WEDF 2012: Plenary Session I

Trade Facilitation: Enhancing interregional and intra-regional trade

The plenary discussion on trade facilitation was moderated by Ms Valentine Rugwabiza, Deputy Director General of the WTO. A lively discussion examined several aspects of the subject, including issues of hard and soft infrastructure investment, improving connectivity and reducing costs to increase inter- and intra-regional trade flows.

Dr Surin Pitsuwan, Secretary-General of ASEAN, said that trade between member countries of ASEAN is currently rather low, and the only way to increase it is through the integration of SMEs into the trade. To do this they need access to markets, finance and technology. He said there is a need to improve logistics and infrastructure in the region, enhance connectivity and bring greater harmonization to rules, regulations and standards. If the member countries could do this they would be able to widen production and distribution networks and also become more integrated into the global economy. Greater connectivity would spur imports and exports that currently suffer costly delays that reduce trade flows. He also noted that one result of the global economic slowdown had been a tendency to apply non-tariff measures (NTMs). ASEAN is urging countries to resist the temptation to do this.

Dr Rob Davies, South Africa’s Minister of Trade and Industry, said that Africa has much to learn from Asia in terms of economic integration. Africa currently accounts for only 3% of global trade and only 1% of world manufacturing. Although growth in Africa is encouraging, the pattern of development needs to change in the next decade. Countries should not just be producers and exporters of primary products, but need to move up the value chain. They also need to understand the importance of intra-regional trade, currently representing only 10% of the total compared to 25% in Asia. Looking at the broader picture, there is a need to develop supply capacity, based on economic diversification, and then to address the problems of hard and soft infrastructure – although the Minister said the two were too intertwined for a real distinction to be made between them.

Mr Salah Sharaf, Director of the shipping company the Sharaf Group, United Arab Emirates, described how Dubai had achieved its position as a trade hub for Asia, the Middle East, Arab countries and Africa. He said there are four key elements guiding decisions on investment. The first of these concerns rules, laws and regulations: countries need to be liberal and open, and welcome foreign investment. The government needs to be transparent and predictable, with no hidden agreements or personal interests. On infrastructure, he said development should focus on both cargo and people, citing the example of the Dubai free zone, which has attracted some 7,000 companies to the area, and Dubai airport, which today is used by more than 100 airlines. The third imperative is security, both internal and external. Countries need to develop good relations with the international community. Finally, Mr Sharaf emphasized the importance of people: there should be no discrimination by gender, nationality or religion. He noted that people of more than 180 nationalities live in Dubai today. Governments, he summed up, have a major role to play in investing in infrastructure and opening the doors for development.

Dr Peter Allgeier, President of the Coalition of Services Industries of the United States, said it was important to talk about trade facilitation as the world was facing a new dynamic in world trade. In contrast to the classical model in which an item was produced in one country and exported to another, today production processes have become disaggregated, with components and manufacturing processes being combined from suppliers all over the world as well as within subsidiaries of a single multi-national. Thus countries are no longer trading in goods but in tasks. For this model to work, companies need to be able to move items across borders quickly and efficiently, relying on an efficient and transparent customs infrastructure. This new model also provides opportunities for SMEs to join the global production system and become exporters. Most SMEs cannot export directly, but they may be able to feed into the global supply chains of larger companies. Dr Allgeier stressed the importance of the internet and electronic communications, and also of attacking corruption.

Dr Davies commented that while he agreed that trade facilitation was an important issue, it was not a magic bullet to solve all the problems of the international trading system. He characterized Dr Allgeir’s vision as being too close to the vision of transnational corporations, but this might not be ideal for developing countries, which may be at the bottom of the global value chain. For them, this was not just a matter of customs services operating smoothly, but belonged much more in the domain of industrial policy, training, education and skills. It was important to recognize the huge challenges they face and also the damaging distortions to global agricultural markets of subsidies and tariffs in the developed world.