WTO NEWS: SPEECHES — DG ROBERTO AZEVÊDO


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> Roberto Azevêdo’s speeches

> Fourth WTO/WB/IMF Trade Workshop

Ladies and gentlemen — good morning.

I’d like to wish you a very warm welcome to the WTO. And welcome to this fourth Annual Trade Workshop bringing together the trade experts from the WTO, the World Bank and the IMF.

I’d also like to extend my thanks to the presenters and organizers for making this event possible.

This initiative helps us to be more coherent and consistent in economic policy making.

It supports a better understanding of the interactions between different policy areas.

And I think that presenting work and sharing ideas in forums like this can spark new thinking in ways we simply can’t predict.

So I hope it will be a very fruitful day.

There is a wide range of trade-related issues where further research would be very positive in increasing our understanding.

I want to highlight three areas this morning which are of particular interest in our work here at the WTO. I’ll throw out a few questions as well to give you a little food for thought during the day.

First, I would point to the relationship between trade and growth.

Policymakers have long held that faster trade growth drives faster GDP and income growth, because of increased economic efficiency, higher inflows of foreign direct investment, and greater availability of technology.

This belief led many countries to successfully adopt liberal trade policies.

So how should we interpret or understand the current slower trade growth, which is now almost at a par with GDP growth?  

Does it mean that the benefits of trade will be smaller, and as a result that GDP growth will be lower?

Or, inversely, does it mean that lower GDP growth slows the demand for tradable goods?

Or, perhaps is it a mix of both? More than that, we could assess whether this lower ratio between trade and GDP growth is now a more permanent feature. What causes it? And what are the implications of all this for economic policy? Can we draw the same conclusions that we did before? Are we facing a new paradigm?

This is an area which would benefit from further detailed study.

I have argued that the change in trade growth is due to a mix of structural and cyclical factors.

In addition, I think it is possible that we are not seeing the true picture because our methods of measuring trade need to be updated.

For example, trade in software and services is not fully captured statistically, so growth in these areas is not fully reflected in the figures.

There is also the question of how to measure trade in components: should they be counted every time they cross a border, or should the value they add to the final product be captured just once?

It would be legitimate to argue that double-counting doesn’t accurately reflect the contribution that trade provides to global growth.

So this is an area where we need to improve our analysis — or rather, where you could improve the analysis!

The second area I wanted to touch on is trade finance.

Up to 80 per cent of global trade is supported by some form of financing or credit insurance.

Despite this, in many countries there is a lack of capacity in the financial sector to support trade, and also a lack of access to the international financial system. Therefore the ability of these countries to use simple instruments such as letters of credit is limited.

The impact of these limitations on a country’s trading potential can be very, very significant.

So what measures can we take to address the gaps in trade financing that exist today?

Moreover, do we fully understand the links between trade finance and trade growth?

In the wake of the 2008 financial crisis trade growth fell off a cliff.

We understand many of the factors behind this, but we don’t, for example, have a full picture of all the external sector spill-over effects in this increasingly interdependent world.

So this is another area where our organisations should continue to work together — and I know that the WTO has a strong partnership with the IMF on this issue.

The final area I want to touch on is the role of trade in ending poverty.

This is the subject of a new report produced by the WTO together with the World Bank. In fact Jim Kim and I will be launching the report here tomorrow morning.

The report argues that while trade has played a huge role in lifting people out of poverty in recent years, there are some groups that often do not feel the full benefits. For example:

  • Gender inequalities mean that women face a range of constraints that limit their ability to participate in trade.
  • The rural poor are often isolated from markets and lack access to technologies that could boost their incomes, like modern seeds and fertilizers.
  • In times of economic downturn, workers in the informal sector often fall into poverty as they have no social safety net to catch them.
  • In addition, more than 40 per cent of the extreme poor live in fragile and conflict-affected areas — and so this creates another major hurdle for the poor to reap the gains from trade.

Our joint report sets out a five-point plan to ensure that these groups can begin to feel the benefits of trade in a more significant way.

And one of these five points is that we need better data.

Enhanced collection of data and analysis will help policymakers design and implement effective policies for maximizing the gains from trade.

So, again, this is an issue to which we need to apply the tremendous brain-power that we have in this room!

Of course there are many, many other topics where interesting and useful work needs to be done — these are just three examples.

But perhaps the issue of trade and poverty is a good one to finish with, because I think it is vital that researchers make their efforts relevant and accessible.

Of course, I could just as easily have picked the work on trade and skills which we’re doing with the ILO, or a number of other examples.

In a world which is increasingly complex and interconnected — and when growth is in short supply — good research is more important than ever in influencing good policies.

And if it is to have this kind of positive impact, then I think it has to be set it in the wider economic context — and it has to be presented in a way that allows policymakers to engage.

So that is your challenge today.

Our three organisations are dedicated to creating a stronger and more stable global economy so that people around the world can lead better lives.

We can’t do any of that without the research, the ideas and the evidence that you provide.

So keep going — and I wish you a very successful day.

Thank you for listening.

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