WEDF 2012 Opening Remarks: Mrs. Patricia Francis

Your Excellency President Susilo Bambang Yudhoyono,
Your Excellency Minister Gita Wirjawan, other distinguished Ministers, Members of the Diplomatic Corps, Heads of Agencies, Private-sector leaders, representatives of the media, ladies and gentlemen.

Good morning, welcome to Jakarta, and welcome to the 13th annual World Export Development Forum!

I want to thank you all very much for joining us here today.
I would especially like to thank our host, Indonesia’s Ministry of Trade, and in particular the Minister of Trade, Gita Wirjawan, and my dear friend Gusmardi Bustami, Director General of National Export Development, as well as the hard working team at the Ministry.

We were very pleased during WEDF 2010 in Chongqing, China, to be approached by the then Minister of Trade, Mari Pangestu, and Soy Pardede of Kadin, the Chamber of Commerce, to consider Indonesia as a potential host for WEDF.

We are here today because of the commitment of Indonesia to see this idea through to fruition, and we are indebted to Minister Gita for inspiring the focus of this event: Linking Growth Markets: New Dynamics in Global Trade. This event would not have been possible without their vision, leadership and partnership.

WEDF 2012 is taking place at a time of political change in China, on the eve of presidential elections in the US, against a background of conflict and change in the Middle East and at a turbulent time for world financial markets. The Euro-zone is struggling with a deep economic and financial crisis, while growth in industrialized countries continues to be slow. As a result, many emerging economies are now experiencing flat or in some cases even declining exports to key traditional markets.

Not all news is grim, however. There are some bright spots, especially as we consider the prospects for growth markets in developing countries in particular, or South-South trade, as it is termed in the UN system.

This development is not new, of course, and it has been discussed for quite some time, but we believe that it has now reached a “tipping point” where we are finally beginning to see emerging economies diversify their exports towards other emerging economies. 

Certainly, developing countries are still largely reliant on industrialized countries for their exports. But the trend is real and global. A recently published ITC research paper highlights the fact that based on current trends, a reorientation of sub-Saharan African exports is already taking place: we are forecasting an annual trade increase of up to 14% in exports to Asia over the next decade. But, while at first sight this trade growth is very impressive, this is chiefly down to the increase of exports of oil and other commodities rather than value-added processed goods, which make up only 5% of exports to Asia.

The challenge facing African policymakers is to maintain the overall growth in exports to Asia while moving up the value chain towards the export of processed goods. This is already happening in the case of exports to Europe and, even more so, in intra-African trade, where processed goods comprise 46% of non-oil exports. 

The problem is that traditional markets are not growing, creating a paradox for African countries: they have to increase overall exports to growth markets while boosting the added value component of their exports.

To resolve this paradox, we need to look at why African exports to Europe include an increasingly higher proportion of value-added products. Much of these exports are taking place within supply chains of multinationals – that is to say, they are the consequence of foreign direct investment by European-based multinationals in Africa. To increase value added exports to Asia and Latin America, African countries need to attract investment from these regions not only in extractive industries, but also in manufacturing. The value addition in African exports will be a natural consequence of this change.

Though we often focus on Asia and Latin America when talking about South-South trade, intra-regional trade within sub-Saharan African countries is also increasing. ITC’s research paper on Africa’s Trade Potential estimates that cutting the time needed to clear customs by 50% would generate an extra US$ 15 billion annually in GDP for sub-Saharan Africa. What’s more, reducing the cost and time required to export goods within the continent by half would boost GDP by more than US$ 20 billion annually, mostly through export growth, significantly contributing to poverty reduction efforts. 

While infrastructure improvements are obviously important, the key insight of our paper is that the potential of much cheaper and simpler trade facilitation reform is comparable to the effects of costly infrastructure overhaul.

Research carried out by McKinsey and HSBC on Africa’s growth potential also confirms this trend, showing that growth is widespread across industries. By 2015, Africa’s 87 million middle class households will drive consumption and help expand the continent’s manufacturing and services sectors, boosting employment and reducing poverty. 

As pointed out in the ITC research, South-South trade is not without its drawbacks and risks. The trade is largely driven by a few countries – the so-called “Emerging 7” – and, for now, by a limited number of commodities.

Sustainable growth of South-South trade will require investments in new capabilities, trade facilitation measures, infrastructure, and trade finance. But the expansion of these growth markets has the potential to revolutionize world markets in the same way that trade between developed nations revolutionized markets in the 50s and 60s.

The opportunity is real. The South must become a real partner rather than a bystander in the process. Many of you are already moving in this direction and can point to a number of success stories and good practices. 

Over the next three days, you will have the opportunity to hear many of these stories, discuss lessons learned, and evaluate various policy options.

We expect you to actively listen and participate in these conversations, knowing that the impact of WEDF goes beyond inspiration, learning and knowledge sharing to what you do after you leave this forum.

Over the past 14 years, WEDF has catalyzed action and partnerships. 

For example, during WEDF 2010 we launched The Women Vendors Exhibition and Forum (WVEF), an annual event of the Global Platform for Action on Sourcing from Women Vendors. We now have over 300 members, including multinational corporations, with a buying power of US$700 billion annually. The Platform aims to increase the share of corporate, government and institutional procurement secured by women vendors as a means of promoting women’s economic empowerment.

Other initiatives have been launched by our previous WEDF partners in China and Turkey to facilitate greater levels of trade and investment with LDCs and we expect that this year will be similarly impactful.

The conference will provide multiple opportunities to engage on a number of issues that have relevance for South-South trade and help you take action.

The sessions today are designed to amplify our understanding of what is actually happening with the emergence of growth markets, to look at how trade facilitation can enhance inter- and intra-regional trade and to provide insight into how Indonesia is tackling the issue of connectivity. Over the following two days a number of plenary and parallel sessions will explore commodity supply chains and the impact on food security, as well as adding value and financing trade.

My hope is that you will take full advantage of this conference, which is designed as a one-of-a-kind knowledge sharing and networking opportunity.

I also hope that we will leave this forum with a set of actionable ideas that will help you expand trade with growth markets.

Just think about the power of the people assembled in this room.

Together, we have the authority to design and implement policies that can fundamentally change the trading system; provide financial support to the business community; build the capacity of key actors - businesses, information providers and other intermediaries; produce the goods and services that add value for sellers and buyers alike; and ultimately ensure that the trading system is more inclusive and benefits people, their communities, and the environment.

We want more out of South-South trade than what we gained from North-South trade. Yes, we need economic growth; yes, we need to find new markets that will help businesses grow and create employment and wealth. We know that trade benefits everyone, and now we have an opportunity to create a new model, one that breaks the cycle of dependency, is inclusive of women and the poor and, creates real and long-lasting partnerships.

Let me finally thank all who made this event possible. The Government of Indonesia, our sponsors, you who have taken time out of your busy schedule to attend WEDF and finally my team at ITC who have worked hard to make things happen. Let me also thank the media as without you we could not get our message out. Thank you.

Once again, welcome to WEDF. I wish you all a fruitful conference.