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The opening speeches underlined how trade impacts on the quality of people’s lives and how perceptions of this have shifted over time.
UN Secretary-General Ban Ki-moon highlighted that trade has to benefit as many people as possible. He said that trade can help to end poverty, ensure food security and foster economic growth. However, it must take into account the needs of the most vulnerable. He said trade has joined us together but there is still a long way to go. Trade must be linked with the Millennium Development Goals and discussions on climate change. He praised the work of the WTO and highlighted that bilateral and plurilateral ventures should not undermine multilateral efforts. His full speech is available here.
WTO Director-General Roberto Azevêdo said “trade matters to everyone because every day, for good or ill, it affects us all … and it affects the poorest the most”. He pointed to a study that showed perceptions of trade are shifting, and that “the greatest proportion of supporters were found in developing countries”. His full speech is available here.
In the opening debate on why trade matters to everyone, the Director-General of the International Labour Organization (ILO), Guy Ryder, said that the relationship between trade liberalization and jobs is not simple. The benefits of trade are unequally distributed and liberalization must be accompanied by other policies which prepare countries for increased competitive pressure in the labour market and which enable the benefits from trade liberalization to be distributed more evenly. He said that discussions must begin at the national level but there must also be engagement at the international level. The international community cannot be passive and must respond to public concerns.
Amanda Long, Director General of Consumers International, said that customers must be put at the heart of the debate on trade, as trade begins and ends with consumption. Laws governing trade do not always take customers’ best interests into account. Customers should therefore have a seat at the table so that trade, consumer issues and trust can be discussed at the same time.
Robert Smith, the Executive Editor for US National Public Radio (NPR), said that people’s decisions to buy certain products have an impact on lives around the world. However, people do not have enough information to make these decisions as it is difficult to follow a product’s production path and its impact on local communities. He said that the trading community must do a better job in showing what trade means for ordinary people.
Cardinal Peter Turkson, delivering a message on behalf of Pope Francis, said that trade can be an agent of development. We should therefore seek a level playing field for the world’s poorest countries. Free trade can only conform to the demands of social justice if trading partners are equal. By opening up trade and taking into consideration the needs of the poorest, a new reality can take shape.
DG Azevêdo said that dialogue is the key. This is what is needed to tackle all issues related to trade and improving people’s lives. Recognizing the issues is an important step in dealing with them. Our approach must be holistic. The WTO is a forum for dialogue and this must be the first step in achieving anything.
In his concluding remarks, the Deputy President of Kenya, William Ruto, said that trade defines and is defined by human activities. Trade has shaped the world in many ways. Africa grew from being a repository of resources to an active player in trade. A lot is still to be done, especially in terms of Africa’s infrastructure and security, and governments are acting on these fronts. He said that trade does not take place in a vacuum. Attention needs to be paid to environmental and other issues. Leaders must be held accountable when it comes to how resources are used so that a win-win scenario can be created. His full speech is available here.
Working session No. 1: BRICS and Africa: Partnership for development
Amb. Eugene Korendysov, Russia, provided an overview of current relations between Russia and African countries, particularly on mining-related issues. The BRICS (Brazil, Russia, India, China and South Africa) and African countries need a modern financial framework, as the existing one is obsolete.
Dr Brendan Vickers, South Africa, said that Africa needed to evolve from a commodity-based growth path and focus on developing its value-added industries. Africa had ambitious regional integration efforts based on “developmental integration”: market integration (elimination of trade and investment barriers) and investment in infrastructure and policy coordination. The BRICS had a strategic role to play, particularly in supporting infrastructure and industrial capacity.
Mr Bipul Chatterjee, India, said that Africa’s trade was driven by commodities. The challenge was to add value to commodities. Investments should be assessed in terms of social benefits, not only economic. Knowledge sharing, trade and investment were the main pillars of BRICS-Africa cooperation. The BRICS should support the Enhanced Integrated Framework.
Dr Olga Ponizova, Russia, presented the following facts: China is Africa’s largest trading partner. Its main partners are Angola, South Africa, Sudan and Congo (oil and minerals). India trades with Nigeria, South Africa, Uganda and Tanzania. Brazil’s trade is focused on Angola and Mozambique. Russia’s trade is rather limited and commodity-based.
Prof. Denis Ulin focused his presentation on BRICS-African investment and cooperation in the diamond industry. Prof.Tatiana Isachenko noted that trade policy and trade liberalization could provide for more active industrial cooperation. The BRICS should promote the interests of developing countries in the G-20 on sustainable development.
Ms Ekaterina Klikunova said that the BRICS should work to rebalance talent, education, jobs and the skills market. Forecasting the “jobs of the future” would enable them to update education policies.
Working session No. 2: Improving trade competitiveness in Africa: Making trade work for the poorest
The panellists said that trade does not automatically reduce poverty. Many countries in Africa export natural resources and find it difficult to transfer the gains to the poorest. The session focused on how trade can work for the poorest in Africa, with a focus on agriculture.
