TRADE POLICY AND SUSTAINABLE DEVELOPMENT MEETING
Geneva, 6 -- 8 October 2015
LESSONS LEARNT FROM UNCTAD'S WORK
ON TRADE POLICY FRAMEWORKS
M s . M in a M A S H A Y E K H I
Head
Trade Negotiations and Commercial Diplomacy Branch
DITC/UNCTAD
Trade Policy and Sustainable Development
Lessons learnt from UNCTAD's work
on Trade Policy Frameworks
6 October 2015
Mina Mashayekhi
Head
Trade Negotiations and Commercial Diplomacy Branch
Outline
1. Recent economic & trade trends
2. UNCTAD's analysis on the interface
between trade and development:
–
There is a "missing link" in translating trade
gains into broad-based & sustainable
development
3. Trade and related policies can help create
such a link
–
–
–
UNCTAD's Trade Policy Frameworks (TPFs)
Main objectives, methodology and
components of the TPF project
Preliminary results
Recent economic & trade trends
Slow pace of trade expansion
• After a modest increase of 3.2% in 2014, world trade volume is
expected to increase by 3.8% in 2015;
• This reflects the slow pace of the global economy:
– World output grew 3.2% in 2014 and is expected to grow 3.4% in 2015;
– Stagnation in major economies and economic slowdown in China contribute to
weak global demand affecting trade prospects;
• And there is a decline in trade responsiveness to output growth:
– Ratio of world trade growth to world output growth was 2:1 before the crisis and
only 1:1 in 2012-2014;
– Among the possible reasons is the deceleration of global value chains (GVCs)
trade, as major players increasingly source inputs domestically.
Recent economic & trade trends
Deceleration in merchandise trade
• World goods exports reached $18.9 trillion in 2014:
– Most developing regions and transition economies contracted or decelerated;
– Only developing Asia expanded (strong engagement in global value chains, with
intraregional trade accounting for 54% of exports) but is now also decelerating;
– Intra-African trade is also increasing although from a lower base.
160
Evolution of
merchandise
exports by region,
2008-2014 (index
2008=100)
Source: UNCTAD
140
120
100
80
60
2008
2009
2010
2011
2012
2013
2014
World
Transition economies
Developed economies
Developing Africa
Developing America
Developing Asia
Recent economic & trade trends
Strong growth in world commercial services
• World services exports reached $4.9 trillion in 2014, almost doubled
the value over the past 10 years:
– Growth came mostly from developing countries, in particular Asia and LAC;
– Dynamism was sustained by travel, construction, financial, telecommunication
and other business services. Transport and goods-related services stagnated.
150
140
Evolution of
services exports by
region,
2008-2014 (index
2008=100)
130
120
110
100
Source: UNCTAD
90
80
2008
2009
2010
2011
2012
2013
2014
World
Developed economies
Transition economies
DevelopingAfrica
Developing America
Developing Asia
Trade and SDGs
Services enable international trade and its diversification
• Servicification and tradability of services promotes trade on GVCs:
– Fragmentation of production requires efficient professional, business and
infrastructure services (energy, transport, telecommunications, ICT, financial);
– Services value-added represent in 2011 an important part of gross exports (60%
in developed economies and over 40% in others. Some services (R&D, product
design, marketing) capture a substantial proportion of value added;
– Foreign services value-added accounts in 2011 for a sizeable 15% in developed
countries, a significant increase since 1995, less explored in developing
countries.
60%
Domestic and foreign services
value added of gross exports,
2011 (%)
Source: UNCTAD
40%
20%
0%
Developed economies
Domestic services value-added
Others
Foreign services value-added
Trade and SDGs
Services are driving employment
• Services are the main creator of new jobs in developing countries
since 2000, particularly in transport, communication and financial;
• Agriculture and mining have negative job growth and manufactures
a weak job creation since 2010. This is of concern for its role in
structural transformation. Since the 1990s, labour shifted from
manufactures to services in emerging developing economies.
