play in supporting global sustainable and equitable growth and decent jobs should be appropriately addressed, in addition to crafting indicators to monitor and measure progress made in these areas. ITC is seeking to advance the growth component by supporting language that reflects just this. We are contributing to develop measurable indicators that can track and evaluate progress and which provide useful tools to countries and communities to move forward.
An important component of our contribution has been around women economic empowerment. Investing in the economic empowerment of women is investing in the economy, the society and in the household. 30-50% of SMEs in client countries are women owned and tomorrow evening you will see this economic empowerment in action as ITC showcases how the value chain “from cotton to the catwalk” can produce economic opportunities for women entrepreneurs that go beyond just a decent job and incorporate better housing, education and nutrition through the proclivity of women to reinvest in their society. This goes hand in hand with SME competitiveness in the ITC philosophy: linking more women owned enterprises to markets, which is what our ethical fashion initiative and Women and Trade programme stand for.
Constant innovation and providing cutting edge solutions has to be the focus so that we can provide transformative support and not simply “sprinkling” of actions.
For that we have enhanced our partnerships starting with UNCTAD and WTO but beyond that with joint work being undertaken with UNDP, UNIDO, UNWTO, WIPO, FAO, EIF, UN Global Compact, UNWomen, Regional Economic Commissions in Africa, SIECA in Central America, the Pacific Islands Forum, CARICOM in the Caribbean and many others.
We are also upscaling our partnerships with the private sector and just yesterday we have signed an MOU with Bosch to cement our long term relationship on supply chain management. And with the World Economic Forum and Bain on trade facilitation. We see this partnership with the private sector also taking the shape of B2B linkages and as a platform for connecting trade and investment. This will be an important component of our World Export Development Forum (WEDF) meeting in Rwanda September 15- 17 2014.
ITC is also making headways in what I call the ‘back office work’ of the organisation. This is the area on which we have focused a lot of energy in these last months. Unsurprising this is also the area where the independent evaluation is suggesting we put greater efforts. Many of their recommendations have already recently been put on track and, being recent, have not been fully captured in their report.
Let me briefly mention some of them and we will go into deeper detail when we address the results of the independent evaluation. We have undertaken a strengthening of results based management, including, for the first time, undertaking an impact analysis of our projects, the preliminary results of which have been shared with you at a seminar last week; we are improving project management and have made great strides in improved project design and project quality assurance; we have advanced a costing exercise to better understand how each dollar is spent; we are building an accountability framework for the organisation as well as a risk management plan. Finally, we are investing in knowledge management and training of our staff. As you can see a lot of efforts are already in train and more is to come along the recommendations of the independent evaluation.
But to fully deliver on all of this, financing needs to follow. There is a need for more, more stable and more predictable financing, as the independent evaluation has indicated. Adequate financing will be essential to ensure ITCs actions are truly transformative. In addition to financing of the ITC, there is much more that we can jointly do to leverage decentralised donor funds in-country, as well as better leveraging support to other multilateral organisations in those areas where the ITC has proven and well recognised expertise.
The ambition behind ‘doing more and doing better’ is a simple one. We must ensure ITC is your partner of choice in strengthening SMEs and using trade to internationalise SMEs.
Let me thank Director-General Azevêdo and Secretary-General Kituyi as well as all of you for the strong support you have afforded me in these my first months in the job. Let me also stress my full support in ensuring ITC responds rapidly and professionally to the needs on the ground
I look forward to our discussions.