Trade is important to ensure the food security of Africa, said the panel. Net-food-importing countries use almost all their generated income to import food. Africa has great potential to expand agriculture and trade more regionally and internationally. However, many barriers still exist. There is a very large amount of trade crossing borders in an informal manner. Trading formally is more expensive due to associated trade costs (e.g. regulatory requirements and non-tariff measures), giving an incentive to trade informally. A farmer in Arusha may find it cheaper to export from Nairobi than from Dar es Salaam but trade barriers hinder their ability to make a choice. The poorest regions mainly comprise smallholder farmers - they cannot benefit from economies of scale and face very high transport costs.
The panel said that Africa can feed itself and become a fruit basket for the world in the future. However, policies need to be smallholder oriented. The question is how do we get them more involved? We need more synergies/partnerships, access to finance and infrastructure supporting smallholders. These issues can be addressed through trade facilitation and Aid for Trade, making it less expensive and accessible to trade formally. The African Union wants to eliminate hunger and halve poverty, using agriculture as a driver. Its decision on boosting intra-African trade and working towards a continental free trade area are key initiatives.
Ethiopia’s new Growth and Transformation Plan, said the panel, seeks to integrate the country better into the world economy (e.g. through accession to the WTO) and to make industry a big driver of economic transformation. A key focus will be on reducing the time and cost for goods to reach markets, providing information to farmers (e.g. commodities exchange) and developing vital infrastructure (e.g. roads, rail and energy). The Trade Facilitation Agreement is very important for Ethiopia as a landlocked country. Africa also needs to add value, especially in agro-foods. The growing middle class demands processed food. Therefore, there is a reliance on imports.
The panel said that trade in services is also very important. For example, Tanzanian Maasai hairdressers are in high demand in Zambia. Rural Rwandans find cheaper healthcare across their border. Educational services are more renowned in Kenya and Uganda.
The panel highlighted a number of key facts. Only 10 per cent of cultivatable land is being cultivated. Only one or two varieties of maize are being introduced in Africa compared with a world average of seven. Ugandan informal exports amount to USD 230 million. This translates into 83 per cent of the country’s formal external trade. By 2030, Africa would be a net food exporter, a significant change from today. Some 70 per cent of global cocoa production comes from Africa. Some 60 per cent of global cocoa production comes from smallholder farmers in two countries: Ghana and Cote d’Ivoire. A cocoa farmer is on average a 45-year-old male. Life expectancy in Cote d’Ivoire is 55. Young people do not want to farm cocoa. This 45-year-old farmer is most likely unschooled and has ten dependents in his household. Benefits of trade facilitation are already visible in Africa. The Northern Corridor in East Africa is seeing a 30 per cent reduction in transport costs.
Working session No. 3: Regional Trade Agreements: Competitors or forerunners of multilateralism?
Iza Lejárraga, Senior Policy Analyst at the Organisation for Economic Cooperation and Development (OECD), discussed how similar or divergent regional trade agreements (RTAs) are in different trade areas, and how homogeneity has developed over time. She questioned whether homogeneity is good or bad news. Some say yes, she said, because countries focus on similar issues, making the system more transparent. Others say that one size cannot fit all.
She highlighted several factors. RTAs have moved to a more comprehensive approach and the legal provisions have become more standardized. Nowadays, many South-South RTAs are in place, yet not many among least-developed countries (LDCs). Areas where there are limited homogeneity include rules of origin and competition law. Areas showing a reasonable degree of homogeneity include sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), agriculture, export restrictions, e-commerce and the environment. Areas showing considerable levels of homogeneity are trade facilitation, transparency, governmental procurement, investment and services.
There is a clear trend towards a higher degree of homogeneity over time. WTO-plus provisions in more recent RTAs are more similar to each other, within both North-South and South-South RTAs. The level of homogeneity does not seem to be strongly influenced by the level of development or by the number of RTA parties. Yet, intra-regional RTAs often have higher homogeneity than cross-regional RTAs. When there are international standards, there is greater homogeneity in RTAs. WTO-plus issues often derive from international guidelines issued by WTO committees. Areas that are covered by UN conventions, such as anti-corruption, are often part of RTAs as well.
Keith Hall, Chief Economist of the United States International Trade Commission, talked about the negative and positive economic impact of RTAs. Pointing out the inclusion of non-tariff measures in RTAs, he stressed their impact on non-party countries. Generally, RTAs cause positive trade creation and negative costs of trade diversion. Non-party countries suffer from inefficiencies because of trade diversion. Thus, trade diversion may undermine the multilateral trading system. While rules of origin are necessary in RTAs, they can be difficult to implement. Their cost of implementation adds to the costs of RTAs. As big countries have a large impact on RTAs, small countries may be left behind in regional trade. This cannot happen in the multilateral trading system. Yet, RTAs have the chance of achieving deeper economic integration than in the multilateral trading system.
He asked why RTAs are so popular. The reasons include easier access to another market, the desire of a developed country for trade and investment in developing countries, slow progress in multilateral integration, and the fact that non-tariff measures in RTAs create deeper commitments that reduce the potential of discrimination in future agreements. These commitments make RTAs easier to ’multilateralize’ over time in particular services.
