We are in the toughest period the world economy has faced since the creation of the multilateral system more than three-quarters of a century ago. The quadruple shock of Covid-19, climate change, conflict, and the cost of living has undone years of hard-fought development gains. As financial conditions tighten, even countries that had seemed on track to prosperity and stability now stare into the abyss of debt distress, fragility, and uncertainty about the future.
Coordinated, multilateral action is necessary to tackle the crises we face. Both aid and trade have key roles to play in reversing the impacts of this quadruple shock and putting the world back on track to achieve the UN Sustainable Development Goals (SDGs).
We head the three international agencies that comprise the Geneva Trade Hub — the World Trade Organisation (WTO), the UN Conference on Trade and Development (UNCTAD), and the International Trade Centre (ITC). The WTO makes and monitors the rules for global trade. UNCTAD delivers research and consensus-building to guide governments. ITC helps small businesses to go global, especially firms led by women and young entrepreneurs. We work together so that trade works better for development.
All three of us share a deep commitment to trade-led prosperity. All three of us understand that a world in crisis means no more business as usual. And all three of us want our organisations to “walk the talk” on making aid and trade deliver for real people.
In order to guide aid and trade towards a better world, policymakers need to pivot in three fundamental ways.
First, we need to make trade greener. Global trade can play an important role in the transition to a low-carbon economy. Preliminary research at the WTO suggests that removing tariffs and regulatory trade barriers for a set of energy-related environmental goods would reduce global CO2 emissions by 0.6 per cent in 2030 from improved energy efficiency alone. Additional potential gains would come from innovation spillovers and as lower prices accelerate the shift towards renewable energy and less carbon-intensive products.
Second, we need to make trade more inclusive. Promoting greater trade by small businesses and greater participation by women and young people makes companies and countries more competitive, drives economic transformation, and reduces poverty. Yet ITC business surveys have found that only one out of every five exporting companies is women-led. WTO data show that micro, small, and medium-sized firms represent around 95 per cent of all companies globally but only one-third of total exports.
Third, we need to make trade more connected. In our networked world, the future of trade is through digital channels and platforms, especially for small businesses. During the Covid-19 pandemic, we saw how doing business online went from being useful to critical for survival. UNCTAD data show that digitally delivered services reached almost two-thirds the level of global services exports.
These themes will be discussed at the upcoming Global Review of Aid-for-Trade, which will be held from 27 to 29 July in Geneva.
The event comes one month after the WTO’s successful 12th Ministerial Conference, which put trade multilateralism back on track and delivered a landmark agreement on fisheries subsidies, and two months before the UN COP27 meeting on climate change to be held in Egypt that could determine the world’s chances to keep the 1.5˚ C target alive.
The data show promising signs that aid-for-trade is tilting towards greater sustainability, inclusivity, and connectivity. OECD and WTO data reveal a record high of nearly $50 billion in aid-for-trade disbursements in 2020, of which half were either climate or gender-related, and one-third supported the digital economy. Despite growing budgetary pressures at home, it is critically important to continue and increase these aid-for-trade flows.
Apart from a stronger thematic focus on sustainability, inclusivity, and connectivity, maximising the contribution of aid-for-trade in order to achieve the SDGs requires a resolute focus on the “where” and “how” of delivering development results.
This means a focus on those countries whose trade and development needs are highest — particularly the Least Developed Countries (LDCs) and fragile or conflict-affected countries — and regional initiatives like the African Continental Free Trade Area, in order to ensure that they become stepping stones to wider and more inclusive regional value chains and trade-led growth.
It means partnership across international organisations. The WTO, UNCTAD, and ITC already collaborate on initiatives like the Global Trade Helpdesk, which simplifies market research by bringing key trade and business information into a single portal, as well as on support to cotton-exporting countries in Africa.
Last but certainly not least, it means mobilising public and private finance. The IFC estimates a worldwide $300 billion financing gap for women, and the global trade-finance gap has nearly doubled from an already staggering $1.5 trillion. Without access to finance, firms cannot grow, diversify, or formalise.
We want to end with a call to action. Creating a more sustainable, inclusive, and connected future is the moon shot of our times. Aid, trade, and multilateralism — working together — are part of the solution. It is understandable that governments want to act to shore up their own economies in troubled times. But we must act now to ensure that the world’s poorest and most vulnerable can still see a pathway to prosperity through global trade.
Ngozi Okonjo-Iweala is the director-general of the WTO, Rebeca Grynspan the secretary-general of the UN Conference on Trade and Development, and Pamela Coke-Hamilton the executive director of the International Trade Centre.
*A version of this article appears in print in the 28 July, 2022 edition of Al-Ahram Weekly.
Short link: