Trade and Development Board reviews prospects for sustained growth in wake of recession
Geneva, 22 September 2010 -- UNCTAD´s Secretary-General and the Deputy Director-General of the World Trade Organization (WTO) told the Trade and Development Board Thursday that trade, especially involving the world´s emerging economies, can help boost the exit from the global recession.
Secretary-General Supachai Panitchpakdi and WTO deputy chief Harsha Vardhana Singh spoke at the TDB´s 16 September session on "Evolution of the international trading system and of trade from a development perspective: The impact of the crisis-mitigation measures and prospects for recovery."
Mr. Supachai said emerging trends include an increased role for State guidance of trade and economic growth so that it meets long-term development goals; a need to balance dependence on export demand with domestically driven demand; and an increased emphasis on exports in services, as trade in services weathered the recent recession more successfully than many other sectors.
Industrial policy also appears to be assuming a stronger role, the Secretary-General said. Strategic approaches of that kind help to take into account such issues as job growth and such environmental concerns as climate change, he told the meeting. The point is not to circumvent the free market but to have effective dialogues between governments and the private sector so that practical, sustainable development solutions are found, he said.
Mr. Supachai said there had been few signs of trade protectionism during the global financial crisis, but it is important to be vigilant. With domestic economic stimulus programmes now winding down and private-sector competition correspondingly increasing, governments and the international community should strive to ensure that protectionist measures do not emerge during this time of fragile economic recovery.
The Secretary-General said he hopes ongoing negotiations during the Doha Round of global trade talks will continue to take into account the special concerns of the world´s 49 least developed countries and that the massive Aid-for-Trade initiative will result in effective programmes to support the participation of developing countries in the global trading system.
WTO Deputy Director-General Singh told the meeting that the world "has been experiencing many difficult problems for the last few years, and this has brought severe pressure on the functioning of the world economy." But the turnaround has been among the fastest seen in the wake of a global recession, he said. It has been led, in great part, by a strong rebound in international trade -- "much faster than people anticipated" - and by a major contribution from developing-country economies. The increasing role played by developing countries, if it continues, will mean that in a decade, trade between such nations will account for more than half of global trade, he said.
Markets should remain open to provide the best opportunity for continuing recovery, the Deputy Director-General told the meeting.
"The trend of growing importance of developing countries will continue," he predicted. Along with the "BRIC" countries (Brazil, Russia, India, and China), Mr. Singh cited an "N11" or "next 11" group of countries as showing promising progress in trade.
There needs to be greater fairness in trade regimes, which requires addressing the imbalances of the current global trading system, the Deputy Director-General said. That issue is expected to be dealt with in the Doha Round.
The results of the Doha talks also will prepare the world for the trade challenges of the future and "strengthen the basis for international cooperation, which is required for confronting most of the major issues of our time, as shown during the recent crisis," Mr. Singh said. Such efforts are needed to address development issues, job creation, and environmental challenges, he said.
Trade negotiations and their resulting regimes also should stress efficiency and "value added," he told the meeting.
Introducing the afternoon´s discussion, TDB President Luis Manuel Piantini saidthe topic of trade in the wake of the global crisis is of great importance, especially for developing countries. He said there is a need for "greater justice and fairness in the international trading system" so that poorer nations can reap the benefits of trade, and much progress will be needed, including progress towards achievement of the Millennium Development Goals (MDGs).
During the debate, many countries called for coherent and consistent policy packages in the area of trade and industrial development to build enhanced and diversified productive capacities and to strengthen the resilience of economies. They underlined the need for policy space. The achievement of the MDGs was seen as the biggest challenge for Africa.
Speakers said progress towards those goals is still threatened, with the number of people living in absolute poverty growing. Trade and increased productive capacities was a proven instrument for poverty reduction and job creation, and needed to be supported with a balanced role for the markets and the State based on adequate policies and support mechanisms. More should be done to bolster the agricultural sector and food security, while simultaneously making sure that the danger of trade-restricting measures is fought effectively, they said. And an inclusive, fair, and open international trading system is ever more important.
National representatives said additional Aid-for-Trade resources will be necessary to help developing countries build capacities and take advantage of market opportunities. While welcoming the global recovery now under way, countries warned of shortcomings that became apparent during the crisis, including unemployment, low investment levels, reduced demand and fiscal sustainability. Many countries deplored the lack of political will needed to conclude the Doha Round of trade negotiations.
UNCTAD was requested to continue to analyse these issues and to feed its analysis into the relevant policy debates.