Richard Baldwin, Graduate Institute of Geneva, highlighted the need to multilateralize regionalism since international commerce has changed profoundly. As the political economy of RTAs has changed, multilateralism will also be very different. The contemporary multilateral trading system was designed for goods crossing borders. Nowadays, trade also means factories crossing borders: goods, know-how, ideas, capital and people. The nature of trade has changed in the global value chain (GVC), creating a ’trade-investment-services-IP nexus’. This created the logic of packing all these areas into RTAs. As factories cross borders, we need extra disciplines, especially in North-South trade. These include supply chain disciplines (assurances for cross-border flows of goods, services, ideas, capital, and technicians) and production network disciplines (assurances for tangibles and intangible assets inserted into other local business conditions, such as IP).
He said that discrimination has changed. As tariffs became as low as never before, trade diversion might be overplayed. Soft preferences in deep RTAs allow GVC disciplines to lack certain discrimination. Nowadays, RTAs are very different as they are asymmetrical, causing regulatory reforms mainly in Southern countries to join Northern value chains. Not everything should be conducted in the WTO. Tariffs can be addressed in the WTO while standards, investments, people or capital flows should be conducted in a similar way to the subsidiarity principle of the European Union.
Simon Evenett, University of St. Gallen, concentrated on the Transatlantic Trade and Investment Partnership (TTIP) and its consequences for third countries. While there are allegations of non-enforcement capacity from transatlantic matters to non-parties, TTIP will not create discrimination beyond its parties. Yet, influential civil society groups are very suspicions when it comes to the creation of new international trade rules, and those groups are often supported by national regulators that do not want their core business changed with trade agreements, especially in competition law. TTIP is important for third non-party countries because they could join TTIP, they could negotiate their own free trade agreement with Europe/United States, they could wait until TTIP multilateralizes its obligations or they could unilaterally adopt certain TTIP rules and then ask for recognition.
Working session No. 4: Africa and jobs – Creating decent jobs through trade and value addition
The debate was dominated by Economic Partnership Agreement (EPA) issues with the European Union and the challenges that EPAs bring to countries in Africa. Many of the panellists denounced the unilateral deadline of 1 October 2014 set by the European Union to conclude these 12-year negotiations.
Many of the speakers said that trade matters but trade policy matters even more. Jane Nalunga, Country Director of the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) in Uganda, said that trade is the only tool that can get people out of poverty but it can also impoverish people. Sylvester Bagooro, Program Coordinator of the Third World Network, said the basket of African exports has hardly changed while the import basket keeps expanding. Others noted that trade flows have been diverted towards China for the past decade.
Guillermo Valdes of the United Nations Conference on Trade and Development (UNCTAD) said trade is a potential enabler but it also takes policy coherence for trade to deliver its potential. This calls for domestic leadership in conducting policy coherence because trade policy by itself is insufficient. He asked whether Africa is prepared to deal with non-tariff barriers or whether it will wait for regulatory convergence between the United States and the European Union. He also highlighted the fact that Africa is getting stronger on rules and institutions, such as competition policy, where it is taking the lead both nationally and regionally. Mr Valdes also asked why we do not speak about the sensitive political issue of agricultural value chains. He argued that it is easier to speak about global value chains in industrial goods while agriculture is a sector where richer countries need to undertake reforms.
Yash Tandon, former Executive Director of the South Centre, advised African countries not to sign EPAs and denounced the 1 October deadline, calling it a unilateral ultimatum by the European Union. He advised African countries to withdraw from global value chains (GVCs) and to concentrate on local and regional GVCs.
The panel said that globally the real world is moving faster than governance. The challenge is how to shape world economic policy to better fit with the real economic structure. Things are moving particularly fast at the city level. For example, cities have more agility than the state and this is an advantage for benefiting from technological change.
Worldwide trends are having an impact on cities, said the panellists. These trends include rapid urbanization, particularly in developing countries, triggering the emergence of a middle class, rising inequalities and technological change. These trends have gone hand in hand with increasing trade. Trade in services plays an important role in technological change. However, data on trade tends to be quite weak at the city level, making it hard to evaluate how cities are really emerging in the world economy. Three flows are key to a city’s integration into the rest of the world: flows of capital, labour and data.
Decentralization of power is important for cities and must be enforced. In addition, enhanced integration and cooperation between cities is needed. Cities should be looking both at the national and international level, and adopting a foreign policy framework which includes strategies to attract foreign direct investment and tourism. Few cities qualify as global cities: Hong Kong, Singapore, New York, Dubai and London. Global cities are those de-anchored from the larger economy where they operate.
For Siemens, there is no substitute for the WTO’s uniform rules. Progress is needed in the trade negotiations, especially on trade facilitation. Siemens welcomes the WTO’s Information Technology Agreement and the plurilateral initiative on environmental goods launched on 8 July 2014. To be fully effective, the latter should encompass environmental services as well.
Unlike trade in goods, services trade is trying to make the production of factors much closer, thus becoming increasingly important for cities that need more policy development. Soft connectivity – including social capital, knowledge, social connections and education – is important for services to develop in cities.
According to a UN report, cities account for 70 per cent of greenhouse gas emissions. Investments in environmental protection services are vital to cities as they are a driver of competitiveness. They boost the economy and are a growing employer: the transfer to a green economy could create 15 to 60 million jobs globally (according to International Labour Organization estimates). Services classification at the global level is a huge issue. The majority of categories do not correspond to today’s world and differ among international organisations.
