Development and building trade capacity
Introduction
Aid for Trade seeks to enable developing economies and in particular least-developed countries (LDCs) to use trade as a means of fostering economic growth sustainable development and poverty reduction. It promotes the integration of developing economies especially LDCs into the multilateral trading system and aims to galvanize support to build supply-side capacity and trade-related infrastructure in these economies to improve trade performance.
Acknowledgements
This publication is the result of a joint effort of the OECD and the WTO and was prepared under the overall guidance of Michael Roberts (Head Aid for Trade Unit Development Division WTO) and Olivier Cattaneo (Head of Unit Architecture and Analysis Development Co-operation Directorate OECD). WTO Deputy Director-General Xiangchen Zhang Taufiqur Rahman (Director of the Development Division WTO) and María del Pilar Garrido Gonzalo (Director for Development Co-operation OECD) supervised the work. The publication was edited and reviewed by Ross McRae and Anthony Martin of the Information and External Relations Division of the WTO and by Henri-Bernard Solignac Lecomte Head of Communications of the OECD Development Cluster. Additional contributions were provided by Masato Hayashikawa (Development Co-operation Directorate OECD).
Acknowledgements
The World Trade Report 2024 was prepared under the general responsibility and guidance of Johanna Hill WTO Deputy Director-General and Ralph Ossa Director of the Economic Research and Statistics Division. Director-General Ngozi Okonjo Iweala Chief of Staff Bright Okogu and Trineesh Biswas from the Office of the Director-General provided valuable advice and guidance.
Foreword by the WTO Director-General
The mission of the World Trade Organization as set out in the preamble to its founding Marrakesh Agreement is to use trade as a means to raise living standards create jobs and promote sustainable development. As we mark the WTO’s 30th anniversary it is clear that members have used the open and predictable global economy anchored in WTO rules and norms to accelerate growth and development with enormous positive impacts for human well-being. At the same time many people and places have not shared adequately in these gains.
Inclusive trade and international cooperation
This chapter discusses how the multilateral trading system has helped some economies to take advantage of trade to further their development but has not succeeded in helping others to harness trade for growth and considers what could be done to ensure that the WTO leaves no economy behind. It also examines the effect of the WTO on how the benefits of trade are shared out within economies and discusses how the WTO and trade can be made more inclusive for people and firms. Finally the chapter outlines the areas in which work at the WTO could be coordinated with work at other international organizations to help make trade more inclusive such as by enhancing infrastructure and digital connectivity to bridge the digital gap or by ensuring coherence between trade and environmental policies.
Introduction
Global trade is often accused of creating a more unequal world but in fact the opposite is happening. Billions of people in developing economies are catching up to the more advanced economies as millions of people in the advanced economies continue to move ahead. This global economic convergence is only possible because the world has become more open and integrated – expanding access to new markets new technologies and new models for achieving rapid sustained and inclusive growth.
Trade and inclusiveness within economies
Trade has raised aggregate welfare and reduced poverty without necessarily raising inequality in many economies but the impact of trade is more complex for individuals. People may benefit from cheaper prices larger variety and export opportunities but they may also face increased competition and may therefore either gain or lose from trade. This chapter reviews why although most people gain from trade some suffer losses. These losses can be aggravated by distortions and barriers such as mobility costs or monopolies that tend to impact more vulnerable groups disproportionately and may prevent them from adjusting to import competition and accessing export opportunities. The chapter also examines why using restrictive trade policy to redistribute gains from trade is often unsuccessful and can have unintended consequences such as retaliation by trade partners. In contrast domestic policies such as education and social protection are more effective in addressing inequality. Their importance is likely to grow as the digital revolution climate change and geopolitics continue to shape the distributional impacts of trade.
Trade and income convergence
The past quarter of a century has witnessed an unprecedented level of income convergence accompanied by the integration of many developing economies into global markets. Despite this some economies have been left behind. This chapter discusses how the participation of developing economies in global trade and investment flows can accelerate structural transformation and enhance productivity growth thereby helping lowand middle-income economies to achieve the economic growth that ensures convergence with high-income economies. The chapter also examines why some economies have taken little advantage of globalization and focuses on barriers to maximizing the gains from trade participation such as trade costs and commodity dependence. Finally the chapter discusses how recent trends in the global economy are shaping future opportunities and challenges for developing economies to leverage trade and foreign direct investment for economic growth and which policies can help to achieve convergence in the upcoming decade.
Executive summary
Never before have the living conditions and prospects of so many people changed so dramatically in the space of a few decades.
Conclusions
Over the past 30 years the world has witnessed a period of unprecedented income convergence accompanied by a steep reduction in poverty but inequality remains high.
Canada - Certaines mesures affectant l’industrie automobile
Le 31 mai 2000 l’Organe d’appel a publié son rapport sur l’affaire “Canada - Certaines mesures affectant l’industrie automobile”.
Canadá - Determinadas medidas que afectan a la industria del automóvil
El 31 de mayo de 2000 el Órgano de Apelación hizo público el informe sobre el caso “Canadá - Determinadas medidas que afectan a la industria del automóvil”.
Canada - Certain Measures Affecting the Automotive Industry
On 3 July 1998 Japan requested consultations with Canada in respect of measures being taken by Canada in the automotive industry. Japan contended that under Canadian legislation implementing an automotive products agreement (Auto Pact) between the US and Canada only a limited number of motor vehicle manufacturers are eligible to import vehicles into Canada duty free and to distribute the motor vehicles in Canada at the wholesale and retail distribution levels. Japan further contended that this duty-free treatment is contingent on two requirements: Canadian value-added (CVA) content requirement that applies to both goods and services; and manufacturing and sales requirement. Japan alleges that these measures are inconsistent with Articles I:1 III:4 and XXIV of GATT 1994 Article 2 of the TRIMs Agreement Article 3 of the SCM Agreement and Articles II VI and XVII of GATS.
