Developing countries must set up national strategies and build industrial capacities to better integrate their economies into high-value-added activities in the value chain, thus bolstering trade, creating jobs, and reaping better income opportunities, eminent policymakers and experts said Tuesday at a panel discussion titled “Reflections on the international trading system and inclusive development.”
The debate, held on the fourth day of the UNCTAD XIII quadrennial conference here, featured the Secretary-General of UNCTAD, the Director-General of the World Trade Organization (WTO), trade ministers, ambassadors to the WTO, officials of several other international agencies, and representatives of the private sector. The panel discussion was moderated by Ransford Smith, Deputy Secretary-General of the Commonwealth Secretariat.
Trade is a necessary but not sufficient condition for achieving inclusive and sustainable development, these speakers emphasized. How, what, and in which sequence countries liberalize their economies, and what policies they implement, matters a great deal in how effectively and broadly the benefits of trade are spread through national populations, they said.
“The multilateral trading system is a precious global public good for all and should be strengthened,” UNCTAD Secretary-General Supachai told the gathering. The international trading system is becoming multi-polar with new players emerging onto the scene and more trade opportunities shifting to the South. The multilateral trade architecture plays a central role, he said. Currently, he told the meeting, there is tension between globalization and national development agendas. He called for finding ways to make the two coherent and complementary.
WTO Director-General Pascal Lamy said “The multilateral trading system is in no need of reform.” He said that although trade structure has changed, the issues debated in the WTO have not changed. Instead, the relative importance of issues has changed, and each faces domestic political constraints. The problem is with the domestic constituencies resisting further trade liberalization, fearing competition, he said.
A principal difficulty with harnessing trade for development gains is that developing countries are mostly producing raw materials and consuming finished goods, panellists at the meeting said. The fundamental problem is how to shift these economies into producing higher-value-added products and how to create much-needed employment. This is not simple and requires strategic policies that support industrial development, South African Trade Minister Rob Davies said. For African countries, enhanced regional integration will help contribute to their trade, domestic capacity building and economic growth, he said.
Various panellists said developing countries need a balanced and equitable outcome from the Doha Round of trade negotiations. They said it is important that the outcome give high priority to development concerns, such as by improving market access and eliminating trade distortions that affect developing countries. Some developing country products have comparative advantages, they pointed out, but still face high tariffs in some developed countries.
“Development” is not sufficiently integrated into the new trade narrative, several speakers said. Global supply chains are not a panacea and the so-called “old” trade issues – such as reform in agriculture and trade in other goods – should not be forgotten, these participants contended. What has changed over the last decade is the number of actors and their composition and different economic capabilities. The impasse of the Doha Round is not about an institutional problem but about an equitable balance, said Roberto Carvalho de Azevêdo, Ambassador of Brazil to the WTO.
Jayant Dasgupta, Ambassador of India to the WTO, said trade liberalization should serve as a “development tool” and should not be seen as an end in itself. Trade liberalization creates winners and losers in the short run, and the magnitude of adjustment can be unsustainable for developing countries with weak domestic capacities. Sound regulatory frameworks and institutions, complementary policies, and social safety nets are needed for sustainability and inclusiveness, he told the meeting.
Zhang Xiangchen, Director-General of the Policy Research Department of the Ministry of Commerce of China , said China would like to play a constructive role in the multilateral trading system, but not a leading role, as it remains a developing country.
Speakers said UNCTAD should continue in its role as a forum and platform for consensus-building on new and emerging issues in international trade and on the trading system, so that these matters can later be taken up for rule-making in other fora, including WTO. In this sense, they viewed UNCTAD’s role as one of achieving coherence in global economic policy making. They urged that UNCTAD’s work be invigorated to better contribute to forging multilateral consensus on issues of particular importance to inclusive and sustainable development.