Gopalakrishnan Manicandan, Forum on FTAs India, opened the session by providing some background information on the ITA and the Environmental Goods Agreement (EGA), which have been cited as successful examples of negotiations that could be followed in other areas of the WTO. The ITA was signed in 1996. Currently, negotiations are ongoing to expand the list of products covered by the Agreement.
Mr Manicandan said that in his view, India - like many other developing countries - has not benefited from the ITA. On the contrary, the domestic IT industry has lost growth potential due to ITA participation and was not able to grow. Despite the ITA, the IT market remains “monopolized” by a few big companies, making it impossible for developing countries to enter the market. Even when developing countries participate in global IT supply chains, they are limited to manufacturing, in most cases simply assembly operations with inputs from around the world. Manufacturing generates low value addition, whereas those activities that create more value (e.g. design, research and development, patent ownership) continue to take place in developed countries.
In a similar way to the ITA, negotiations on the EGA mainly focus on tariff reduction, not taking into account the concerns of developing countries with respect to technology transfer and non-tariff measures, limiting policy space for governments to protect domestic industry.
Georgios Altintzís, International Trade Union Confederation, noted that the IT market is quite closed and that a few companies capture most of the value generated within the sector. The trade in value added approach used to collect statistics shows how trade causes growing inequalities, especially in the most advanced sectors. While consumption in developing countries increases, the capacity of these countries to seize new market opportunities is not improving. If India had not participated in the ITA and had protected its infant industry from liberalization, it would have better captured opportunities offered by its growing market. Through tariff protection, domestic industry would have had time to grow and become competitive and the market could have been opened up at that point. Likewise, it is not clear what the impact of the EGA will be in developing countries as no comprehensive impact assessment analysis has been conducted and there is no transparency in the negotiations.
Brian Kohler, IndustriALL Global Union, focused on the EGA and how it could contribute to sustainable development and “just transition”. “Just transition” towards a sustainable future means three things: sustainable industrial policy; robust social protection; and creative labour adjustment programmes. Based on past experience, Mr Kohler does not expect the EGA to contribute positively to these objectives. On the contrary, deregulation in trade has caused the economic, social and environmental crisis in which we live. The free market cannot help in creating sustainable development, for which a stronger role of the government and support for incentive policies are needed.
Sanya Reid Smith, Third World Network, reinforced the concept that infant industry must be protected from trade liberalization and that tariffs must remain high until the industry has grown and is ready to compete in the global market. If developing countries join the ITA or the EGA, they will lose the policy space to support industrial development; they will import more than they will be able to export, affecting negatively their balance of payments. They will lose revenues from tariffs, which cannot be compensated by collection of other types of taxes, taking away resources from other public programmes (e.g. education and health).
If developing countries want to gain access to cheaper environmental goods and technology, they should decide to unilaterally reduce or eliminate tariffs rather than bind them to zero at the WTO because once tariffs are bound they cannot be raised if the need to protect domestic industry arises. Policy space is needed to respond to new challenges but the ITA and the EGA restrict such space. Developing countries should undertake a cost-benefit analysis of joining such agreements and consult other stakeholders. The Doha Round is focused on development but none of the issues of interest for developing countries has progressed or come to an early conclusion. If the WTO does not deliver on development issues in a development round, it will lose its credibility.
Working session No. 5: International standards and accreditation: preventing barriers, protecting consumers
The session was organized by four organizations (International Laboratory Accreditation Cooperation, International Accreditation Forum, International Standards Organization, and International Electrotechnical Commission) - all united by the goal of promoting trade facilitation though the removal of technical barriers to trade. By developing and managing standards and accreditation, they protect consumers around the world by assuring quality and easing trade through mutual recognition of standards and assessments. Each organization explained how they cooperate in terms of standard setting and accreditation. The organisations focus on mutual acceptance of certifications and standardization, saving time and resources for the parties involved.
Research presented by Axel Mangelsdorf, Researcher at the Federal Institute of Materials Research and Testing, showed empirical evidence that ISO 9000 certifications signal a firm’s investment in quality and increase trade between countries. As a policy recommendation, Mr Mangelsdorf said membership of the International Accreditation Forum would increase trade and was important for developing countries.
Working session No. 6: Post-Bali agenda: where does parliamentary oversight fit in?
Bernd Lange, Member of the European Parliament, said that the European Parliament will continue to strive for multilateral solutions whenever possible. So far, the WTO is driven by governments; it could be more successful if parliaments were more actively involved. There is a need to engage with the public and not to be afraid of discussing even sensitive subjects. Parliaments should ensure that trade is free and fair. Indeed, negotiations on trade facilitation demonstrate the potential for trade rules that take into account different levels of development and that provide capacity building, moving away from a one-size-fits-all model. Parliamentarians need to engage, even though the economic crisis creates a temptation for advocating protectionism.
Mr Lange said that fundamental negotiation documents should be public. This is not currently a problem for the European Parliament but the general public does not have the same access so that limits discussion. Today it is not possible to negotiate behind closed doors. Transparency is necessary. The EU agreements with Colombia and Peru offer a good example of how to develop a dialogue that will lead to improvements on labour rights and the environment. Parliaments also have a duty to monitor the implementation of trade agreements.
