Committee on Trade and Development, World Trade Organization 50th Session on Aid for Trade
Thank you, Deputy Director-General Agah
Thank you, Ambassador Mohammad Qurban Haqjo
I am delighted to be here in my capacity as the newly appointed Executive Director of the International Trade Centre (ITC). ITC has often been described as a 100% Aid for Trade agency; therefore, I thank you for inviting me to deliver keynote remarks to today’s 50th session of the Committee on Trade and Development (CTD).
We are living in turbulent times. Health and economic challenges have brought parts of our global ecosystem to a virtual standstill. Micro, small and medium-sized enterprises (MSMEs) are fighting for their survival, and people around the world, especially the most vulnerable, are losing jobs and income. On a scale closer to home, in this ‘house of trade,’ the WTO itself grapples with its role and relevance.
However, the one constant has been the power of trade to restart and reinvigorate the global economy. Trade at the local level as MSMEs fight to remain open. Trade at the regional level as countries struggle with the delicate balance of allowing vital medicines and essential products like food and healthcare-related equipment, while also protecting their population. And trade at the global level as we see the devastating impacts on tourism-dependent economies with the closure of borders. It may seem counter-intuitive, but during this time of decreasing trade, we at ITC have seen an increase in the demand for Aid for Trade assistance as countries and businesses recognize the need to prepare for a post-pandemic world.
Aid for Trade will matter for economic recovery from the COVID-19 crisis. Without MSME recovery, they will simply be no COVID recovery! The WTO Aid for Trade work programme is an essential ingredient in ensuring that international cooperation and trade play their role in helping all countries build back better.
We all know that MSMEs are the backbone of national economies worldwide, accounting for 60 to 70% of employment, 50% of value addition created every year and more than 95% of all companies. But they are not just numbers. They are also the main engines of inclusiveness by employing women and young people, and a critical factor of resilience, by generating revenues for poor or excluded communities in the formal or informal sectors. In many ways, taken together, MSMEs are “too big to fail.”
As the only international organization fully dedicated to supporting the competitiveness of MSMEs, ITC has allocated all possible resources to assist our stakeholders in weathering this crisis and preparing them for the future. Trade must be ‘good trade’ and ‘smart trade.’ And Aid for Trade must support this ‘good’ and ‘smart’ trade.
Through our network of business support organizations, we reached out to businesses across the globe to understand their concerns and needs. We developed a 15-point Action Plan, with concrete advice for small businesses, business support organizations and governments to help small businesses.
Our assistance to MSMEs has taken multiple forms. We are, for instance, working with MSMEs to move their business online or to go into new product lines – ITC’s FastTrackTech initiative has provided many solutions to African tech-entrepreneurs by providing individual coaching sessions and distributing internet access credits in Burkina Faso, Mali, Niger, Rwanda, Senegal and Uganda. Together with major international private-sector partners, we delivered new content and modules on the SheTrades.com platform, and workshops on the SheTrades virtual learning space. Through our trade policy work, we provide implementation support to countries in applying relevant trade facilitation measures at the border and training border officials on inspections in emergencies and the classification of medical goods and pharmaceuticals. With the Global Trade Helpdesk, a joint ITC-UNCTAD-WTO effort, we have introduced specific COVID-19 features that help MSMEs assess how border measures at home and abroad are evolving and potentially affecting their businesses. For example, the WTO Informal Working Group on MSMEs and ITC are working to scale the impact that the Global Trade Helpdesk has to empower MSMEs with the trade intelligence they need to make informed business decisions.
During the last CTD meeting, you discussed the consequences of COVID-19 and the impact of response measures for the Aid for Trade agenda, particularly the risk that the COVID-19 crisis might wipe out certain development gains. Like many of you, I share the same concern, and I concur with the importance of a coordinated response. Let me share some thoughts on the way forward and suggest three Aid for Trade priorities for the upcoming period.
First, enhance digital penetration, and MSME access and connectivity so that they can expand trade online and take full advantage of the virtual world. Indeed, lockdown restrictions due to COVID-19 have led to a rapid global shift to digital platforms. For example, e-commerce has shown its value to MSMEs in this period. We have seen this with our ecomConnect project for women entrepreneurs in Central America. Many have integrated digital solutions to serve customers or search for new demand sources. Still, lower survival rates among MSMEs and uncoordinated post-COVID recovery plans have raised concerns that current support is not enough and could lead to lower long-term growth rates. Digital can be a central instrument in making sure MSMEs remain connected to markets and included in recovery plans. Still, we have to close the gap between the rhetoric and reality. The truth is that digital penetration in many developing countries is sub-optimal, which risks creating inequality of access in the virtual space. Aid for Trade has an incredibly important role to play here in bridging this divide.
Second, build the right business case for MSMEs and green growth. Climate change was ranked as the top global business risk in a 2019 survey of insurance industry experts. In parallel, MSMEs have the lowest financial, physical, and human resilience to climate disasters – making them vulnerable. In the post-pandemic period, expect this to rise to the top of the risk register again.
Countries around the world recognize the need to pivot to a “green recovery.” MSMEs need to be a fundamental part of that vision. Environmental sustainability is likely to be more critical in the post-pandemic global economy. For this reason, retrofitting for both COVID-19 sanitary requirements at the same time as environmental sustainability may be wise. But we need to build the business case for MSMEs to show how investing in environmental action today can improve future profits. Realistically, for MSMEs, the business case for investing in emissions reductions and climate change adaptation depends on its financial viability. This must be part of a new Aid for Trade drive. In that regard, ITC is gathering policymakers, business support organizations and innovative MSMEs − including the first person to ever fly across the world in a hot air balloon! − at its first Good Trade Summit this week, on 7 October. I invite you all to participate.
Third, regional integration and South-South cooperation will accelerate and become drivers of more significant trade and development opportunities. This is a top priority for us. This year, ITC is stepping up its efforts to support the African Continental Free Trade Agreement (AfCFTA). ITC has worked shoulder-to-shoulder with the African Union Commission and the European Union to establish the African Trade Observatory and the Trade Negotiation Tool. These will provide critical up-to-date trade data and statistics for policymakers across the continent to monitor the progress of economic integration in the AfCFTA area. ITC is also joining forces with the U.N. Economic Commission for Africa to help governments develop national trade strategies in line with the agreement.
On the ground in the Caribbean and Africa, our EU-funded Intra-ACP Project, Alliances for Action, strengthens agricultural value chains against climate change effects, fluctuating commodity prices, and the fallout from the pandemic. In Africa, the Caribbean and the Pacific, our work will be boosted by a new United Kingdom Trade Partnership project to explore new markets, prioritize value-added products, digitalize, strengthen the creative industries’ value chain, and support COVID-19 affected businesses in particular women-owned ones.
Central to all of this is Aid for Trade. Now is not the time for the development community to retreat. I appreciate that all of us − large and small, developed and developing − are facing the economic fallout of the pandemic. But developing countries, especially the least developed, the landlocked, the small island states and small, vulnerable economies, and the fragile and post-conflict states, do not have the reserves, the safety nets or the ‘whole of economy insurance policy’ that many more resilient economies have. Aid for Trade is that safety net.
Once again, thank you for having me. ITC remains ‘open for business,’ and we are here to be your partner in the recovery. I hope to see all of you on 25 November at our annual JAG, a hybrid event this year, hosted at the WTO and virtually.