International trade has been a driver of growth, job creation, and poverty reduction in many countries. Thus, it makes sense that the ongoing Sustainable Development Goals (SDGs), pending agreement by world leaders this week, include targets related to international trade. For instance, there are targets focusing on limiting agricultural export subsidies (target 2.a), increasing Aid for Trade (target 8.a), promoting an equitable multilateral trading system under the WTO (target 17.10), increasing the exports of developing countries (target 17.11), and enhancing market access for exports from least developed countries (target 17.12). Yet, some of the ongoing SDG targets related to trade entail or presuppose the completion of the WTO’s Doha Development Agenda, which seeks to improve market access for exports from developing countries as one of the main objectives. (e.g. target 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).
A successful Doha Round is not only likely to bring significant gains to developing countries, but also is expected to bring significant economic benefits that greatly outpace the costs according to an Expert Panel gathered by the Copenhagen Consensus, and as highlighted by The Economist. A study by Anderson (2014) estimates the benefit-cost figures for trade liberalization and finds that completing the most ambitious proposals of the Doha Development Agenda (DDA) to reduce trade barriers can bring the world as a whole $2,011 per dollar spent, and developing countries $3,426 per dollar spent. Yet, the prospects for successfully concluding the Doha Agenda remain uncertain.
Despite the desirability of concluding the Doha Round because of its benefits to developing countries, good targets should also focus on policies or other actions that can be undertaken by policy-makers in developing countries and for which they can and should be held accountable. This aspect is somehow missing in the trade-related targets of the current SDGs, and should be strengthened and prioritized during the implementation of the SDG framework.
One area of importance for policy-makers in developing countries not captured in the SDGs is trade facilitation. The importance of trade facilitation policies in diminishing trade costs and helping countries to benefit from trade has also been extensively recognized by policy makers, researchers and the rest of the international community. Trade facilitation is an area of the Doha Agenda which has shown progress. The WTO Trade Facilitation Agreement (TFA) includes commitments on publishing and making information available for traders, expediting the movement and clearance of goods, as well as adopting modern approaches to customs and border management. As has been noted many times before, the TFA provides a solid basis for facilitating trade in developing countries. Once it is ratified and fully implemented, the TFA is expected to generate large net benefits. For instance, the World Bank and World Economic Forum (2013) finds that policies to improve key supply chain barriers of countries to half the level of Singapore’s performance (the country with the best global practice) could increase world GDP by nearly 5%, up to six times more than reducing tariffs.
To assist developing countries in the implementation of the TFA, the World Bank Group has launched the Trade Facilitation Support Program (TFSP). The program provides support to countries interested in strengthening their trade facilitation and logistics regimes, with a view to create and sustain the momentum for reform. To date, 45 countries have formally requested support from the Program.
Another area that should be emphasized during the implementation of the SDG framework is non-tariff measures (NTMs). Benefiting from a more open global market is becoming increasingly dependent on reforming the use of NTMs to minimize or remove their impact on reducing trade costs. NTMs are regulatory measures other than ordinary tariffs that can potentially increase trade costs and distort trade. While the WTO recognizes the right of countries to introduce trade regulations to achieve objectives such as protecting human, animal, and plant life, NTMs can be also be used for protectionist objectives. NTMs often encompass ‘behind-the-border’ measures embedded in domestic legislation, regulations, and methods of enforcement. A major problem with NTMs is the significant transparency gap that often exists, making it difficult to tell which NTMs serve protectionist aims rather than legitimate regulatory aims. Streamlining cost-raising NTMs is increasingly recognized as a key component of the development agenda.
Trade reforms aimed at reducing trade costs, such as trade facilitation and streamlining NTMs, can also have a positive contribution to the achievement of several other targets in the Sustainable Development agenda. These include reducing poverty, reducing malnutrition and hunger, boosting employment and sustainable economic growth, reducing inequality and strengthening global partnerships for sustainable development. At the World Bank Group, through our work on trade and competitiveness, we are supporting countries’ reform efforts and, along with the wider international community, looking forward to achieving all of the SDG targets aimed at ending poverty for millions of people.
Anabel González is Senior Director of the World Bank Group Global Practice on Trade and Competitiveness. She leads a team of 500 people to design and implement the World Bank Group’s global and country agenda in the areas of trade, investment climate, competitiveness, innovation and entrepreneurship. Anabel served as Costa Rica’s Minister of Foreign Trade from 2010 to 2014. During her tenure, she led Costa Rica’s efforts to join the OECD, negotiated, approved, and implemented six major free trade agreements, and implemented investment climate enhancement policies that contributed to attracting over 140 new investment projects. Anabel is the current Chair of the World Economic Forum Global Agenda Council on Competitiveness.