WTO NEWS: SPEECHES — DG ROBERTO AZEVÊDO


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> Roberto Azevêdo’s speeches

  

Ambassador Abou,
Mr Ehouzou, Permanent Representative of the African Union in Geneva,
Secretary-General Kituyi,
Director-General Ryder,
Dr Hamdok,
Director-General Swing,
Excellencies,

Good morning. I want to thank the African Union for the opportunity to be here today.

I am truly delighted to be here and to have the chance to discuss these very important issues — specifically trade and the central role it can play in industrialization and building productive capacity and inclusive development in Africa.

I'd like to start by putting this in a historical context.

In the 1960s, there were high hopes for the development of the newly independent Sub-Saharan African countries.

However, these hopes were quickly dashed following a series of shocks which began in the mid-70s, with the first oil price spikes, followed by a severe decline in GDP growth and increase in poverty in the 80s and early 90s.

However, by the mid-1990s, economic growth had resumed in certain African countries.

Economic reform, better macroeconomic management, donor resources and a sharp rise in commodity prices were having a positive effect.

In the 2000s, many African countries witnessed high economic growth performance and during that period some of the world's fastest growing economies were in Sub-Saharan Africa.

Angola, Nigeria, Chad, Mozambique and Rwanda all recorded annual GDP growth of over 7%.

In 2012 Africa's exports and imports totalled 630 billion dollars and 610 billion dollars respectively — a fourfold increase since the turn of the millennium.

And the long term prospects for growth are good.

The Economist Intelligence Unit has forecast average growth for the regional economy of around 5% a year from 2013-16.

Despite all this, the continent still plays a marginal role in the global market, accounting for barely 3% of world trade.

One significant reason — though of course there will be others — is that African economies are still narrowly based on the production and export of unprocessed agricultural products, minerals and crude oil.

Now, due to relatively low productivity and technology, these economies have low competitiveness in global markets - apart from crude extractive products.

The low productivity of traditional agriculture and the informal activities continue to absorb more than 80% of the labour force.

And growth remains highly vulnerable to external shocks.

So, overall you could say it is a mixed picture. But I think this story of half a century of struggle, set-backs and progress shows two things:

One — the road to meaningful and inclusive development still seems long.

Two — we are in a better position than ever to make real, sustainable progress. So we must make the most of this opportunity.

And I applaud the efforts of many governments to do so.

Many are striving to do more in turning their strength in commodities into strengths in other areas — using commodities as a means of spurring growth across various sectors.

The UN Economic Commission for Africa's 2013 Economic Report echoes this — calling for the continent's commodities to be used to support industrialization, jobs, growth and economic transformation.

Indeed, the African Union's 2063 Agenda calls for the region's economies to integrate and to join the global economy through the development of human capital, the acceleration of infrastructure development and the fostering of meaningful partnerships with the private sector.

In line with this, I think there are a number of essential steps to take:

  1. the diversification of economic structure, namely of production and exports;
  2. the enhancement of export competitiveness;
  3. technological upgrading;
  4. the improvement of the productivity of all resources, including labour; and
  5. the reduction of infrastructure gaps.

 

Only by delivering in these and other areas can policymakers ensure that growth enhances human well-being and contributes to inclusive development.

But how can we take these steps?

Well, I'm sure it won't surprise you if I say that I think trade can play a vital role.

Over the next few minutes I would like to focus on how trade — and the WTO — can help African countries to industrialize their economies, with the ultimate purpose of supporting inclusive development.

Of course I should say that although African countries share some common features, no unique set of policies, including those on trade and industrial policy, could ever fit for all in a uniform way.

For example, while almost all African countries are WTO members, some are least-developed countries, and therefore benefit from more flexibilities than those that are not included in this category.

Even among the LDCs, some are already exporters of manufactured products — though often they rely on a single product — while others are more dependent on commodities.

Nevertheless I think it is clear that some preconditions of success are universal. For example:

  • political stability;
  • a business friendly environment, for both domestic and foreign investors;
  • bureaucratic capacity in decision making and in designing, implementing and revising policies; and
  • the coherence of these policies with other trade and development policies.

African regional integration is of course very high on the policy agenda. There is little doubt that the regional market offers good scope for African firms to diversify their production and achieve greater value addition.

Already now, manufactures constitute as much as 40% of intra-African exports, compared with 13% of Africa's exports to the rest of the world.

I recently visited Kenya and Uganda where I heard about some of the excellent work that is going on in East Africa — particularly their efforts to improve their shared trade infrastructure and speed up the transit of goods across borders, which is already reaping rewards.

However, despite the progress made in many areas, the African market as a whole remains quite fragmented.

The Bali package, which WTO members agreed in December last year, will help to resolve some of these problems.

Inclusive, sustainable development was at the heart of the whole Bali project — and our African members played a crucial role in making it a success.

It brought some progress on agriculture.

It delivered a package to support LDCs.

It provided for a Monitoring Mechanism on special and differential treatment.

And, in addition, Bali delivered the Trade Facilitation Agreement — and this is a direct answer to some of the problems of fragmentation that I raised a moment ago.

Costly and cumbersome border procedures, inadequate infrastructure and administrative burdens often raise trade-related transaction costs within Africa to unsustainable levels, creating a further barrier to intra-African trade.

