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Developmental or merely window-dressing? Searching for development in the Sustainable Development Goals Sustainable development goals, trade, and transformative growth Yurendra Basnett – Research Fellow November 2014
Locating MDGs – MDGs were a product as well as a reflection of the understanding of development as ‘human development’. – The first seven goals relate to different dimensions of human development, and the eighth is a global contract on meeting the previous seven. – The United Nations (UN) MDG Task Force Report (2012) painted a mixed picture of achievement against the trade-related targets of MDG8. If progress is measured in terms of the indicators on market access (indicators 8.6-8.9), at face value the outcomes tick the boxes. – But beneath the surface, progress remains questionable. 3
An agenda for development, but not necessarily developmental The MDGs place great weight on social goals. But can social development take place, and more importantly can it be sustained, without economic development? The aid-driven improvements in and expansion of health services are noteworthy achievements in many poor countries, but without economic resources how are these countries to sustain such improvements? Where an economic dimension features, for instance in the trade element of MDG8, it relates to doing more of the same. The agenda sought to help countries export more of what they are already exporting, but there is nothing on helping poor developing countries move into higher-productivity activities. 4
Enter SDGs United Nations Conference on Environment and Development in Rio de Janeiro in 2012, marking the 20th anniversary of the Earth Summit of 1992. The post-2015 global development agenda has converged with the 2012 Rio+20 Conference on sustainable development to produce one global sustainable development agenda. Will the Sustainable Development Goals address the missing economic development in MDGs as well as include environmental concerns of the Rio+20 Conference? To what extent will SDGS allow developing countries to embark on transformational development journey. 5
From MDGs to SDGs: Tracing change MDGs (Goal 8)SDGs (Goal 17) 8.A: Develop further an open, rule-based, predictable, non-discriminatory trading and financial system. 17.10 promote a universal, rules-based, open, non- discriminatory and equitable multilateral trading system under the WTO including through the conclusion of negotiations within its Doha Development Agenda 8.B: Address the special needs of the LDCs.17.11 increase significantly the exports of developing countries, in particular with a view to doubling the LDC share of global exports by 2020. 8.C: Address the special needs of landlocked developing countries and SIDS. 17.12 realize timely implementation of duty-free, quota- free market access on a lasting basis for all least developed countries consistent with WTO decisions, including through ensuring that preferential rules of origin applicable to imports from LDCs are transparent and simple, and contribute to facilitating market access 6
Global trade and economic landscape is changing Global and regional value chains – avoiding being captured. South- South trade – the terms of engagement. Mega-regional trade agreements – who is being left out. International instruments and global standards – what about capabilities. These economic forces are shaping new forms of convergence and divergence What are the opportunities for late-industrialisers? 7
LDC exports to MICs: 2000-13 8 Source: UNCTADstat, Merchandise Trade Matrix - product groups, exports
LDC imports from MICs: 2000-13 9 Source: UNCTADstat, Merchandise Trade Matrix - product groups, exports
Ensure developing-country voices are heard in the making of trade rules 10 Developing countries have a voice within the World Trade Organization (WTO), but lacklustre progress on negotiations has tipped the Doha Development Round into uncertainty. In a world being carved up by mega-regional trade agreements, LDCs will be marginalised and their ability to use trade to escape poverty will be undermined. What should be done? – Revive the political interest for the WTO’s Doha Development Round. – A commitment to a new global trade framework that goes beyond market access for the poorest countries.
Diversify trade with developing countries LDCs have committed to double their share of global exports by 2020. To trade out of poverty in a sustainable way, exports must come from a wider range of sectors and industries in order to facilitate wealth distribution and job creation. But recent growth in the value of LDC exports has been largely owing to oil exports. Oil exports, for example, to EU increased in value by an annual average of 16% between 2002 and 2013 and doubled in share from 18% to 35%. 11
Revise rules of origin for 21 st century trade The EU sets rules of origin (RoO) to establish whether products from LDCs are sufficiently made within these countries to benefit from duty- and quota-free access. Increasingly goods are ‘made in the world’, with different components made, and processes carried out, in different countries. RoO often preclude poor countries from participating in global value chains. What should be done? – Further reduce the value-added thresholds in the RoO in EU trade preferences. – Allow imports from LDC in all bilateral and regional cumulation of origin. 12
Promote environmentally-friendly trade with developing countries Global trade in environmental goods reached US$955 billion in 2012, with tariffs on some products as high as 35%. Importing from poor countries whose environment is better suited to production without resource depletion is better than subsidising resource-intensive production. What should be done? – Use trade with developing countries to improve global environmental outcomes. – Work to conclude the WTO Environmental Goods Agreement and ensure that developing countries can participate in the opportunities that it will create. 13
Build the capacity of developing countries to meet standards Primary products – for example agriculture, fishing, forestry and mineral fuels (including oil) – make up about half of LDC exports. These products face the most stringent health, safety and traceability standards, which many poor countries lack the technical and financial resources to meet. Market access becomes meaningless if the capacity to produce goods and services and meet the standards required does not exist. What should be done? -Help to build technical capacities in developing countries at national and regional levels to meet product standards. -Communicate information on standards in a timely and transparent way. 14
Increase business networks between EU and developing countries Services sector one of the fastest growing economic sectors in developing countries. A 15-year service waiver, agreed at the 2011 WTO Ministerial Conference in Geneva, would allow the developed and developing countries to provide preferential market access for trade in services to the LDCs. But the waiver is yet to be applied. What should be done? – Respond positively to the LDC proposal on trade in services with the EU. – Offer all LDCs the levels of services market access that are offered in its free trade agreements with developed and developing countries. 15
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