Arancha González, Executive Director of the International Trade Centre, said parliaments should engage with the important questions that are frequently raised in connection with trade, such as the benefits of trade as well as the compatibility of trade with other goals (the environment, fighting corruption, promoting human and labour rights etc.). The role of parliaments goes beyond approving or disapproving trade agreements; it is also ensuring trade agreements are part of a coherent set of policies. Parliaments have a role to play before the negotiations, during negotiations and after the negotiations. In order to do this, parliaments need to master the technical aspects of trade policies and trade negotiations.
Ms González said that the dividing line in agriculture negotiations is not between developed and developing countries. It is between countries that believe they have a comparative advantage and those who do not. We should make sure the rules on agriculture are fair. For many poor countries, the problem is not the current trade rules but market access opportunities. More generally, many of the problems of agriculture are not to do with WTO rules but with investment, infrastructure and other policies.
Kil Jeong-woo, Member of the Korean National Assembly, said parliamentarians should ask themselves what they have done to push forward the Bali agreements. What have they done to promote trust and dialogue, which are essential responsibilities of parliaments. Often parliamentarians tend to take the multilateral agreements for granted and pay more attention to bilateral and regional agreements. Parliaments should promote activities to educate themselves, media, students and civil society.
Helmut Scholz, Member of the European Parliament, said the current model of agricultural production and distribution often leads to waste and is unsustainable. Food should not be treated as any other commodity. Remaining export subsidies should be scrapped. Current WTO rules do not address many of the problems associated with agricultural trade liberalization. If trade agreements are to be effective, they need to contain binding commitments. They should have functioning dispute settlement mechanisms.
Working session No. 7: How a proposed trade in services agreement (TISA) matters to everyone
The panel said that the plurilateral Trade in Services Agreement (TISA) negotiations taking place outside the WTO are being criticized for apparent lack of transparency and democracy. Discussions are based on news reports as no negotiating texts have been officially released unlike at the WTO, which regularly updates the general public by publishing speeches by the Director-General etc.
The commitments that countries take in TISA could have a “ratchet” effect and can be irreversible, said the panel. Seven years after the 2008 financial crisis, global financial stability is still at stake. The supervision of cross-border activity is weak. TISA seems to be using the pre-2008 financial crisis rules and does not include a forward-thinking approach through reforms of the financial sector. The financial regulation debate is dominated by the financial sector, and this was already the case before the 2008 crisis. The public services exception in TISA results from a misunderstanding. Most public services are a mix between private and public and shift over time because of changing political mandates etc. In TISA, it is unclear whether countries still have the right to regulate.
Service corporations are frustrated by slow progress at the GATS, and have turned to TISA and other regional and bilateral negotiations to pursue their goals. The human right to food and water must be defended in all these negotiations. Up to 80% of of water consumption takes place in agriculture. TISA can negatively impact the right to food, a fundamental human right, by promoting and enforcing the privatization of water distribution upon which the food sytem depends. Agriculture also depends on other support services, which can be undermined if TISA opens them up. Resources and policy space are needed to rebuild agriculture, a major source of greenhouse gas emissions in ways which promote sustainable food production and the rights of agricultural workers.Much greater services commitments seem to be asked from developing countries in their free trade agreements with the United States than in the WTO’s General Agreement on Trade in Services (GATS). The United States uses state monopoly in the postal sector as a means to make this service universal. In Europe, the liberalization of the postal sector seems to have failed, resulting in a decline in jobs; in 18 European countries, employment in the postal sector dropped by 5 per cent within four years of liberalization. The race for competitive advantage has led to cross-cutting policies, including precarious job conditions in this sector.
Working session No. 8: Innovative Africa: Perspectives from the Private Sector
Dehou Dakuo, Director of Cotton Production at Sofitex, and Ouattara Zanga Mamadou, General Secretary of the National Union of Cotton Producers in Burkina Faso, spoke about cotton production in Burkina Faso. Cotton represents 50-60 per cent of exports, and 60 per cent of the population are farmers. In the 1990s, the country had issues with treatment of cotton plants and protection of the health of mining families. Parties subsequently agreed on quality monitoring for cotton production. As a result, there was a drop in the number of times required to treat the cotton (cutting down on treatment and increasing production) and a drop in the poisonous effects on farmers. Work was made easier, saving time for other things such as cereal and maize production. Insecticide and water use were reduced. Most Burkina Faso cotton producers are in favour of genetically modified cotton, which allows higher yields, and it is difficult now to find producers who will accept to produce conventional cotton.
Agbokponto Soglo Bienvenu, Senior Manager at Qualcomm, spoke about wireless communications in Nigeria. How technical innovation can enhance health care delivery is an on-going project in Nigeria. Mobile development is connected to economic development. Wireless Reach promotes social and economic development in the communities in which it works, comprising 100 projects in 35+ countries. The CliniPAK360 project is enhancing healthcare delivery. Nigeria is home to one of the highest maternal mortality rates in the world. The project brings a paperless, mobile patient registry to midwives throughout rural Nigeria. Midwives use tablets to more closely chart at-risk patients.
