Ladies and gentlemen, it is a great pleasure to be here.
I would like to thank your majesties for letting me join you today — and also to congratulate you on this excellent initiative.
I’m going to talk about what trade can do for children.
When people heard I was coming here to talk about these issues, some didn’t see the connection.
But I think the connections are pretty clear.
For a start, the World Trade Organization only began life in 1995 — so, actually, it is still a teenager.
But, more seriously, the global trading system is aimed at creating some of the essential conditions needed to improve children’s lives and their prospects in the future.
Ultimately, when we come into work every day in Geneva, that’s what we’re trying to do.
But let’s get a bit more specific. I want to use this time to identify three flash points where trade and children’s interests intersect, and where perhaps we — all of us — can do a bit more to maximize our impact. One relates to developed countries, and two to developing countries.
1. YOUTH UNEMPLOYMENT
The first point is this: the crisis in recent years has hit many western economies hard — and one of the most worrying effects has been very high levels of youth unemployment.
Levels have topped 50% in some countries. The effects of this are very significant — and are much more damaging than simply the loss of productive capacity in the economy.
Surveys of young people highlight the corrosive effect that unemployment can have on their confidence, motivation, and their view of the future — raising the spectre of a “lost generation”.
Trade can be part of the solution, because one of the key differences that trade makes is through job creation.
The WTO reached a major multilateral trade deal in Bali last December which could make a big difference here — as economists predict that it could create 21 million jobs.
Of course the relationship of cause and effect is complex. We conducted a major study on this issue with the OECD and others in 2012.
The evidence shows that trade can play a powerful role — but to be effective, trade reforms have to be embedded in supportive policies.
Countries where trade openness has failed to stimulate growth, commonly have unstable macroeconomic policies, inadequate property rights, insufficient public investment in overcoming supply-side constraints, or other socio-political constraints.
So for the positive effects of trade to be realised in tackling youth unemployment, we need to recognise the inter-linkages to other areas of policy.
And with the right approach, trade doesn’t just create more jobs, it is also a tool to create better quality jobs.
Export-orientated jobs typically pay higher wages to their workers. In western Europe those working in export-focused companies collect a 10-20 per cent wage premium over the average wage. (And, by the way, in sub-Saharan Africa that figure is even higher, at 34 per cent).
Of course there are challenges here too in ensuring that low-skilled workers are not left behind.
But the prize is that, because of their better prospects, as well as giving the young unemployed a chance to enter the workplace, these export-oriented jobs can also provide a renewed sense of confidence and hope — which is priceless.
2. CHILD POVERTY
My second point, turning now to developing issues, is about the persistent tragedy of child poverty.
By supporting economic growth and poverty alleviation, trade can be an important engine for change — and therefore can make a significant difference to children’s prospects.
The leaders of the Young Lives survey conducted by Oxford University over 15 years in India, Ethiopia, Peru and Vietnam, found that growth provides financial space for governments and families to invest in children and create improved infrastructure and opportunity.
The fact that the Millennium Development Goal to halve the rate of extreme poverty by 2015 was met well ahead of time was illustrative of this.
Take China, where the pursuit of an export-led growth model has led it to become the world’s second largest economy and now the world’s biggest trading nation. At the same time they have also reduced poverty levels from 60 per cent to 12 per cent between 1990 and 2010.
Other economies have followed a similar trajectory, using the trading system to rapidly expand economic growth and slash rates of extreme poverty.
Look at Vietnam or the recent graduates from Least Developed Country status — Samoa, Cape Verde and the Maldives. They show again the difference that trade and increased investment can make in achieving more inclusive socio-economic development.
However the rate of poverty reduction as a whole is not always matched in the area of child poverty. Again, the Young Lives survey argues that while economic growth is important — what matters more for children is the nature, or quality of that growth.
We have to harness growth more effectively and convert it into social change that benefits poor children and their families. This is an urgent challenge for policy makers…
- …at the international level to provide the right frameworks and mechanisms to support quality growth,
- and at the domestic level to ensure that no-one falls behind, particularly children.
So the debate that is currently underway to design the successors to the Millennium Development Goals will be crucial here, not least as this will dictate the agenda until 2030.
For the more than 300,000 babies born today, that period covers almost their entire prospective childhood and adolescence. So this is a pretty important conversation.
I met with Ban Ki-moon just a few weeks ago to discuss the process towards the proposed new “Sustainable Development Goals”. And I think some important questions regarding the WTO work in Geneva remain in the current debate:
- How should we recognise trade’s role in cutting poverty and supporting growth?
- How do we build linkages between the trade and economic growth agenda and effective action on child poverty?
- And perhaps most importantly — how can we ensure that the voices of those affected are featured in the debate? How can we ensure that the voices of children and their families are properly heard?
3. A BROADER UNDERSTANDING OF DEVELOPMENT
This brings me to my third and final point, which is that lifting children out of poverty is essential — but it is not enough.
We need to look at children’s lives in a more holistic way.
Robert F. Kennedy warned of the narrowness of economic measurements. He said:
“The gross national product does not allow for the health of our children, the quality of their education or the joy of their play... It measures everything in short, except that which makes life worthwhile.”
Of course this is what the Human Development Index is all about — the need to place people at the centre of policy-making.
And, as I suggested earlier, trade is not just about dollars and cents — or kroners andöre.
We need to look at the wider environment. I believe that trade can help to create the conditions in which children can lead better lives.
And at the most fundamental level, we can do this through supporting the family — by reducing the potential for conflict, helping to create a stable environment and predictable conditions, and supporting higher income levels.
This, in turn, can support better education and healthcare, while better connections through trade also support better access to medicine.
Amartya Sen, one of the creators of the Human Development Index, argues that true development comes through freedom.
And I believe that by encouraging openness, co-operation and democracy trade supports this as well.
It is clear to me that while perhaps trade can’t transform children’s lives on its own, in the right combination with other policies, it can be a very important factor.
So we should seek to maximize this potential.
And I have just one final thought I’d like to share.
The purpose of creating a global trading system after the Second World War was never simply to support trade as an end in itself — it was as a means to an end.
It was based on the belief that trade creates peace and stability, supports growth and development, and helps us to lead better, happier lives.
We would be betraying that mission if we did not try to ensure that children’s interests — particularly in the developing world — were always in our minds and in our hearts.