70%
Employment growth for
selected sectors in
developing and
transition countries,
2000-2010, 2010-2014,
2010-2019 (%)
60%
50%
40%
30%
20%
Source: UNCTAD
10%
0%
-10%
Agriculture, forestry,
hunting and fishing
Mining and quarrying
Manufacturing
2000-2010
Transport, storage and
communication
2010-2014
Financial activities
2010-2019
Health and social work
activities
Public administration
and defence;
compulsory social
security
Recent economic & trade trends
Real effective exchange rates of selected economies,
2010-2015 (index 2010=100)
Source: UNCTAD
135
125
115
105
95
85
75
China
Euro
Japan
Russia
Brazil
South Africa
United States
03-2015
01-2015
11-2014
09-2014
07-2014
05-2014
03-2014
01-2014
11-2013
09-2013
07-2013
05-2013
03-2013
01-2013
11-2012
09-2012
07-2012
05-2012
03-2012
01-2012
11-2011
09-2011
07-2011
05-2011
03-2011
01-2011
11-2010
09-2010
07-2010
05-2010
03-2010
65
01-2010
Fluctuations in exchange
rates affected export
competitiveness
• In real terms, until March
2015 the USD and the
yuan appreciated,
reducing US and China’s
export competitiveness
and influenced dollardenominated trade and
commodity price
statistics;
• Others depreciated, as
the EU and Japan
(expansionary monetary
policy) and Brazil and
Russia (falling energy
prices).
Recent economic & trade trends
Dropping energy prices
worsen terms of trade
in commodityexporting regions
• Energy prices dropped
sharply in 2014:
Trade unit prices of manufactures, energy and other
commodities,
2008-2015 (% relative to pre-crisis)
Source: UNCTAD
120
110
100
90
80
70
60
50
Manufactures unit price
Energy unit price
40
Other primary commodities unit price
30
2008m01
2008m03
2008m05
2008m07
2008m09
2008m11
2009m01
2009m03
2009m05
2009m07
2009m09
2009m11
2010m01
2010m03
2010m05
2010m07
2010m09
2010m11
2011m01
2011m03
2011m05
2011m07
2011m09
2011m11
2012m01
2012m03
2012m05
2012m07
2012m09
2012m11
2013m01
2013m03
2013m05
2013m07
2013m09
2013m11
2014m1
2014m3
2014m5
2014m7
2014m9
2014m11
2015m1
2015m3
• The combined effect of
exchange rates and
energy prices offset the
increase in world trade
volume with a decrease
in unit values since Apr
2011.
Per cent relative to pre-crisis
– Brent Crude oil price
reached a 5 year low of
$45 per barrel in Jan 2015,
a 50% drop from Jun 2014;
– Because supplies raised
and weak demand;
Trade and SDGs
Trade contributed to growth and development
• Provides access to larger markets, as well as skills, technology and
capital, which in turns enable a better use of productive resources
and catalyse desired structural transformation;
• This is recognised by SDGs, implicitly and explicitly in goal 17.
Trade in SDGs
• Goal 1. End poverty;
• Goal 2. End hunger, achieve food security:
– 2.b Correct and prevent trade restrictions and distortions in world agricultural
markets, including through the elimination of export subsidies and all measures
with equivalent effect;
• Goal 3. Ensure healthy lives:
– 3.b Provide access to affordable essential medicines and vaccines, in
accordance with the Doha Declaration on TRIPS;
• Goal 7. Ensure access to energy:
– 7.1 Universal access to affordable energy;
Trade and SDGs
Trade in SDGs
• Goal 8. Promote sustained, inclusive, sustainable economic growth:
– 8.2 Economic productivity by diversification, technological upgrading, innovation;
– 8.a Aid for Trade, including by the Enhanced Integrated Framework to LDCs;
• Goal 9. Infrastructure:
– 9.1 Quality, reliable and resilient infrastructure, including regional / transborder;
• Goal 10. Reduce inequality:
– 10.a Special and differential treatment (SDT) for developing countries;
– 10.c Reduce to less than 3% remittances’ transaction costs;
• Goal 14. Oceans:
– 14.6 Prohibit certain forms of fisheries subsidies;
• Goal 17. Means of implementation:
– 17.10 Promote a universal, rules-based, open, non-discriminatory and equitable
multilateral trading system (MTS) under the WTO, including through the
conclusion of the Doha Development Agenda (DDA);
– 17.11 Increase exports of developing countries, double LDCs% of global
exports;
– 17.12 Duty-free Quota-free market access for all LDCs, including through
preferential and transparent rules of origin (RoO) for LDCs.