Leigh Gunkel-Keuler, Head of Corporate Affairs at Pfizer in South Africa, spoke about innovation in South Africa. He said that there is a lot of innovation taking place in the southern region of Africa and South Africa. Collaboration with government in particular is needed and an enabling policy environment. Pfizer is the largest R&D provider in the pharma industry. The key stakeholders are government, media, healthcare practitioners, patients and business.
Evan Lee, Vice President of Global Health Programs at Eli Lilly & Co, spoke about technology transfer. He said that the company’s experience with technology transfer has been used to treat tuberculosis and MDR tuberculosis, which occurs when bacteria and pathogens develop resistance. This makes it resistant to two of the first-line medical treatments, increasing the complexity of the treatment significantly (from six to 24 months). MDR tuberculosis is very concentrated in southern Africa. The objective is to move manufacturing closer to where the need is, to increase manufacturing capacity, to lower manufacturing costs, and to ensure that treatments are produced to the highest international quality standards. The challenges include multiple quality standards, complex supply chains and fragmented markets (with multiple treatment regimens). Technology transfers are highly complex and resource intensive with evolving regulatory requirements. It is critical to understand the potential and limitations of technology transfer.
Working session No. 9: From Consumer Conscience to Sustainability Standards – What Role for Policymakers?
The proliferation of sustainability standards and codes of conduct is becoming a challenging topic that could create a burden to non-governmental organizations, governments and small and medium-sized enterprises (SMEs) in developing countries, said the panel. The International Trade Centre (ITC) has launched an initiative to promote sustainable value chains to add value to goods and services produced in least-developed countries (LDCs). It is necessary to invest in technical resources in order to help SMEs in LDCs access the market and improve their trade. This commitment, however, faces a proliferation of standards and codes. Thus, the keyword needs to be “convergence”: how can we have convergence in sustainability standards.
The German government has already tackled the issue, implementing a set of standards that includes public procurement, which allows ministries to take into consideration if a certain product is produced in a sustainable way, and a textile alliance in order to improve the sustainability of the garment supply chain.
The Costa Rican government has played a very important role in applying a set of sustainability standards in order to promote its exports, especially in the agricultural sector. These standards have been perceived as an opportunity by Costa Rica. However, the implementation of this set of codes cannot be led exclusively by governments: the contribution and commitment of both the private and the international public sector is crucial.
The European Union is fully committed to contributing to the implementation of sustainability standards in order to improve the trade of LDCs and developing countries. Examples of the effort invested by the European member states are the Generalised Scheme of Preferences (GSP+), the Aid for Trade initiative and improvements in public procurement.
Nestlé, as a private company, has put the “sustain value creation” at the core of its mission, helping the company to expand in almost every country in the world. The most important factor that has helped Nestlé to implement a sustainable value creation has been trust, earned thanks not only to the quality of its products or the compliance with laws and regulations but especially to the creation of a shared value for both society and shareholders. In doing so, Nestlé has stressed food security, which has led policymakers to implement policies in order to improve carbohydrates and nutrients security. This is considered by Nestlé as the most effective way to tackle malnutrition worldwide.
The International Union for Conservation of Nature, as a multi-stakeholder organization, has been very interested in the implementation of sustainability standards, establishing a set of focal points that needs to be taken into consideration in order to increase the efficacy of standards and codes of conduct. These standards need to raise the sustainability bar, in compliance with the Sustainable Development Goals, focusing on the impact and the process behind the design and implementation of standards. Moreover, trust has to be addressed as a key issue. Governments must play a crucial role in this process, helping in the convergence towards a common set of standards. Trust is a key issue but it is not easy to build. To do so, it is necessary to improve transparency and responsibility through special initiatives such as the one implemented by the ITC database.
Working session No. 10: ICC World Trade Agenda post-Bali business priorities
Gabriela Wurcel, Director of International Trade at Philip Morris International, said that the WTO is still relevant for the business community but frustration with the stalled Doha Round has resulted in the creation of increasingly complex “mega-regional” free trade initiatives.
Ms Wurcel said that the Trans-Pacific Partnership (TPP) and other agreements such as the Transatlantic Trade and Investment Partnership are not a threat to the multilateral trading system, provided they are fully compatible with the principles of the WTO. Alejandro Jara, Senior Counsel at King & Spalding and former Deputy Director-General at the WTO, said that the outcome of such agreements may be sub-optimal but many issues discussed on the rules side will, by necessity, have to be extended to all on a most-favoured nation (MFN) basis.
The panel and members of the audience agreed that the business community was less interested in a successful outcome to the Doha Round than it was in the previous Uruguay Round, where corporate lobbying had been key to advancing the talks. However, views differed as to why this was the case. Ms Wurcel said that some businesses may just be reluctant to be seen openly lobbying for the Doha Round while other panellists said that businesses in emerging markets needed to be more supportive and that the negotiations need to address new so-called 21st century issues of particular interest to business.
The panel said that it was important both for business as well as for the multilateral trading system to get the recently concluded Trade Facilitation Agreement adopted and implemented. James Bacchus, Chair of the Commission on Trade and Investment Policy at the International Chamber of Commerce, said that recently launched initiatives such as the proposed Trade in Services Agreement (TiSA) and the plurilateral environmental goods agreement could provide impetus for additional liberalization in other sectors.
