ADB Commits to Aid For Trade
Good afternoon your excellencies, distinguished colleagues and friends:
On behalf of the Asian Development Bank (ADB), I welcome you all to this discussion on the progress and future of inclusive trade-driven growth in the Pacific.
It is our pleasure to share ADB’s 2017 report on the World Trade Organisation’s Aid-for-Trade(AfT) initiative and how it impacts the Asia and Pacific region.
I appreciate the partnership with the World Trade Organisation, the Pacific Islands Forum Secretariat, and graciously acknowledge financial support from Australia’s Department of Foreign Affairs and Trade in preparing the report.
I thank our co-host, Vice-Chancellor Chandra of the University of South Pacific, with which the ADB recently signed a co-operation agreement to boost knowledge-sharing between our institutions, particularly in developing policies that can help tackle the unique challenges of the Pacific region.
We are most grateful to Fiji’s Ministry of Trade, Industry and Tourism for supporting this event. ADB’s operations in Fiji date back to 1970 and have been consistent with the priorities of successive administrations across a range of sectors such as transport, energy, water and sanitation, public sector management, among others.
We greatly value our continued strong partnership, particularly on pressing issues such as climate change, where Fiji was last year’s COP23 president.
ADB’s dedication
As the largest development finance institution in Asia and the Pacific, ADB is dedicated to reducing poverty across the region.
We marked our 50th anniversary last year. And we are privileged to partner with the region’s developing economies and our donor members to support the rapid development that has helped transform Asia and the world.
From some of the world’s poorest, most economies in the region have reached middle-income status, with dramatic economic and social improvements.
Our latest forecasts show economic growth will remain robust in 2018. If this trend continues, developing Asia’s per capita income could rise six-fold by 2050.
And its share of global output would increase from 32 per cent today to over 50 per cent.
We have seen international trade as a key driving force behind this remarkable economic growth—growth that has lifted more than a billion people out of poverty in our region since 1990.
Aid for Trade can play an important role in ensuring this continues—by maximising opportunities to expand trade further and, more importantly, spread evenly, the resultant economic gains.
Today, developing Asia and the Pacific is benefiting from a rise in investment, manufacturing and trade—all from strengthening global demand.
Despite the broadening trade recovery since last year, there remain risks to ensure a sustained recovery. The uncertainties in the global economic environment and financial markets remain, primarily from anti-globalisation factions and continued geopolitical risks.
Yet, despite these uncertainties, we must continue to push for open trade and use it to provide more inclusive and shared growth.
Lessons from the Report
This Aid for Trade report analyses how AfT can increase trade in services though regulatory reform and modern trade facilitation such as paperless trade.
Lessons highlighted in the report will help policy makers target sectors with the greatest potential to create jobs and reduce poverty, and better identify areas for policy actions under the Aid for Trade Initiative
Clearly, trade costs must be lowered further. This is key to integrating developing economies—especially lower-income countries—into the global economy.
Lowering costs will help draw in small and medium-sized enterprises and marginalised communities into global and regional trade and value chains.
To do this we must:
- Accelerate trade facilitation, build the infrastructure to expand our capacity and improve the business climate to attract more investment.
- Enhance regulatory reform to make it less cumbersome thus reduce costs.
Progress on these fronts is important for Asia and the Pacific because trade can create the jobs needed to meet employment targets under the UN’s Sustainable Development Goals, or SDGs.
Aid for developing services—increasingly tradable as digital technology transforms business and logistics—is particularly important as the sector employs 60 per cent of the workforce globally, and 70 per cent of women workers.
For the island nations of the Pacific, the challenges to engagement in international trade are exponentially compounded by geography.
– The small size and isolation of sea-locked economies increase the costs of providing services and doing business.
– Their high exposure to climate change and natural disasters, and their narrow economic base, make them extremely vulnerable to natural and economic shocks most often beyond domestic control.
– Supply-side capacity and trade-related infrastructure constraints further impede access to markets and connections to global value chains, and greatly amplify the isolation.
Therefore, aside from the physical infrastructure needed to trade efficiently, it is especially important for Pacific countries to continue improving the business environment and minimise barriers to services trade.
Governments can make efforts to leverage sectors with the most potential to contribute to inclusive growth, trade flows, and to generate economy-wide spillovers.
For example, around 70 per cent of the total output in the Pacific is generated by services, such as tourism, which employs a large proportion of the workforce—ranging from about 10 per cent here in Fiji to almost 50 per cent in Palau with strong links with the rest of the economy.
This can help the Pacific nations to overcome the challenge of geography, better connect with international trade flows and achieve inclusive growth.
Rapid digitalisation and the growth of e-commerce also offers a historic opportunity for the Pacific economies to increase trade, tap into niche export markets, and promote inclusive growth.
Still much to be done
While Pacific nations have made great strides toward regulatory reform of telecommunication services to enhance investment, much still needs to be done.
For instance, with just 60 per cent of the population holding mobile subscriptions and only 13 per cent with internet access, there is an urgent need to expand ICT infrastructure
By better channelling Aid for Trade in services, improvements can be made in ICT infrastructure.
Further a regulatory environment needs to be enabled to help the Pacific nations to share the benefits of the digital economy. Expanded internet access can be particularly transformative in providing opportunities for small firms—often owned by women—to tap previously inaccessible markets.
Overall, Aid for Trade has helped strengthen economic infrastructure and the productive capacity needed for economic development—to achieve higher levels of sustained and inclusive growth.
It accounts for about 40 per cent of official development assistance in Asia and the Pacific.
Sea-locked Pacific economies rely more significantly on Aid for Trade, which accounts for 2 per cent of GDP. It.
Aid for Trade has also been an important part of ADB’s support for regional co-operation and integration for ensuring sustainable development in Asia and the Pacific.
More than 60 per cent of Aid for Trade to the region targets infrastructure, especially transport, energy and agriculture.
These are prerequisites to further economic development and achieving SDG targets.
ADB has remained actively involved in the Aid for Trade Initiative since it began in 2005.
We work to further reduce trade barriers, facilitate trade, assist domestic regulatory reform, and deepen regional co-operation, in part by enhancing trade linkages between economies.
ADB continues as a close partner with the WTO by contributing to the Global Review of Aid for Trade through research collaboration and knowledge-sharing on related policies.
I reaffirm ADB’s continuing support for Aid for Trade.
I look forward to new and bold ideas to bolster international trade inclusively by
- improving connectivity
- leveraging digital technology and the services sector.
- mobilising Aid for Trade resources to address existing constraints—for example, limited ICT infrastructure and the regulatory bottlenecks that remain barriers to growth.
Once again, a sincere welcome, and best wishes for active, vibrant, and constructive discussions.
Thank you
Feedback: maraia.vula@fijisun.com.fj