Trade and SDGs
Trade contributed to income and growth, with variations
• Volume of world trade increased 5x in 1990-2013;
• Developing countries increased their share in world trade:
– Share of merchandise exports increased from 32% in 2000 to 45% in 2014;
– Share of services exports increased from 24% in 2005 to 29% in 2014;
– LDCs share of goods exports reached 1.1% in 2014 (almost double since 2000);
• The export earnings of LDCs in 2013 were $213 billion, more than
2x their combined inflows of FDI, ODA and remittances;
• This overall positive picture masks important variations:
– In 2005-2013, 63 developing economies exports grew over 10%/year, 4 had
export contraction, and 68 had a persistent trade deficit;
– The 20 largest exporters, mainly developed and Asian economies, represent
70% of world exports in 2013;
– Commodity-dependent economies remain vulnerable to shifts in terms of trade;
• Uneven trade is a reminder that inequality between and within
countries remains a persistent development challenge requiring
policy attention.
Trade and SDGs
The development benefits of trade are not automatic
• Trade in GVCs allowed specialization in specific production
segments, opening opportunities for “fast-track industrialization”;
• It has also led to “thin industrialization” in some cases, following
short-term incentives to specialize in activities that reflect existing
factor endowments, even if they are low-skill and low productivity:
– These represented more than 80%in LDCs in 2013, more than in 1995.
90
Share of labour-intensive,
resource-intensive and lowskill technology-intensive
manufactures exports in total
manufacture exports by
region,
1995 and 2014 (%)
80
Source: UNCTAD
10
70
60
50
1995
40
2014
30
20
0
Developing
economies
Developing
Africa
Developing
America
Developing
Asia
LDCs
UNCTAD experience in the analysis of the
interface of trade and development
What have we learnt?
Trade can contribute to improved
development prospects
• Development variables:
– SDGs: Poverty, decent work, food security, access to basic
services and infrastructure services, gender equality,
sustained transformation of the economic structure
• Trade contribution to development:
– Income opportunities and job creation
– Greater availability of goods and services
• Strengthening trade's contribution to sustainable
development further requires:
– Enhanced productive capacities and employment
– Gains from trade is shared equitably and widely by different
segments
– Greater coherence of trade with complementary and other
policies to support different dimension of SDGs
But translating trade into development
benefits entails challenges in …
1. Diversifying exports (products, services, markets) and
triggering structural transformation
–
Incentives that do not lead to expected trade/investment results
2. Taking advantage of market opening/trade agreements
– Persistence of non-tariff barriers to trade
• "Quality" concerns in destination markets (e.g. agro-industrial products)
– Constraints in supply capacity
• Human capital
• Ensuring access to infrastructure and key services for competitiveness
3. Creating forward and backward linkages (domestically,
regionally and internationally)
–
–
Enclaves with no linkages with the rest of the economy
Informal sector with low productivity
4. Formulating and implementing appropriate policies
–
Difficulties in the design, monitoring and evaluation of policies
Different factors influence the capacity of countries
to translate trade into development gains
The external environment:
- Trading conditions
- Economic conditions
(growing interdependence,
economic volatility)
The domestic environment:
- Building resilience
- Policy and regulatory
frameworks:
- Supply-side capacity
- Social impact of trade
(flanking policies)
- Institutional frameworks
The "pending agenda"
for policy reform
Overcoming the "missing link" successfully
… and how
UNCTAD work on
Trade Policy
Frameworks help…
Helping strengthen coherence among
different policy spheres (pillars)
•
•
Pillar 1 is about:
Policies + regulations
aimed at:
Strengthening supply
side capacity
Pillar 3 is about:
• Policies/regulation
aimed at:
• Promoting exports
and access to
markets
•
•
Pillar 1:
Competitiveness
Pillar 2:
Socioeconomic
impact
Pillar 3:
Trade
promotion &
negotiations
Pillar 4:
Design,
monitoring &
evaluation of
policies
Pillar 2 is about:
Policies + regulations
aimed at:
Maximizing impact on
socio-economic
variables
Pillar 4 is about:
• Institutions
• Strengthening the
institutional
framework
… Another vision of coherence (SDGs)
Services
Policies
•
•
Financial
policies
Financial
inclusion
Policies related to:
• Digital economy
• Technology &
innovation
Services
Policies
UNCTAD (2015): "Trade development policies and the post-2015 sustainable development agenda, and
formulation of national policies in the context of existing regional trade agreements"
How UNCTAD can help?
