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| Summary of Round Table 3, 2 December 2003
Making trade work for the poor - Stimulating the real economy's response
In the context of the present setting of intensifying globalization, driven by accelerated technological progress, by trade and investment liberalization, by enforceable international rules and regulations, and by the progressive spread of integrated global production systems or value chains-initiated and dominated by transnational corporations (TNCs), the UNIDO round-table discussion on "Making trade work for the poor -Stimulating the real economy's response" focused on the tools that can be used at a national level to help the real economy strengthen its productive capacity to grasp the opportunities arising from new market developments, and on identifying technical-assistance needs in these areas. These tools include a wide range of institutions and organizations that support the building of skills; acquisition of capital, technology and information; and compliance with international conventions and agreements, and with different types of technical, environmental, and health standards. More specifically the round table discussion is focused on two major areas, namely, strengthening supply-side capacity and Enhancing capabilities to assess and proof conformity with standards, technical regulations and other market requirements.
The discussion was structured to confront the views of public and private sector as well as the civil society around the key issues outlined in the UNIDO issue paper. International agencies and representatives of donor countries expressed their opinions on the issues posed and on the TA challenges facing the donor countries. The presenters and panellist include Mr. Otto Genee, Director, Policy Coherence Unit, Ministry of Foreign Affairs, The Netherlands, Previous chairman of the WTO TBT committee; Mr. Adrian Wood, Senior Economist, DFID, United KingdomMr. Alain Bryden, Secretary General, ISO; Mrs. Silvia Cuéllar, Executive Director, Federation of Chambers and Associations of Central American and Caribbean Exporters (FECAEXCA); Mr. Tadesse Haile, State Minister for Industry and Trade, Ethiopia; Mr. Jeremy Hobbs, Executive Director, OXFAM International; Mr. Oskar Knapp, Ambassador, Delegate for Trade Agreements, State Secretariat for Economic Affairs, Ministry of Economy, Switzerland; Mr. Stefano Ponte, Senior Researcher, Danish Institute for International Studies; Mr. Kipkorir Rana, Deputy Director General, WTO.
The main messages
The clear message arising from the statements of the Panellists concerning the technical assistance (TA) is the existence of a strong needs to enhance the coordination, harmonization, and transparency, between different technical assistance providers. This has been clearly illustrated by the fact put forward by Ms. Cuellar, from the Federation of Exporters of Central America (FECA-EXCA), indicating that between 2000 and 2002, approximately US$500 millions were spent on cooperation for agriculture and rural areas in El Salvador, but this was scattered over 195 projects implemented by 42 agencies. As a result, the efficiency of such TA was estimated at 45 percent. This clearly calls for the need to increase the ownership, cooperation and harmonization between the donors. There is also a need to improve the dialogue between the public and private sector, as there is a lack of long-term strategies, which go beyond election schedules as well as the public policies often diverge from the needs of the private sector. While TA should adopt the long-term vision, the goal of the international community should be not to create dependency on TA.
In addition, the TA and trade liberalization are not panacea but are certainly important for poverty reduction. Technical assistance being demand driven should be linked to poverty reduction strategy papers. The issue is whether this has worked in the past or not and that these linkages have not received enough attention.
The key questions of the trade-related technical assistance emphasized by Adrian Wood include: Do the benefits exceed the costs? Where are the market failures? and, how effective can the public sector can be?
He also put an accent on the importance of the domestic relative to the foreign markets. Producing the goods for the domestic market is sometimes even more important for less developed countries but as argued by the discussants, the domestic market situation is more often than not dominated by monopsonies can also prevent countries from industrial upgrading. He concluded that problem is less daunting and that we should be sceptical about solutions. We can learn from the experience from the Southeast Asian countries.
All the panellists shared the opinion that supply-side development and technology upgrading are important elements for trade capacity building. The standards and conformity requirements have become an important sign of time for supporting developing countries to improve their capacities and capabilities to access more demanding markets. Standards can be created in the global market but also in the regional (local) markets in order to better respond to local market conditions, to reflect the needs for quality and price differentiation respond to the local market demand.
It was also stressed that complying with the standards has become increasingly important for learning and for upgrading industrial capabilities through participating in global value chains.
Usually in the global value chains, and in buyer-driven value chains in particular, lead firms are those that are setting the standards. Three categories of standard making were distinguished namely, mandatory, voluntary and private standards. Most technical assistance is in the area of mandatory standards while in voluntary standard making, private cooperation role is dominant.
In a nutshell, the round table concluded that the developing countries are being left behind in terms of poverty reduction, in output growth, and in participation in international markets. There is a need to improve the efficiency of TA by better adapting to the real needs of developing countries. Developing countries need to take the lead in directing this trade related TA where it is most in need. Clearly the supply side constraints have to be addressed as a priority so that trade work for the poor.