Revamping trade to address poverty

Although trade and development are believed to complement each other, there are questions about the role of trade in cutting poverty globally. This is so, because of the widening gap of inequality between the well-off and the poor.

There are concerns that development which results from the growth of trade in both the developed and developing countries is not always inclusive in that much of the fruits of development do not reach the poorer sections. The UN's landmark initiative in setting the Sustainable Development Goals (SDGs) is integrally linked to trade believing that the direct and the indirect fallout of growing trade will have a sobering effect on world population --rich and poor.

Enough emphasis is there on the role that trade can play in achieving sustainable development goals. The proposed Goal 17 specifically calls for promoting a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organisation (WTO) on conclusion of negotiations within the Doha Development Agenda.

While taking stock of the MDGs, it had been estimated that around two-thirds of reduction in poverty came from economic growth in developing countries. And this process in believed to be driven, in part, by trade. Developing countries' share of global trade has grown from 28 to 42 per cent over the last two decades. In commercial services trade, the share has risen from around 25 to roughly 35 per cent over the same period. In keeping with the global trend, South-South trade has also grown in importance. Trade acted as a catalyst for reaching the Millennium Development Goals through cutting extreme poverty by half. But this does not adequately explain the relation between reduction of global poverty and growing inequality.

The issue received some prominence at the World Trade Organisation's (WTO) Annual Public Forum held in Geneva recently. What transpired at the event was a firm conviction on the positive role trade is going to play in the days ahead. The public forum surmised its proceedings with the hope that trade will continue to play a key role in achieving the United Nations' 2030 Sustainable Development Goals (SDGs), and both governments and private sector need to be more active in ensuring trade's full potential in contributing to these goals.

The SDGs were the focus of discussion during a number of sessions at the three-day Public Forum, the WTO's flagship outreach event held last month. The Forum provided a unique platform for senior officials, leading global businesspeople, academics and civil society representatives to come together and discuss some of the major trade and development issues of the day. The SDGs put significant emphasis on the role trade can play in promoting sustainable development. There were direct references to WTO activities in many of the SDGs, ranging from ensuring food security and sustainable agriculture to conserving marine resources and promoting inclusive and sustainable economic growth. In this context, one of the key issues that drew the attention of the participants was agri-business. Speakers noted that several of the SDGs directly relate to agriculture and that modernising agricultural production will be the key to achieving this. WTO members have already agreed to eliminate export subsidies for agriculture, one of the SDG targets, at the 2015 Nairobi Ministerial Conference. Thus trade, inclusive of agriculture, figured as one of the cornerstones of alleviating poverty and bringing a balance in the asymmetries that have been building over the decades in the global arena.

It was considered more important for the developing countries which needed a paradigm shift to make agriculture a key and dynamic contributor to the GDP. For this, value addition and integration into national, regional and global value chains is extremely essential. And this could only be done in an enabling infrastructure requiring, among others, partnership of the private sector which can bring the much needed investment, and have access to knowledge and technology. One of the challenges in this regard, according to the speakers at the Public Forum, was how to avoid market distortion of agri-products business and link small farmers to global value chains.

Linking small farmers of less-advanced countries to the global value chain is a difficult task for the simple reason that all it takes to rise up to even a moderate level calls for investment that primarily relies on the use of advanced technology. As for the enabling infrastructure, it is not just the country in question which can put in place such facilities, since much of the challenges come not from within but without. It is here that the international community cannot shrug off its responsibility as there are many avenues through which assistance can be channelised to these countries. The WTO has its obligations to bring greater coherence to its existing trade-support programmes and to generate additional funds to assist developing countries to build supply capacity and trade-related skills, so that they can adjust to the competitive trading activities. In order to ensure that these get translated into action, it should strengthen the tools it has such as the Enhanced Integrated Framework, Aid for Trade etc. Besides, there is the critical need for providing an ambience so that the increasing flow of trade does not widen the social inequality. The growth of trade flow and broader welfare gains are but one side of the picture.

The affected countries do have their roles to play by way of framing policies that address the issue of distributive justice so that gains from trade are not meant for those who are better operators. They also need policies to better equip workers to benefit from the opportunities offered by trade in a way that the major sources of livelihood of the poorer segments of society, such as agriculture, rural non-farm activities and small businesses are brought under the ambit of the trade policies in a progressive manner.

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