Asia-Pacific ready to lead and shape sustainable trade and development

15 September 2014
ITC News

Export-led growth needs to be supplemented by complementary measures and policies, not least by social protection and employment policies to make trade and investment more inclusive, writes UNESCAP Executive Secretary Shamshad Akhtar.

The recent and striking success of Asia-Pacific countries in boosting growth and reducing poverty is testament to the importance of trade as a driver of growth. Rapid integration of Asia and the Pacific with the global economy through trade, investment and technology transfers has lifted an average of 42 million people in the region out of absolute poverty every year since 1990 ( Asia-Pacific Regional MDGs Report 2012/2013 – Asia-Pacific Aspirations: Perspectives for a Post-2015 Development Agenda, ESCAP/ADB/UNDP, 2013).

Trade-led growth has not, however, benefited all people equally. Too many barriers to inclusion remain, especially for our poorest communities. In particular, least developed countries (LDCs), landlocked developing countries (LLDCs) and economies in transition still face daunting challenges to enhance their trade.

At the Rio+20 conference in 2012, global leaders recognized trade as a key means of implementation for sustainable development ( The Future We Want, outcome document of the Rio+20 Conference on Sustainable Development). As the world now transitions from the Millennium Development Goals (MDGs) to a post-2015 development agenda anchored by sustainability,it is time to do more to harness and nurture trade for inclusive growth.

First, governments need to accelerate the building of an ‘open, rule-based, predictable, non-discriminatory trading system’ as originally envisaged in MDG 8. A global trading system that is open, equitable and accessible to all will be the single greatest contribution trade policy can make to the post-2015 agenda. A successful conclusion of the Doha Round of multilateral trade negotiations is a prerequisite to achieve these goals. Recent agreements in the so-called Bali Package concluded in December 2013 show that multilateral deals remain possible. As a first step, the World Trade Organization has launched its Trade Facilitation Agreement Facility to help developing countries and LDCs reap the benefits of trade facilitation. Still, greater efforts will be needed to finalize the Doha Round, to boost global trade and to deliver real gains in market access for developing country exports.

Second, developing countries need more assistance to take advantage of the opportunities offered by the multilateral trading system and by regional trade agreements. Many Asia-Pacific nations face barriers to trade and LDCs and LLDCs in particular face large obstacles, both in the form of weak infrastructure and outdated policies. Trade costs for Asia-Pacific LDCs can be more than double those of other regional developing countries ( Asia-Pacific Trade and Investment Report 2013, ESCAP, 2013). There is a pressing need to reduce these costs and eliminate unnecessary administrative burdens in trade and transit. This will require addressing behind-the-border obstacles, including simplifying customs procedures and wide-ranging trade facilitation measures.

As part of the broader push to mobilize finance for development, Aid for Trade (the share of which may rise for developing countries), has been a somewhat effective vehicle in channelling assistance to tackle these problems. However, traditional assistance alone will not be enough: we need to find new ways of using aid to catalyze private capital to play a more significant role in economic diversification and achieving efficiency gains.

Third, trade-led growth needs the right supporting policies to ensure inclusive outcomes. Rising inequality in many countries is a major concern. While trade is a powerful engine of growth, export-led growth needs to be supplemented by complementary measures and policies, not least by social protection and employment policies to make trade and investment more inclusive. These are needed to limit rising inequality, widen access to opportunities and bring excluded groups in from the margins.

Trade must be mainstreamed into the post-2015 development agenda. Accompanied by effective access to appropriate technology and supported by intellectual capital and resources, as well as property rights, trade will help integrate local industries into global value chains and create far-reaching economic gains.

Getting our approach to trade right, ensuring more equitable gains from trade for less developed countries, holding G20 members to their promise of a standstill on protectionist measures, and structuring production networks to generate jobs will have positive impacts on poverty reduction, health and climate change, to name but a few possibilities. National sustainable-development strategies need to adopt sustainable infrastructure, competitive policy environments and efficient trade facilitation systems to achieve sustainable growth in trade.

Having stepped on to centre-stage of global trade now is the time for Asia and the Pacific to lead the way in fostering multilateralism to ensure that trade helps to deliver the future we want.