It's Trade AND Development, Not Trade OR Development

Trade and development.  In the UK, it’s a single subject.  Just take two examples.  First, the UK’s trade policy unit is staffed by officials from both the Department of Business and the Department for International Development.  Second, whilst two-thirds of the UK’s Trade and Investment White Paper is about boosting UK exports and attracting more inward investment, a third is about helping developing countries benefit more from trade and being given the opportunity to integrate more into the global trading system.

But in the US, where I’ve been lucky enough to have been posted for the last three years, the two nouns are so rarely heard together that you’d be forgiven for thinking that they are unrelated.  When you listen to the trade debate, it seems to be very close to a mercantilist debate about exports, market share, and enforcement.  Obviously, that’s a generalisation, and it doesn’t do justice to those in Government, business and non-profit organisations who are working on trade and development.  But it is fair to say that trade and development doesn’t get much airplay.    The US GSP renewal got held up in 2011 for months because of the impact on one sleeping bag manufacturer in one US state.

So I was delighted to get the opportunity be invited to a trade and development discussion at an informal roundtable dinner in one of the Congressional buildings last week, alongside two well-respected members of Congress, and representatives from business and civil society.  It was “Chatham House rules”, so I hope you’ll forgive me for not revealing more about the discussion or revealing identities.  But it struck me as such a sadly rare occasion in which I could talk proudly about the strong UK views about why trade and development should be discussed in the same breath and are legitimate bed-fellows, that I wanted to share some of my main points more widely.  Here’s some of the main policies we’re promoting:

• Poverty alleviation.  Millions have been lifted out of poverty in the last decade through the ability to trade.  That shouldn’t be such a surprise.  Brazil, India and China didn’t become emerging economies by chance.   And aren’t the UK, US and others in the West are all trying to find new ways to get growth through exports.  Surely developing countries’ economic security is our security?
• Trade facilitation.  It’s a huge disappointment that we didn’t manage to conclude the WTO’s Doha trade round.  But the silver lining is that ministers committed themselves, at the WTO Ministerial in Geneva in December, to try “fresh and credible approaches” to take trade liberalisation forward.  So let’s get a trade facilitation agreement done.  A deal would be worth half of the Doha round’s estimated gains, and most of those benefits will go to developing countries.  Because, let’s be honest, their customs procedures aren’t as efficient are ours.  But that’s not the point.  The key issue is that just as it would help smooth the path of our exports to them, is that it would also do the same for their exports to us.  And even more important, when you consider the growth of south-south trade, it would have a positive impact on regional trade amongst developing country neighbours.
• Aid for trade.  The UK is living up to its G20 commitment to spend 0.7% of Gross National Income on overseas development.  And this applies to trade.  The UK’s spending £1bn (or about US$1.55bn) on aid for trade a year, on things like infrastructure, advocacy, technical assistance and capacity building.
• preference schemes.  Let’s do 100% duty-free quota-free market access for Least Developed Countries (including cotton) now.  It’ll have marginal impact on us financially, but have a huge relative impact on the LDCs.  Let’s graduate the higher income countries out of Generalised Systems of Preferences, but expand the schemes’ coverage for those still benefiting.
• global value chains.   They’re responsible for $2 trillion in sales and 55% of trade.   Most of the UK’s – and US’s imports are components into something we then export.  How does a suit manufacturer in London’s Jermyn Street or New York’s  ……. hope to compete with those in China, Sri Lanka or Hong Kong if they’ve got to pay huge tariffs on the textiles they need to import to make the clothes with?  So why not make it easier for SMEs in the poorer countries to enter the supply chains?   Good for them, good for our competitive edge.  And, again, it’s the security question – better prospects for the 18-20 million people in developing countries who work on supply chains means more security.  And, to put it bluntly, they have more disposable income.

Trade and development.  Are they really world’s apart?