• The Trade Policy Framework can help:
1. Deepen understanding of the specific context of countries
• Trade and development linkages
• Trade performance
2. Take stock of economic, policy and institutional constrains
facing the countries, as well as opportunities
3. Provide policy recommendations on possible policy reforms
and action plans (domestic policies & trade negotiations)
•
More effective capacity to benefit from trade
4. Promote multi-stakeholder interaction and collaboration
regarding policy design
•
Develop local expertise and sustainable and inclusive trade
policy making
UNCTAD Trade Policy Framework
studies
Completed
On-going
1. Papua New Guinea
6. Dominican Republic
2. Rwanda
7. Panama
3. Jamaica
8. Algeria
4. Mexico
9. Namibia
5. Tunisia
10. Botswana
6. Zambia
7. Angola
Examples: Recommendations from TPF
studies
• Rwanda TPF
– Improved coherence between broader development goals and
the trade policy framework
• Need to develop regional and national infrastructure and human
capital
• Tunisia TPF
– Maximizing opportunities from participating in the ITA
agreement requires active promotion measures to attract IT
and IT-related R&D and product and design services
• Jamaica TPF
– Maximizing opportunities from participating in trade
agreements (EPA & CARICOM) requires:
• Improving indicators and benchmarks to monitor and assess
trade policies and understand/address persistent trade barriers
Cross-cutting lessons
1.
2.
3.
4.
Policy coherence and coordination
Evidence-based policy-making
Effective institutions and governance
Enabling productive, technology and business
environment
5. Labour skills development
TPF - Different components
1. Research:
– Customized to address specific needs of beneficiaries
2. Capacity building:
– Work with national experts
– Multi-stakeholder dialogue to discuss policies with
diverse stakeholders
• Including private sector and civil society
3. Recommendations on policy-mix:
– Improving formulation, implementation and review of
trade policy
– Identifying and promoting niche sectors
4. Experience sharing and information exchange:
– Regional, inter-regional meetings
– Best-fit practices
How is the work undertaken?
6-9 months
Step 1:
Request by
Government
3 months
2-3 months
Phase 1:
Preparatory
work
Outcomes:
Identification of:
* focal point
* National
Experts
* Peer
reviewers
* Topics of
interest to the
beneficiary
Phase 2:
Desk
research
Phase 3:
Workshop 1
with
stakeholders
Outcomes:
*Understanding
topics of
interest to the
beneficiary
* Identification
of areas for indepth research
(by National
Experts)
* Recruitment
Phase 4:
Draft 1 by National Experts
(reviewed by
UNCTAD)
Outcomes:
* Definition of
scope of work by
National Experts
* Definition of
work schedule of
National Experts
Phase 5:
Draft 2 by National Experts
(reviewed by
UNCTAD)
Outcomes:
*Comments by
UNCTAD
* Comments by
focal point
* Comments by
relevant
agencies
* Peer review
comments of
Draft 1
Outcomes:
*Comments
by UNCTAD
and
Government
are
incorporated
Phase 6:
Validation WS
with stakeholders
(depending on
funds availability)
Outcomes:
* Final
recommendations
* Validation by
stakeholders
* Finalizing
publication
Phase 7:
Finalization
&
Dissemination
Beneficiary Gov.
UNCTAD
UNCTAD + Focal
Point
National experts
+ UNCTAD
13/15
Conclusions
• Maximizing the contribution of trade to sustainable
development requires:
1. Improving trade outcomes
2. Gains from trade are equitably shared among population
3. Supported by robust productive capacities and employment
• To achieve that objective
– Ensuring coherence and linkages among different policy
spheres is important
• Development, macroeconomic, competitiveness and productive
capacities (investment, technology, innovation), socio-economic
impact, sector-specific plans, institutional frameworks
• UNCTAD's TPF can help improve that coherence
– To tackle more effectively the "pending" trade agenda
• Research, capacity building, policy-mix recommendations and
experience-sharing
Thank you for your attention
Mina.Mashayekhi@unctad.org