World Bank Group at the World Trade Organization’s 5th Global Review of Aid for Trade
On 30 June, WBG President Dr. Jim Yong Kim and WTO Director-General Roberto Azevêdo launched pdf The Role of Trade in Ending Poverty (2.26 MB) , a joint report which sets out an agenda for maximizing the contribution trade makes to poverty reduction.
Examining extreme poverty through the lens of four characteristics that hold the poor back from benefiting fully from trade opportunities – rural poverty; gender; fragility and conflict; and informality – the report provides a broad framework for deepening the poverty impact of trade integration.
Supporting this, Dr. Kim and WTO DG Azevêdo announced that the Aid for Trade initiative will be used in future to focus more intensely on the poverty impact of trade-related assistance. In a joint press release they also announced a new collaboration, led by the Bank Group and WTO, to develop better indicators for monitoring and reducing trade costs facing the extreme poor.
Opening High Level Session
President Kim also delivered an address to the opening plenary of the Global Review. The speech provided a strong statement on the importance of trade in achieving the Twin Goals, by lowering trade costs between countries, and doing more to connect the poor to market opportunities. President Kim made the case that evidence showed the greatest impact on poverty has been achieved in countries that connected their people to markets, while undertaking complementary reforms to ensure gains were widespread.
At the opening plenary, the WTO DG and OECD Secretary-General launched a pdf Aid for Trade at a Glance 2015 (4.31 MB) including a chapter from the WBG on the evolution and drivers of trade costs (Chapter 2: pdf How are trade costs evolving and why? (182 KB) ). The chapter – drawing on the WB-UNESCAP Trade Costs Database – shows that trade costs for low-income countries continue to be around three times higher than for advanced economies, and sets out the key reforms to be undertaken in order to reduce this gap.
WBG Trade and Competitiveness Global Practice Event
On 29 June T&C hosted an event on the role of the new global practice in helping developing countries build competitiveness and lower trade costs. The event demonstrated the ways in which the Global Practice can link the trade agenda with other drivers of competitiveness. For example, the Lesotho Minister of Trade and Industry talked about how the WBG’s support for building private sector competitiveness there, combined with efforts to lower trade costs, had contributed to private-sector led growth.
Similarly, Patricia Francis, the Chair of Jamaica’s Trade Facilitation Taskforce, outlined how WBG support for Jamaica’s goal of becoming a regional logistics hub, had helped drive improved coordination across government. Tekreth Kamrang, Cambodia’s Secretary of State for Commerce, talked about how Cambodia’s trade reform efforts, supported by the WBG, had helped improve the country’s Logistics Performance Index and Doing Business rankings.
The fourth workshop organized jointly by the WTO, the WBG and the IMF took place at WTO headquarters in Geneva on 29 June. The event brought together trade experts from the three institutions to present cutting-edge research on trade and trade policy and to discuss current policy issues. The research part of the conference was organized in three sessions – “Global Value Chains, Growth, and Price Movements”, “Trade, Productivity and Growth,” and “Trading Firms, Uncertainties and Policies.”
The policy part of the conference featured a panel discussion on the “Value of the multilateral trading system at 20” including the WTO’s Chief Economist, Robert Koopman; the World Bank Group Senior Director for Trade & Competitiveness, Anabel Gonzalez; the IMF’s unit chief for trade and external policies, Martin Kaufman; and Professor Thomas Cottier from the University of Bern.
The discussion touched on the value of the multilateral trading system and how to properly measure it; how the rise of cross-border production is contributing not only to change the nature of trade but also the nature of trade agreements, with the increasing role of preferential arrangements; and, finally, what can be done to make sure that the WTO and preferential trade agreements coexists and to preserve the unity of the multilateral trading system.
Supporting Implementation of the Trade Facilitation Agreement (TFA)
On 30 June, Anabel González, the Senior Director for WBG T&C Global Practice, moderated a high-level plenary session on implementation of the WTO Trade Facilitation Agreement. Speakers included the Secretary-General of the World Customs Organization; Executive Secretary of UNESCAP; UK Secretary of State for International Development; and Minister of Trade of Senegal.
The session affirmed the importance of the pdf Trade Facilitation Agreement (150 KB) as part of a wider agenda to lower trade costs faced by developing countries. In the Asia-Pacific, for example, UNESCAP estimates that the TFA is already around 50% implemented, on average, and full implementation of the TFA would bring about average reductions by 16-17% in trade costs.
Effective Implementation of SPS Measures to Facilitate
Anabel González was also a panelist at a session on facilitating safe trade through the effective implementation of sanitary and phyto-sanitary standards. Other panelists included the Director-General of the Food and Agriculture Organization (FAO); the incoming Director-General of the World Organization for Animal Health (OIE); and speakers from Chile, COMESA, Thailand, and Cargill.
Ms. González set out the Bank Group’s experience in facilitating safe trade, showing that in our view there was no question of a choice between trade facilitation on the one hand, and addressing health and safety concerns on the other – the two needed to be done together. This was the approach taken through WBG projects, including those to implement the Trade Facilitation Agreement.
Lessons from Natural Disasters and Other Humanitarian Emergencies on the Role of Trade in Relief and Reconstruction
In addition to the WBG, the panel for this event included representatives from Nepal, Liberia, Vanuatu, Agility Logistics and IFRC to discuss the role trade plays in humanitarian relief and recovery. The WBG Special Representative to the UN and the WTO, Selina Jackson, presented findings from a forthcoming paper that indicates that trade policy has a strong impact – both positive and negative – on the ability of the international humanitarian community to provide relief to disaster affected countries. Border management (trade facilitation) issues were the most obvious and most often cited source of problems in moving humanitarian aid to disaster affected countries. The international community has recognized this and several attempts have been made by the World Customs Organization and others to develop emergency relief guidelines or best practices, but none of those efforts are binding.
