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Trade as a force for Good

By Roberto Azevedo
Director General WTO

We need to promote a well-informed,  calm and balanced debate,  and we need to continue working to reform  and improve the global trading system, to the benefit of all.

Amidst the recent flood of rhetoric about trade, I think it’s crucial that we remember one fact: trade has the potential to change people’s lives for the better. Trade was a driving force behind the rapid growth and prosperity enjoyed by many developed countries since the Second World War, and it continues to support those economies today. Meanwhile, the benefi ts of trade have also begun to reach people in less-developed economies. Over the past quarter century, one billion people have been lifted out of extreme poverty. Around two-thirds of that poverty reduction came from economic growth in developing countries–with trade acting as an important driver.

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Nevertheless, it is important to acknowledge that trade is not perceived so positively in many constituencies. There are a number of specific concerns which are often raised. They must be heard and responded to if we are to ensure that trade keeps delivering the economic gains of which history shows it is capable.

For example, we must recognize that while the benefits of trade are spread across the economy, the effects of increased competition can hit specific communities hard. We need to put more focus on how governments can mitigate those impacts. We must also rectify the perception that imports make jobs disappear. Actually, the vast majority of jobs are lost because of new technologies and increased productivity. In addition, we need to address the perception that trade only favours the big companies. This is not true, but there’s no doubt that trading internationally is normally much more costly and difficult for small enterprises. We need to support micro, small and medium-sized enterprises (MSMEs) to trade – not least as they are huge job creators, accounting for around 90% of the workforce in many countries. In responding to these concerns, we need to promote a well-informed, calm and balanced debate, and we need to continue working to reform and improve the global trading system, to the benefit of all.

A lot has already been achieved on this front. The WTO’s members have quietly delivered a run of trade reforms over the last two and a half years, such as the Trade Facilitation Agreement. This was the first multilateral trade agreement since 1995 and it could reduce average trade costs by over 14% globally. WTO members also agreed to abolish export subsidies in agriculture, which was the biggest reform in global agriculture trade for 20 years. And, a group of members have struck a deal to eliminate tariffs on a range of new generation information technology products, worth around 1.3 trillion dollars each year.

These agreements will help to lift trade and economic growth, but clearly there’s more to do if we are to get trade moving again for small and large businesses alike, in developed and developing countries alike. That’s what we’re trying to do at the WTO. Every WTO member agrees that we need to make progress on outstanding issues such as domestic subsidies in agriculture, and improved market access for agricultural produce, industrial goods and services. Some are also keen to discuss a range of other issues, such as facilitating digital trade, promoting investment, and ensuring that the trading system supports MSMEs. In each case, flexibility and creativity will be essential ingredients if progress is to be made.

This is a crucial time in the trade debate. If we work together, there is a huge amount we can do to ensure that trade continues to improve people’s lives. If we don’t, we risk exacerbating wider economic problems and to the detriment of global growth and development. As ever, the G20 will play a leading role in this debate, and in strengthening global trade for the benefit of all.

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