Photo: WTO Chief Azevêdo highlights important role of trade and investment in promoting sustainable development at the High Level Policy and Private Sector Trade and Investment Facilitation Partnership Forum in Abuja on November 2-3, 2017. Credit: WTO - Photo: 2017

The Role of Trade and Investment Vital in Fostering SDGs

By Roberto Azevêdo

Trade and investment are inseparable and remain indispensable “twin engines” for economic growth, modernization and development of Africa, says ‘The Abuja Statement’ emerging from the two-day High Level Policy and Private Sector Trade and Investment Facilitation Partnership Forum in Abuja, Nigeria, on November 2-3, 2017. Following are extensive excerpts from WTO Director-General Roberto Azevêdo. – The Editor

GENEVA (IDN-INPS) – It is encouraging to see many countries – as well as the broader development community represented here – interested in exploring how trade and investment can help promote sustainable development . . . both these elements – trade and investment – are fundamental in helping countries successfully integrate into the global economy.

There are some important linkages here. Throughout history, trade has proven to be one of the most effective anti-poverty and pro-development tools. Today, trade plays an important role in the economy of developing countries. To have an idea, trade now represents 34 per cent of developing countries’ GDP on average – compared to 20 per cent for advanced countries.

And the fastest-rising engines when it comes to trade and investment today are not in Europe or North America, but in Africa, Asia and Latin America.

China, for example, is now the world’s largest exporter and second largest foreign investor; thirty years ago, it ranked 32nd in world trade. And this remarkable story of trade and investment-led development includes countries of all sizes and regions – from Ethiopia and Indonesia, to Ghana and Cambodia.

This is very positive.

However, for trade to play its full part, the right conditions need to be in place. Many elements are involved in this mix. This includes physical connectivity. If you’re selling goods, you need the hard infrastructure which allows you to ship them to your buyer. And to support this connectivity we need the appropriate soft infrastructure. That means a regulatory environment which works to facilitate trade.

Yet, there is much to be done to ensure that all can participate and compete. Connectivity remains a major obstacle in many places. For example, Africa’s infrastructure investment needs are estimated at about 120-150 billion dollars annually – with a financing gap of about 60-80 billion dollars per year.

Globally, the UN estimates that developing countries alone will need an additional 2.5 trillion dollars annually in foreign and domestic investment if they are to meet the 2030 Sustainable Development Goals.

This situation deserves our attention. Bridging these gaps could help reduce Africa’s trade costs, boost its competitiveness, diversification, industrialization, and participation in global trade.

It can also help to spread the benefits of trade more widely, reaching more people and leveraging trade to promote growth and development.

Many governments simply may not have the public resources to build the infrastructure they need. And therefore a large part of infrastructure investments will need to come from other partners.

And let me stress that infrastructure is just part of this picture. Investments will also help overcome supply side constraints, promoting the diversification of the productive structure, reducing dependency on basic commodity exports, and adding value to the exported product.

Also, investments improve access to more advanced technologies, production techniques, and managerial methods.

Countries would be able to leapfrog steps towards a more modern economy. There will also be a positive impact on the capacity and skills of the work force, who will have access to more advanced and better paying jobs.

Steps to create a more enabling environment for investments would make these countries more attractive locations for productive and sustainable FDI – both in infrastructure and in productive assets. If the conditions are right, we’ll have a win-win situation.

For these reasons and many others, I think that today’s discussion about investment facilitation is very important.

We need to share ideas, exchange insights, and learn from one another’s experiences to ensure these forces can work together to create more opportunities particularly for developing countries.

And I think it is very positive that we have some important elements to build on in this discussion.

Africa, for example, is a case in point.

Many African countries are engaged in facilitating trade and investment – and will showcase their experience during this Forum. There are some interesting initiatives being implemented, which can help inspire other solutions in the continent.

For example, last year President Buhari launched the Presidential Enabling Business Environment Council (PEBEC) – chaired by Vice President Osinbajo. This initiative aims to cut red tape, remove bottlenecks, coordinate policies and facilitate doing business in Nigeria.

Many other countries are taking similar coordinated steps to facilitate trade and investment – for example by creating electronic “single windows” for both investment and trade.

Furthermore, some countries represented here are also engaged in the negotiation of a Continental Free Trade Area and in developing a parallel Pan African Investment Code.

These steps can go a long way in creating a more enabling environment for investment in Africa. And I think that they also showcase how regional integration and investment flows are clearly connected as well, and how regional cooperation can help advance these efforts.

Having said that, cooperation at the global level can also play an important role.

Some WTO members have been holding an open and informal dialogue to consider whether – and how – the WTO might better contribute to facilitating investment flows.

These conversations are ongoing. I don’t know where these discussions will lead, or what conclusions members will reach.

What I do know is that – as in most elements of life – talking, listening and learning is the best way to make informed decisions.

And I do think that, if you have a properly framed conversation, you will find that the WTO has a lot to offer. But having said that, I must also share my belief that most members would not be willing to revive – at least not now – the kind of conversations we were having on investments several years ago.

So issues like market access, investment protection, and investor-state dispute settlement – elements that are often the focus of existing bilateral investment treaties – are not the subject of current discussions. The inspiration for investment facilitation is the WTO’s new Trade Facilitation Agreement, not the old “Singapore Issues”.

From my conversations with proponents, I think development is very much at the centre of the debate. The purpose of your debate seems to be a search for ways of facilitating investments with an enabling approach – one that supports the development of national policies.

I also understand that you are still seeking to identify how collaboration and understandings at the WTO – at the global level – could help you achieve these goals. And it is precisely at this juncture that initiatives like this Forum are critical if you are to reach a common view on the way forward.

Our next Ministerial Conference is in Buenos Aires this coming December. That could be an opportunity for ministers to discuss how they would like to pursue this conversation at the WTO.

As always, what happens there will be up to the proponents. And, as with all issues that members want to discuss, I am myself available to help.

In conclusion, I want to emphasize that this Forum is indeed an important opportunity to help provide useful inputs to that debate.

Working together, we can ensure that we seize all of the tools available to us in the search for stronger growth and more sustainable development – in Africa and around the globe. [IDN-InDepthNews – 4 November 2017]

Photo: WTO Chief Azevêdo highlights important role of trade and investment in promoting sustainable development at the High Level Policy and Private Sector Trade and Investment Facilitation Partnership Forum in Abuja on November 2-3, 2017. Credit: WTO

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