The panel said that internet access is increasingly faster and affordable in developed countries, which explains the high degree of penetration. However, the experience is completely different, both in terms of quality of access and type of content, in many developing countries, particularly in Africa. Liberalization of different elements can help to improve the situation.
Costa Rica used to have a government monopoly for telecommunications, said the panel, but the market was opened up in the context of a free trade agreement between Central America and the United States (CAFTA). A considerable number of providers entered the market and began offering both traditional and new types of services. Mobile subscribers increased by almost 169 per cent during the first year. Internet access increased from 17 per cent of households in 2007 to 31 per cent in 2013. Benefits trickled down to the entire economy.
At the macro level, the International Telecommunications Union (ITU) has found a contrasting picture in terms of Internet access. There are 6.9 billion mobile subscribers but only 3.4 billion unique mobile users, and of those only 2.3 billion relate to mobile broadband (i.e. only one-third of mobile subscribers have internet access). Approximately 4.3 billion people live “off-line”. In terms of affordability, the ITU has determined, based on a study that covered 180 countries, that the best that could be done to improve the situation is to liberalize the market. There is clear evidence that the more internet service providers (ISPs) that enter a market, the more prices tend to fall. Finally, just like in the industrial revolution, it is important to recognize that there will be winners and losers in the digital revolution. The first mover advantage is gone; the number of countries with broadband service is approximately 140. Many new intangible assets are being created.
The Internet Corporation for Assigned Names and Numbers (ICCAN) coordinates the domain name system (DNS) of the Internet and performs the “plumbing” functions so everybody can use it. ICCAN regulates two types of domain names (i.e. country domain names and the generic by activity). However, new types are being created this year (e.g. by city, by brand, by company, non-Latin characters) so it expects to have 600 types by the end of the year. This gives increased choice and flexibility for users but what does it have to do with international trade? It is important to remember that, before the Internet, there were several different types of networks that used different protocols for connection. However, having a global Internet requires having only one DNS. There are many actors, and they all need to act together to keep it as a “single Internet”, which should not be taken for granted. There are government actions that could jeopardize this single Internet connectivity, and fracturing should be prevented. A new study on access to the Internet and economic growth explains the manner in which some 60 decisions have a direct impact on that relationship, and include things such as regulation and education. A mix of content and infrastructure is essential.
The Internet Society sets the standards on which the Internet relies. It is important to have policies that create an environment where countries cannot only access foreign content but also create it. Governments have a key role in creating this environment based on three pillars: 1) lowering economic costs; 2) developing technical capacity; and 3) eliminating barriers such as those affecting placement of servers and skilled sectors. There are two issues that pose problems for establishing an ISP: 1) legal uncertainty; and 2) liability rules. Any of those can prevent ISPs from establishing in a country. Local content is growing very fast in volume, and for this reason it is important to have local hosting services to minimize transit cost and speed up delivery. Governments should regulate in a manner that promotes innovation.The real challenge is to provide Internet access to the billions of people without it, said the panel. The lack of institutions is the biggest problem but the cost of hardware keeps falling. However, it is also important to: 1) eliminate barriers to Internet connectivity; 2) invest in education; and 3) develop free content. Having to pay can be a big barrier in the poorest countries.
Working session No. 12: NAFTA @ 20. Job creation and consumer benefits in North America
The panel discussed factual realities of the North American Free Trade Agreement (NAFTA) in terms of the benefits it has brought to the people of the three member countries vis-à-vis the disadvantages. The panel did not have representation from Canada and therefore the discussion was largely about Mexico and the United States.
The moderator, Eduardo Díaz Gavito, set the tone of the session by taking the audience through the history of NAFTA and how the agreement came into being. James Bacchus, former member of the US Congress, spoke for the United States. He said there was a misinformed notion that people have about NAFTA, namely that it is a trade agreement that has brought more tears than joy to the member countries. He attributed to NAFTA several benefits that have accrued to the US economy, such as higher wages and more employment. He urged the participants to consider that had NAFTA not been instituted, the economies of the member nations would not have realized perhaps the levels of growth that they have reached in the NAFTA years.
Cristina Hernandez spoke from the Mexican perspective. She highlighted the positive economic indicators for the country in NAFTA. While showcasing data for the immense progress that the Mexican economy has made during those years, she was mindful of the fact that the growth in GDP fell short of growth in trade. She did however acknowledge that NAFTA was a correct recommendation that was made to the Mexican economy to relieve itself of the debt crisis of the 1970s and 1980s since it increased inward investment into Mexico multiplefold.
Mauricio Soriano gave the industry perspective as a representative of the National Chamber of Tequila Industry. He said that tequila was not merely an alcoholic beverage but a matter of national identity for Mexico. As a member of NAFTA, Mexico was able to not just increase exports of tequila to the world but was also able to bring professionalism within the industry and to export its culture globally.
The panellists said that finance is a very important element in making trade happen. Some 70 to 80 per cent of trade is subject to some financing. It can take several forms, such as trade financing by banks. The one word which is important in trade is “trust” - without trust, nothing can happen. To build trust, you need partners, and the role of these partners is to take the risks that you cannot take. For example, HSBC helped fund a satchel company in Cambridge. It became a successful company thanks to investors and people who were able to help and take risks for the company.
