Lord Green’s speech on ‘The road to Bali’

25 October, 2013

Lord Stephen Green, trade facilitation, Africa, economy, growth, poverty, trade,

Lord Green, Minister of State for Trade and Investment Department for Business, Innovation and Skills spoke at our conference today on Trade facilitation for African economies

 

Lord Green’s speech

The road to Bali: driving and delivering a meaningful consensus

“Why is trade important? World growth depends on world trade.

One sure way of miring us more and more in poverty would be to put up the barriers, restrict trade, and force everybody to be more local in their business connections. One sure way of creating sustainable growth is to open up more and more sectors of all of our economies to the opportunities from trade. All the evidence is that when you do that, people flourish, people prosper, businesses grow and you create more jobs.

The original case for this goes back to a British economist from the 18th Century: David Ricardo, whose position has never been seriously controverted. Namely that trade benefits both parties. Even if there’s a clear actual advantage in all products, it’s still beneficial for countries to trade under comparative advantage.

The more recent international background is the failure of the Doha development round. Nobody’s quite ready to proclaim that dead yet but it’s clearly comatose and we’ve made very little progress and the world needs to be ashamed about that.

We have an opportunity coming up in Bali to prove that the Doha development round is not dead, and indeed to prove that the WTO has a significant strategic role to play in the world’s economic development.

The point of reminding ourselves of this background is to remind ourselves of what a great prize there is in getting this right. What is on the table at Bali is a trade facilitation deal and there are a lot of exports around this table who will know more about the minutiae of that than I do.

It is the main endeavour of Roberto Azevêdo, the new director general of the WTO, to try to pull together a consensus behind any package of measures that we could get signed off at Bali.

What is clear to me, and I suspect everybody, is that this will not be the end of a process; it will be the beginning or the continuation of a process. A post-Bali roadmap will be one of the things that we have to identify the contours of and there will be international dialogue on various aspects, both of trade facilitation and of other matters, like agriculture, that will have to go on after that.

If we fail, it would be a negative stigma for the world at large. If we succeed, this will be part of a process and not the end of one.

It is important to recognise that a trade facilitation deal, if we can get it done, is worth maybe half of all the benefits of Doha. So it is not trivial, it is very significant. It is also very clear that every single country gains from it.  Some gain more than others, of course. Some gain in percentage terms more than others, but every country gains from what is on the table in terms of trade facilitation.

This is about smoothing pathways across frontiers for trade. It takes 30 days from one end of Africa to the other, half of which is spent at boarders—offloading produce for inspection, filling out forms. The obvious impediment that creates for trade, especially for landlocked countries, doesn’t need spelling out.

We all know why it’s there and we all know that in many cases finance ministries quite like the revenue that it generates. But the clear benefits, particularly to smaller businesses, of being able to get across borders more freely is one that will contribute materially to the growth in global trade and to rising prosperity.

That’s essentially the case, and there are some strong examples of where improvements in the harmonisation of form–filling, and all the basic minutiae of that kind that goes with trade facilitation, has quite a dramatic difference. DFID programmes invested in an enhanced border control programme in Zambia and the dramatic effect of that on numbers of days waiting at the border, and the amount of perishable goods lost, was very significant. We could all replicate examples of that kind from our own experience.

As always in international negotiations there are other things that are attended to the agenda. Entirely understandably, the least developed countries and the less developed countries are looking for assurances of support to implement over a period of time and assurance that there’s adequate assistance and other forms of technical assistance to help get this done. They’re wary of making commitments to unrealistic timeframes. All of that I think is entirely understandable.

There have been some good proposals coming through from the African Union and Caribbean groups. I think those need to be taken very seriously because they’re very realistic and would make a great deal of difference to sensible implementation.

There are also other things on the table. There are proposals about food security and there’s dialogue going on between those who are concerned that this might be a means of introducing covert support to agriculture, in a way that has got nothing to do with trade facilitation. There is a demand on the part of least developed, least developed and developing, of the developed (particularly EU and US) to forgo export subsidies in key agricultural sectors.

These next few weeks are crucial. An immense amount of work is going on amongst the various representative organisations in Geneva, of all the various countries and groupings on countries. We need to get, by no later than the middle of November, that as much of a it is agreed as possible, and that leaves a couple of weeks in the latter part of November, and Bali itself in the first week of December, to make whatever big ticket political agreements are needed to get it over the line. And we’re not there yet. We certainly can’t assume it’s in the bag.

I end with what I was saying earlier: this is an immense pride if we can get it right. All countries benefit from this. It’s also binary: if we fail, if we came away with no agreement, this would deal a very serious blow to the standing of the WTO and international trade discussions generally. So we can’t allow that to happen either.

This is an important juncture and I am looking forward to spending a lot of time on this over the next few weeks and culminating in that week with the actual ministerial meeting, because I think there’s an immense amount at stake. I can’t think of anything that would unleash as much SME potential as a really good trade facilitation deal. It needs to be helped through. There are legitimate issues and worries and I think that although countries have got to show a degree of wisdom about this, everybody’s got to show a deal of realism about this.

But if we get all this together, and it’s a collective challenge to keep the pressure up, for our part (the UK), we will continue to push within the EU for an appropriate stance on this by the EU. We will continue to push for a reasonable position, particularly on the matter of export subsidies that I’ve referred to.

We will continue to push the US to get themselves in a reasonable position. But it’s not just the developed countries. China needs to step up and show leadership in this, because China’s a big beneficiary of this but beyond that China’s an important voice for the developing country agenda.

There are many people around the world—the more you look at it, the more you see—and this is the deal we’ve got to do somehow. The more people look at it, the more they recognise that failure to do it would miss a big impact for us all.”

Further information

Conference on Trade facilitation for African economies

 

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