This Agreement will help to address some of these bottlenecks.

It will support regional integration, and therefore complement the African Union's efforts to create a continental free trade area.

And it will begin to remove some of the barriers which prevent full integration into global value chains.

As such it will create an added impetus for industrialization and inclusive sustainable development.

And it is worth noting here that the Trade Facilitation Agreement broke new ground for developing and least-developed countries in the way it will be implemented.

For the first time in WTO history, implementation of an agreement is directly linked to the capacity of the country to do so.

Previously it was more about giving a few more years — so developed countries implement an agreement immediately and least-developed and developing countries just get a few more years. 

Nobody ever talked about whether, when the deadline came, those countries would have the capacity to implement the provisions that were agreed.

So now, and for the first time, we have more than that — we are taking a more dynamic approach.

Under the Trade Facilitation Agreement, not only does a country have to have the capacity before being required to implement the provisions, but technical assistance and support must be provided to help them achieve that capacity.

Moreover, developing and least-developed countries can determine for themselves when they have the capacity to implement each of the trade facilitation measures of the Agreement. 

This has never happened before and it did not happen by accident. Members made the decision together. Africa was a big part of that.

Clearly a central element of implementing the Agreement will be ensuring that the assistance that developing and least-developed countries need will be available.

A great deal of very welcome work has already been done. But from my consultations with members, including the coordinators of the African Group, the Africa, Caribbean, Pacific Group and the LDC Group, I know that some real concerns remain on how easy, affordable and accessible the technical assistance will actually be.

We have been working very hard to address these issues and ensure the provision of technical assistance to everyone, without exceptions.

My team and I have been talking to donors and consulting with members to try to find a solution that would allow the WTO to assist those seeking technical assistance and capacity building support. That solution should:
 

  • enable the flow of information between donors and recipients on their needs and options;
  • assist members in preparing and updating their needs assessments;
  • help members to develop technical assistance projects;
  • identify possible development partners for countries that might have had difficulties doing so by themselves;
  • and, finally, ensure that resources are available for all those seeking technical assistance.

We expect to be able to set out a new WTO facility along these lines before the summer break.

Another vital issue here is the importance of agricultural development in industrialization, and the role of industrial collaboration through regional cooperation.
 
The contribution of the agriculture sector is of utmost importance for the establishment of a sound industrial base. It can provide a surplus to invest in industrial capacity building, and supply agricultural raw materials as inputs to the production process, especially for today's highly specialised food processing industry.

Moreover, it can also significantly contribute to industrialization by providing an ample supply of food products. This is because food constitutes a large share of what wage earners in African countries spend their money on. Its availability at low prices contributes to increase the purchasing power of wages, and therefore raise the competitiveness of a country in international markets.

The importance of agricultural development as an ingredient in development and industrialization policies has been shown over and over again. You can see it in the experience of all industrial, developed countries and in the newly industrializing economies of East Asia.

Because of the momentum generated by our success in Bali, WTO members are discussing these issues again, for the first time in six years. And we have a target of producing a work programme by December this year on the conclusion of the Doha Development Agenda.

I care deeply about the Doha Development Agenda. I have been working on this since 2001 and if there is someone who wants to see it completed, it's me.  

In my conversations with leaders around the world I have detected a new willingness to engage on Doha and give it another chance.

We are working hard on this down the road at the WTO. Just last week I called on all members to redouble their efforts so that we can meet our December deadline.

The conclusion of the DDA would be a huge boost to development. So we must take this opportunity.

Beyond the DDA, the WTO can support the cause of industrialisation and inclusive development in a number of other ways.

Infrastructure is essential for trade — but so too are the necessary back-up services.

Therefore, the implementation of the Bali decision on the LDC Services Waiver is very important.

WTO members will soon consider the preferences they could give to LDCs in this area. And I hope that the timely submission by the LDCs of their request will support this process.

Another area which demands our focus is improving supply capacity and human resources.

Through our capacity building and technical assistance programmes such as Aid for Trade and the Enhanced Integrated Framework for LDCs, the WTO is doing a great deal to support this.

Despite continued pressure on donor budgets as a result of the economic crisis, Aid for Trade commitments have risen by 20% since 2011. In 2012 they stood at 54 billion dollars.

Most of this increase has gone to Africa whose share of Aid for Trade has risen to 40% of the total flows — which is the largest share overall.

Significantly, the majority of these commitments have been directed to improving Africa's economic infrastructure and building its productive capacity. Over 20 billion dollars were directed at these two priorities in 2012.

These resources finance cross-border road projects, private sector development funds for the region, and basket funds for trade facilitation, agricultural development and support for fair-trade products.

So I think this is an important contribution to the challenges we are trying to address here today.

These issues are undoubtedly complex. Success will involve a large number of policies: economic, social and political — domestic, regional and multilateral.

But, despite this complexity, it's clear that an essential component in the policy mix is trade.

I hope I have illustrated this point today — including how trade is already making a difference, and what more we can potentially achieve if we continue to work together.

As I have indicated, I believe we are in a better position to make real progress now than ever before — particularly when it comes to trade.

This is why I believe that trade must be fully reflected in the post-2015 development agenda — and why I hope that the WTO will be a vital forum for achieving everything that is on our agenda here today.

So let's make sure we deliver.

Thank you.

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