The new Trade Facilitation Agreement, once implemented, provides a binding framework under which humanitarian organizations can operate with greater confidence and includes a number of relevant provisions. Other trade-related issues discussed were Agriculture (access to food aid), TRIPs (access to medicines), Goods (access to equipment) and the need for a strong and robust Services industry to adequately respond to crises. There was also a discussion about the impact of disaster on countries’ economies and the need to quickly reconnect to the global economy.
Reducing Cargo Costs in Air Transport – Giving the Bali TFA Deal Wings
The Global Express Association (GEA) and the International Air Transport Association (IATA) shared the results of recent research on the scope and scale of the air cargo industry were presented emphasizing the industry’s contribution to the economic development of many developing and least developed countries. During the panel discussion the WBG discussed the potential impact of the WTO Trade Facilitation Agreement and the need for countries to prioritize full and effective implementation of its provisions.
The Bank also outlined the broad range of trade facilitation support it is currently providing to developing countries and highlighted the specific programs it has deployed to assist countries to implement the WTO Agreement. The session also provided an opportunity to discuss recent international developments in the automation of air cargo procedures and pilot projects the Bank Group is currently developing focused on supporting business process simplification and automation of documentation in the air cargo industry.
Electronic Commerce and the Aid for Trade Initiative
Electronic commerce offers exciting possibilities for SMEs in developing countries to achieve global reach, participate in value chains and even export sophisticated business services. Entrepreneurs in the global South are doing amazing things with the Internet. But In many countries there are still significant impediments to achieving the full potential of e-commerce, ranging from availability and affordability of online access to entrepreneurial capacity to policy-induced problems with payments and delivery.
Landlocked Developing Countries
Klaus Tilmes, T&C Global Practice Director, presented at a session that focused on reducing trade costs in landlocked developing countries, along with the UN High Representative on the topic; and ministers and senior officials from Tajikistan, Mali, Lao PDR, and Uganda. Key themes of the discussion included the high logistics costs faced by LLDCs, export delays, higher costs, and links with other challenges like fragility. This underlines the importance of an agenda targeted at reducing trade costs for LLDCs, given the unique challenges they face. In this regard, the session focused on the importance of the 2014-2024 Vienna Programme of Action, in which the WBG is a key partner.
Motor Vehicle Agreement among Bangladesh, Bhutan, India, Nepal
The civil society think-tank CUTS International invited experts to reflect on a forward-looking agenda for the implementation of a sub-regional Motor Vehicles Agreement recently signed by Bangladesh, Bhutan, India, and Nepal. Signed on 15th June, 2015, the agreement seeks to facilitate easy cargo movement across their borders and is expected to significantly reduce trade transaction costs in this sub-region.
Rajesh Aggarwal, Chief of Business and Trade Policy at the International Trade Centre, who chaired the event, invited panelists representing governments, private sector, civil society and international organizations to share their views on “how can the potential for regional road trade connectivity be unlocked between these four countries?” While the breakthrough of signing this agreement was welcome, the panelists shared concerns with regard to its implementation pertaining to route earmarking, permits for trucks and vehicle operators, vehicle registration, inspections, insurance, local political issues and customs delays mitigating potential benefits.
NTMs and Trade Costs
This session focused on the link between non-tariff measures (NTMs) and sustainable development through trade. The objective was to discuss collaborative work and progress of different institutions in relation to NTM, in aspects such as trade costs, governance, coherence or convergence. Part of the discussion related to data availability and progress in the area of data collection. Some assessments using collected NTM data already indicate that NTMs are more important for trade costs than tariffs.
Panelists also shared their views on the need and ways to overcome other potential adverse effects on trade. There are some instruments at the multilateral level, for example, disciplines and dispute settlement mechanisms, especially on trade remedies or trade contingency measures. At the regional level, convergence between countries is considered convenient for lowering trade compliance costs, improving private companies’ competitiveness through harmonization and mutual recognition of NTMs. At the same time, unilaterally, countries may improve their performance by assuring coherence in their policy choices to attain desired development objectives.
Reducing Trade Costs in the Cotton Value Chain
Ministers of Trade and Industry from Benin, Burkina Faso, Chad, and Mali (‘Cotton 4’) discussed the challenges of developing their cotton industry in the face of high trade costs. Poor quality and high transport costs limit access to inputs and increase the costs of exports. These reflect both weak infrastructure and restrictive policies which result in limited competition in the transport sector.
Three of the ‘Cotton 4’ are landlocked and so cross-border cooperation is required to address these issues. Innovative approaches were discussed, including the WBG’s recently approved regional DPO that will support Cote D’Ivoire and Burkina Faso to implement policies that will transform transport along the Abidjan to Ouagadougou corridor to be modern and competitive. It was concluded that Aid for Trade activities must target the reduction of trade costs for export sectors that can drive poverty reduction.
Barriers Facing Women Traders in Africa: What are they and How Could Aid for Trade Help in Removing Them?
Women are important players in trade in Africa: they produce exportable products, transport goods and provide services across borders, manage and own trading firms or are employed to work in them. However, women’s potential in trade is often held back by the many gender specific constraints they face. In this session the World Bank’s report on pdf Women and Trade in Africa: Realizing the Potential (3.64 MB) was presented and discussed by a panel including Dorothy Tembo, Deputy Executive Director, ITC, Joakim Reiter, Deputy Secretary-General of UNCTAD and Marie Ottosson, Director for International Organizations and Policy Support at the Swedish International Development Cooperation Agency.