The Role of Trade-Led Economic Growth in Fostering Development
The United Nations' post--2015- development agenda is taking shape. Like its predecessor the Millennium Development Goals the post--2015- agenda will reshape development policy priorities for governments and non-governmental actors alike in many cases galvanising new attention thinking and financing to tackle the priorities it identifies. This essay reviews the historical and ongoing role played by trade in sustained high growth and human development progress and makes the case that the post--2015- development agenda should include considerations related to trade rules and supply-side capacity. Given the strong links between trade-led growth economic upgrading and poverty reduction the paper argues that trade led economic growth must be prioritised in the post--2015- development agenda.
Aid for Trade, Foreign Direct Investment and Export Upgrading in Recipient Countries
This paper examines empirically whether Aid for Trade (AfT) programmes and Foreign Direct Investment (FDI) inflows affect export upgrading and if so whether their effects are complementary or substitutable. Export upgrading entails export diversification (including overall export diversification as well as diversification at the intensive and at the extensive margins) and export quality improvement. The empirical analysis shows that total AfT flows have a strong positive impact on export upgrading and that LDCs as compared to Non-LDCs are the most important beneficiaries of this positive impact. While the impact of FDI inflows on export diversification in host economies is mixed these flows do exert a strong positive impact on export quality upgrading. Furthermore the impact of FDI on export diversification is higher in LDCs than in Non-LDCs. Incidentally AfT and FDI inflows appear substitutes (in an economic theory sense) in achieving export diversification and complementary in their effect on the improvement of export quality in recipient countries including LDCs. Results obtained on the impact of components of total AfT are inconclusive as they suggest both complementarity and substitutability with respect to FDI inflows in affecting export upgrading in recipient countries. Overall empirical results suggest that AfT and FDI inflows are effective in influencing export upgrading in recipient countries. However the results also highlight the importance of the interplay between these two kinds of capital flows in affecting export development strategies and FDI policies of recipient countries notably LDCs. We can infer from this study that AfT flows appear to play a particularly important role in ensuring that FDI inflows do not lead to further export concentration by putting in place the necessary conditions for export diversification.
Competition Policy and Poverty Reduction
This paper examines the role of competition law and policy as tools for poverty reduction and development. The authors put forward five related principles building upon the important work on related issues that has been done by the OECD the International Competition Network (ICN) UNCTAD and civil society organizations such as CUTS in recent years in addition to the earlier work done on these topics in the WTO Working Group on the Interaction between Trade and Competition Policy when that body was active from 1997 through 2003. Together these principles comprise the "holistic approach" to competition law and policy which is referenced in the title of the paper: First the focus of policy makers in using competition policy as tool for poverty reduction should be on approaches that are relatively easy to implement but have a trackrecord of being effective and economically sound. Second for competition policy reforms and legislation to be successful public acceptance and support is critical and must be an essential focus of related initiatives. Third to serve as an effective tool of poverty reduction competition policy needs to address the needs of the citizens of poorer societies in their capacities as producers (and therefore as users of extensive input goods and services including public infrastructure) in addition to their capacities as final consumers/households. Fourth it is posited that "competition policy" is more than just "what competition agencies do" and includes the full spectrum of measures that governments employ to enhance competition and improve the performance of markets. Fifth in order to address the challenges posed by the changing landscape of competition policy worldwide new forms of international co-operation may need to be considered. The paper then develops the application of these principles with respect to five specific areas in which competition policy can contribute to poverty reduction namely: (i) the reform of public and business infrastructure sectors particularly in the context of developing and transition economies; (ii) the complementary roles of competition law enforcement and market liberalization in public procurement markets; (iii) various related dimensions of competition policy as they relate to public health objectives; (iv) the addressing of possible monopsonistic practices in international supply chains that may affect the ability of developing country producers to reap gains from participation in international markets; and (v) measures to address the enduring problem of international cartels which despite an impressive record of prosecutions by developed jurisdiction competition agencies over the past decade continue to impose substantial costs on developing economies. The paper concludes with some observations regarding the future of international cooperation in the competition policy sphere.
Achieving Bangladesh’s Tourism Potential
Bangladesh's international image is not as a popular tourism destination and many people might be surprised to learn it has three World Heritage sites including the Sundarbans tiger reserves. Moreover it is part of important travel circuits for cultural and religious tourism and has demonstrated potential for sports tourism. The objective of this working paper is to critically test the assertion that pro-poor "green" tourism is one of the best development options for the majority of least developed countries (LDCs) -- a challenging task in Bangladesh in the face of the country's success as an exporter of readymade garments -- by comparing tourism to the available alternatives with regard to the crucial government priorities of export diversification employment generation and the "green economy". It is well-known that Bangladesh is under strong pressure to diversify its exports to generate new employment (especially in rural areas) and to respond to critical environmental issues. The government has identified over 30 "thrust sectors" (including tourism) to help address these challenges but otherwise tourism is rarely mentioned as a major trade and development option for Bangladesh. Within the limitations of data availability this working paper reaches the conclusion that greater efforts to develop "green" tourism would be highly beneficial for facilitating rural development environmental and cultural protection gender equality and export diversification in services. The most obvious current impediments are inadequate infrastructure lack of investment and (typically election year) political conflict but behind these factors appear to be a serious lack of stakeholder coordination insufficient regulatory and administrative transparency and coherence as well as some government reluctance to relinquish greater commercial autonomy in tourism to the private sector. This paper offers extensive analysis and some suggestions to help address the impediments including the recommendation to create a Bangladesh Tourism Stakeholders Forum.