Since the last financial crisis what has really happened, asked the panel. Banks have started to re-privatize their business due to more demand for capital. People were scared about banks collapsing with their money. Gradually, most banks have been focusing on their own market: “what is key to them”. Short-term finance is the true lifeline of international trade: 80 per cent of merchandise trade flows depend on trade finance.
The essence of trade finance is providing secure and timely payment across borders, liquidity, very effective risk mitigation, and information flow about goods. Correspondent banking is very important, meaning big banks working with smaller banks in smaller countries. Multilateral companies help to fill a gap; they are a door opener. They provide capital and funding to companies and people in need. The panel concluded that trade finance matters for trade.
Workshop No. 5: How to change economic behaviour towards sustainable consumption
The panel explained that the FairShopping Foundation (FSF) is a Dutch initiative set up in 2010. Dedicated to fair trade and sustainable products, it aims to help consumers find fair, sustainable businesses. This is done by providing a map that guides the consumer through 40 cities in the Netherlands. Each map contains a maximum of 24 businesses in a city. The map is drawn up by local volunteers in each city, who determine the most sustainable businesses to appear on the map.
FSF staff are all volunteers and they rely on each “city team” to find the funding to print the map and to pinpoint the sustainable businesses. On the FSF website, there is a mandate that guides the city team on how to find the businesses, market the initiative and find the funding for the printing of the maps.
The FSF is in the process of setting up an app that will guide users around each city with an FSF map. The FSF promotes organizations that help shops to build sustainable and fair trade businesses - e.g. the Fair Wear Foundation.
Fair trade is a popular issue these days. Since 2010, the identification of the most honest, sustainable brands has proved challenging. In the Netherlands, the FSF knows of over 170 brands that claim to be fair trade or organic without meeting European standards. The FSF considers Dutch environment standards to help it decide which fair trade brands are deemed truly sustainable. There are also two useful websites which rate thousands of brands: ’Rankerbrand’ and ’Kledingchecker’.
Owen Barder from the Center for Global Development (CGD), as moderator, introduced the panellists and the theme of the discussion: How European and US trade policies matter for developing countries. He introduced the CGD’s Development Index, which ranks developed countries on the extent to which their policies are good for development, using indicators related to aid, trade, finance, migration, environment, security and technology. This index demonstrates that there is a lot of variation between European Union countries on the extent to which their policies contribute to international development, with Nordic countries such as Denmark scoring highly and large countries such as the United Kingdom, France and Germany lagging behind. The lack of collective progress over the previous years was also highlighted, with the CGD’s Beyond Aidinitiative presented as a possible solution.
Patrick Messerlin from Sciences Po predicted that trade negotiations in the future will be carried out differently, with the WTO playing a smaller part in a modern system that will move away from discussions on tariffs towards dealing with norms and services. Although there is still unfinished business among developing countries with regards to tariff reduction and trade in goods, the industrialized nations will want to progress more quickly and break new ground through “living agreements” on complex, evolving issues. The example of “mutual equivalence” was highlighted, in particular, as an area of enhanced cooperation between countries, involving agreements between regulators that have the potential to “bypass” the negotiation phase. The EU automobile industry was used as a case study.
Simon Evenett from the University of St Gallen introduced evidence from the Global Trade Alert, a database of protectionist policy measures. Without defining “protectionism”, the database seeks to identify policies that discriminate between domestic and foreign firms. The evidence presented revealed an upward trend in protectionism from 2011 to the present day, with current figures at the same level as those that prevailed immediately after the global financial crisis. The evidence also suggests that the growth in trade has been slowing relative to growth in GDP, with a ratio of over 2:1 before the crisis falling more recently to 1.73:1. Mr Evenett sought to identify the origin of trade policies that cause economic damage to low-income and lower middle-income countries, and found that there is no simple North-South divide in this area. He said that the EU member states are joined by India, Argentina, Brazil and Russia in implementing “beggar-thy-neighbour” policies that affect less developed trading partners.
The subsequent debate focused on the pros and cons of trade liberalization. The benefits of preferential trade agreements were questioned by Mr Messerlin, who cited lost revenues from tariffs. Questions were raised about the implications of mutual equivalence arrangements with regards to consumer protection. Questions were also asked about agricultural subsidies and their contribution to the rise in protectionism identified by the Global Trade Alert data. Some audience members contested the specific concerns raised about some emerging market countries such as India.
The panel said that a balance has not yet been achieved between the need to protect medicine patents to encourage innovation and people’s need to access medicines. There is an access problem because prices for major treatments are too high and access is limited. Some 80 per cent of people seem to be excluded from “the system”.
Prices are fixed in accordance with what the market can bear, said the panellists, and are not based on the costs of innovation and the protection of patents. The power of “big pharma” is too big, and in the negotiations “drug monopolies run governments’ action and not the other way around”.
The panel said there was a need for a business model based on capitalist principles which would incentivise investment but more availability of knowledge is needed for the public good. It called on the WTO to create a programme for the adequate supply of public goods and concluded that universities have a long way to go to contribute more in the field of research and innovation.
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