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Pre-UNCTAD XII Civil Society Forum in Asia


Key Trade and Development Issues and the New Realities in the ... Brunei Darussalam. Cambodia. Indonesia. Lao PDR. Malaysia. Myanmar. Philippines. Thailand ... – PowerPoint PPT presentation

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Title: Pre-UNCTAD XII Civil Society Forum in Asia

Key Trade and Development Issues and the New
Realities in the Geography of the World Economy
An Asian-Pacific Perspective
  • By
  • Marc Proksch
  • Trade and Investment Division

Evidence of contribution of trade to development
is overwhelming
  • Trade provides the means for countries to pursue
    development in a self-determined and sustainable
    manner thus reducing dependence on aid and debt
  • No country has witnessed rapid economic growth
    without trade
  • Asian miracle from import substitution to
    export and import-led growth
  • Current experiences of India, China, Viet Nam,
    among others, speak for themselves
  • However, experiences are not all positive
    pockets of poverty remain, and some
    liberalization has resulted in increased poverty

Some observations
  • Lesson trade is essential but not sufficient for
    development enabling policy and institutional
    environment is also required
  • Trade-development linkages are complex and often
  • There is a direct link between trade and economic
    growth however economic growth is not enough to
    ensure income growth and distribution and poverty
  • For trade to grow, trade liberalization and
    facilitation are required in an enabling policy
    environment private sector as principal agent
  • Trade growth has two dimensions export and
    import growth both are required for development

Role of exports in development
  • Generates financial resources/foreign exchange
    for investment, import of essential capital goods
    and technology
  • Contributes to growth of enterprises and hence,
    employment (e.g. garment industry in Cambodia and
    Bangladesh) important role of SMEs!
  • Attracts FDI in the export sector, bringing
    technology, capital, management expertise, access
    to markets
  • Hence, exports lead to economic growth, which
    leads to increased consumption and investment,
    which leads to further economic growth
    (multiplier effect)
  • Economic growth leads to higher tax income which
    can be used by governments for development
  • Contribution of exports to income distribution
    and poverty reduction is not automatic but
    depends on government policies

Role of imports and import liberalization in
  • No country is self-sufficient in all required
    goods and services
  • Imports of capital goods, parts and components,
    raw materials, technology etc. required for
    export sector and development
  • Import liberalization ensures cheaper access to
    essential goods for consumers, including food
    wider choice of products
  • Selective import protectionism may be warranted
    in early stages of development. However
  • import competition ensures better quality at
    market prices of goods and services but may phase
    out uncompetitive enterprises and industries and
    lead to short-term employment loss
  • Tariff reductions may lead to decreased
    government revenue need for tax reform in the
    long run income growth offsets losses

Two issues in promotion of trade
  • Market access being able to export your
    product/service on the basis of fair competition
    and in a level playing field
  • Supply-side capacity building building
    productive capacities for international

Promoting market access Different modalities
  • Multilateral (WTO, DDA)
  • Regional (RTAs)/GSP schemes
  • Bilateral (BTAs)
  • Unilateral (non-reciprocal but still beneficial)

Multilateral trade liberalization
  • Most efficient form of trade liberalization
    universal, rule-based, non-discriminatory (MFN,
    national treatment) and predictable access to
    dispute settlement
  • Special provisions for LDCs many
    exemptions/SD/duty and quota-free access for
    most products to major export markets
  • However, progress is very slow, positions and
    countries national interests vary widely though
    breakthrough may be imminent
  • Main areas of concern seems to move away from
    agriculture towards NAMA (special products) and
  • 20 out of 49 regional ESCAP members still not
    member of WTO

Regional and bilateral trade agreements
Boon or bane?
  • Less efficient than multilateral trade agreements
  • Can lead to trade and economic growth if they are
    comprehensive with far-reaching commitments
    usually they are not
  • Potential trade diversion undermines WTO rules
    on discrimination
  • Rules of origin, red tape and lack of trade
    facilitation may undermine benefits
  • Asymmetrical bargaining power may work against
    weaker partys interest
  • Overlapping RTAs are not in businesss interest
    costs exceed benefits

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Supply-side capacity building developing an
enabling business environment through
public-private partnerships
  • Building national competitiveness no longer
    solely on basis of comparative advantages in
    resources but rather on basis of brand name,
    uniqueness, marketing
  • Principal agent of trade commercial (private)
    enterprises. Policy environment for enterprises
    matters emphasis on private enterprise and fair
    competition promoting CSR
  • Enhance enterprise capacity to deliver quality
    products in time
  • Legal and institutional framework rule of law
    (conducive laws and their enforcement) stability
    vs. efficiency
  • Infrastructure financial, physical
    (transportation and communications, energy and
    water etc.)
  • Human resources development/R D/technological
  • Trade facilitation/ reduce red tape and
    corruption in business transactions/trade finance

Major current challenges and threats to trade
and development
  • Failure of Doha Round return to protectionism?
  • Proliferating RTAs noodle bowl effect may deny
    the benefits
  • From sub-prime to prime problems from US to
    global recession?
  • Keeping up with the Joneses struggle to gain and
    maintain competitive advantages the China
    factor rising inflation
  • From market access to supply side capacity
    building easier said than done Will Aid for
    Trade help?
  • From trade liberalization to trade facilitation
    the new frontier
  • Environmental concerns global warming, dwindling
    (energy) resources, and many others
  • Social concerns burgeoning and ageing
    populations and employment concerns spreading
    the welfare equitably

Need for regional economic cooperation and
  • South-South economic cooperation the basis could
    be the RTA covering substantially all the
    trade, including services
  • Next step South-South cooperation in investment
    and enterprise development RTA expanded to
    include investment, technology, IPR, etc.
  • Deepening integration South-South cooperation in
    finance but also in energy, transport and
    communications infrastructure
  • Consolidating and integrating cooperation
    mechanisms to ensure policy coherence and
  • Capacity development building (sub) regional
    supply chains through trade facilitation and
    building enterprise capacity to deliver quality
    goods in time (sharing resources, joint R D,
    technology development, IPR, etc.)
  • But need to move from rhetoric to action!

  • Trade is essential (but not sufficient) for
    economic growth and development but conducive
    policy framework and enabling environment to be
  • Market access primacy of the multilateral
    trading system
  • Moving from market access issues to supply-side
    capacity development
  • Working together for development public-private
  • The way forward deepening and broadening
    regional cooperation and integration political
    will is essential
  • Organizations like ESCAP can help