The
Growth Markets’ Potential: What their emergence means for the future
The opening Plenary session of WEDF 2012 was an
open discussion moderated by Ms Haslinda Amin of Bloomberg TV, Singapore. Participants
covered areas including the prospects for enhancing South-South trade, as well
as constraints faced, including the problem of volatility in commodity and
currency markets.
Mr Pascal
Lamy, the Director-General of the World Trade Organization (WTO), told the
forum that growth in Europe, the USA and Japan should not be expected for five
years, and emerging countries need to ride the new dynamics of globalization,
which are become increasingly South-South in orientation. There is a need for a
change in the existing North-South mind-set in trade negotiations, and in the
future developing countries need to pay more attention to what is happening in
other developing countries.
Dr Supachai
Panitchpakdi
, the Secretary-General of
the UN Conference on Trade and Development (UNCTAD) said that South-South trade
had been expanding rapidly and developing countries are now exporting more to
each other than to the rest of the world, although much of this trade is still
concentrated in Asia.
Much of
South-South trade is in intermediate goods, with the final products heading to
the North. Thus some export-oriented economies in Asia are not doing well
because they rely on global supply chains that depend on Northern consumption. He
expressed concern that different continents appear to be caught in traditional
roles: Latin America exporting food products, Africa minerals and raw materials
and Asia manufactured goods. There is a need for diversification, investment
policies need to be addressed in different ways, and NTMs need to be tackled.
H. E. Minister
Gita Irawan Wirjawan discussed the difficulties Indonesia had experienced
in diversifying away from dependence on exports of natural resources. There
could be, however, still good opportunities to move towards a more
knowledge-based economy based on exports. There is a need for focus on
education if Indonesia is to move up the value chain. He noted that the country
tends to export to other Asian countries, which are in
turn dependent on exporting to Europe, so that the economic downturn in Europe
has resulted in an inability to expand exports in the short term. Signs of economic
improvement in the United States and Europe will be reflected in Indonesia.
Dr
Marta
Lucia Ramirez de Rincon, CEO of the National Coalition for Colombian
Production and former Minister of Trade, said that in recent years Colombia has
seen strong growth in mining, and oil and gas, while more traditional exports
have been growing at a lower pace. The government is using royalties from oil
and gas and mining to invest in innovation and education. There is also a need
to support the agriculture, manufacturing and services sectors. While the
country would not abandon its main market, the United States, it is looking to
increase trade with other Latin American countries, taking advantage of its
knowledge of markets and the common language.
Ambassador
Yonov
Frederick Agah, the Permanent Representative of Nigeria to the WTO, said
that Nigeria’s high level of dependence on natural resources, and particularly
oil and gas, meant that agriculture and manufacturing had declined over recent
decades, along with transport infrastructure such as roads and railways. The
government is now using oil revenues to address these problems and support the
private sector in areas like trade finance. The aim is to be a country friendly
to foreign direct investment, with a more streamlined customs agency system,
and to develop trade links in the ECOWAS sub-region, including a connectivity
initiative creating a Lagos-Abidjan corridor and a coastal ferry system.
In subsequent discussion, Minister Gita said more progress in breaking
down trade barriers would have been made in Asia without the Asian financial
crisis of 1998. The lesson learned was that patience is required and that
results would not come overnight. He also raised the problem of price
volatility in commodity markets attributable to speculative activity. For
example, far more oil is traded on international markets every day than is
physically consumed.
Dr Supachai
drew attention to the important work ITC is doing in trade intelligence,
helping countries to understand the markets available to them, and also on
NTMs. He said that for years efforts had been made to find ways of measuring
NTMs, which are not always tangible or easily measurable. There is a need for a
transparent system of NTM measurement with a focus on South-South trade. He
highlighted that UNCTAD is working on an automated data system on customs
operations. He agreed that speculation in commodity markets is a problem, while
accepting the need for futures trading and hedging. He did not believe that speculation was good for exchanges,
and added that trade restrictions could create unpredictability in markets.
There is a need for more transparency, and he noted the creation of the AMIS
information exchange system by the G20 and said he believed there is a need for
a global governance mechanism that goes beyond the G20 to coordinate matters
such as quantitative easing. He expressed concern about the inflationary
potential of excessive liquidity and said countries need a policy-based system
to manage capital flows.
Mr Lamy
said that improved rules were needed regarding trade in natural resources: in particular,
on export restrictions, which are currently weakly regulated. He agreed that
NTMs, and in particular the discrepancies between them, were hugely important
as future obstacles to trade. In future, tariffs themselves would be less
important. On the issue of speculation, Mr Lamy said WTO would like to see a
more stable environment for trade, whether in commodities or currencies, but
the problem is how to achieve this. One reason for volatility is that markets are
not open. In some sectors there is a degree of cartelization. Responding to a
question on ways to increase trade capacity, Mr Lamy referred to the WTO Aid
for Trade programme and said there is a need for a redirection of international
development assistance. Aid for Trade could help LDCs whose human and
productive capacities are lagging by helping them to understand and track
markets.
Dr Ramirez said South-South trade provided
opportunities to improve and develop capacities. There is a role for governments
in supporting innovation, increasing knowledge of markets, strengthening institutions,
legal systems, logistics and transportation systems: all essential to improve
competitiveness. There is a need for stable, long-term policies.
Following the Plenary session, the Ambassador of
Switzerland to Indonesia, Timor-Leste and ASEAN, Mr Heinz Walker-Nederkoorn was invited to address WEDF delegates in
recognition of Switzerland’s generous support in facilitating the participation
of delegates from various developing and Least Developed Countries (LDCs).
The
Ambassador highlighted the need to address trade-related challenges using what
he called the “3-Cs approach”: compete, comply and connect. He said that for
companies to compete in international markets supply capacities need to be
enhanced through practical action, including innovation. Consumers and retailers
demand reliable, transparent, and internationally recognized information
regarding production and processing methods. Institutions that can ensure
quality and consistency in complying with international standards must be
developed. Since value chains are increasingly global, improving production at
the farm or enterprise level without progress in logistics and supply chain
management is not workable.
The
Ambassador concluded that, since trade development is a complex activity involving
a diversity of players, concerted and coherent action is critical. He
highlighted the need to involve the private sector in trade development and
improve coordination between multilateral and bilateral technical cooperation.
He emphasized Switzerland’s commitment to partnerships with multi- and
bilateral agencies and their priority partner countries, including Indonesia.