Turning the Tide: Towards Inclusive Trade and Investment
Your Excellency, Mr. Niwattumrong Boonsongpaisan, Deputy Prime Minister and Minister of Commerce, Royal Government of Thailand
Your Excellency, Dr. Nam Viyaketh, Minister of Industry and Commerce, Government of Lao People’s Democratic Republic
Your Excellency, Mr. Maung Myint, Minister of Industry, Government of the Republic of the Union of Myanmar
Excellencies, distinguished delegates, ladies and gentlemen,
It is a joy for me to warmly welcome all of you to this third session of the Committee on Trade and Investment, a culmination of events during our Trade and Investment Week.
As the famous management consultant Peter F. Drucker once said: “Free enterprise cannot be justified as being good for business. It can be justified only as being good for society.”
It is precisely that spirit that is now guiding ESCAP’s work in trade and investment – promoting enterprise and barrier-free trade so that their benefits could be enjoyed by all people across Asia and the Pacific. This means forging a better development path. However, it requires commitment and partnership from all stakeholders: governments, business, civil society and communities.
Since we last met two years ago, the region continues to be impacted by the prolonged global economic crisis, with developing countries (not including China) witnessing a 7 per cent decline in exports in 2012. However, there are signs of a weak recovery in 2013.
Despite the crisis, the Asia-Pacific region has consistently outperformed other regions in economic growth and this trend is expected to continue. Intraregional trade continues to grow in importance, lessening the region’s reliance on the markets of developed countries in Europe and the United States. For the first time, developing economies worldwide – but led by those in Asia and the Pacific – absorbed more FDI than developed countries in 2012, accounting for 52 per cent of global FDI inflows. At the same time, within the rising global south, developing countries in Asia and the Pacific have become the most prominent sources of FDI, accounting for about one-fifth of the share of global outflows.
These facts have been documented in some detail in this year’s Asia-Pacific Trade and Investment Report, which we launch officially today. For the moment, I wish to draw your attention to some key messages from the report:
First, the real challenge for policymakers is to find ways to boost growth without relying on unstable demand from large economies outside the region. We often speak of the need to balance our sources of growth, as the crisis has demonstrated that dependence on exports alone creates vulnerabilities. Therefore, countries need to stimulate domestic demand to the extent possible. In this regard, however, we should also recognize such challenges as small domestic markets and limited resources faced by LDCs, LLDCs and small island States.
One of the potential growth sectors the Report highlights is services. It is among the best-performing sectors in developing countries but still has great potential to grow further, particularly in the area of outsourcing. In addition to well-known IT software and outsourcing industries in India, several countries in Asia and the Pacific such as Thailand, Singapore and India are rapidly becoming hubs for medical services. Malaysia and the Philippines are aiming to become hubs for education, while Singapore and China are rapidly becoming global centres of finance.
Second, though the region has largely resisted trade protectionism in the wake of the crisis, there is considerable scope to further dismantle less transparent barriers to trade, especially those affecting the manufacturing sector. We look forward to a successful conclusion next month in Bali of the Ninth WTO Ministerial Conference, which will hopefully provide renewed momentum to the Doha Round as we believe that the multilateral trading system – imperfect as it is – still offers some of the better modalities for developing countries to pursue freer and fairer global trade.
Third, trade and investment should not be pursued for their own sake but to increase the wellbeing of all, not just the wealth of a few. While it is recognized that trade and investment have lifted millions out of poverty, there is also evidence that many countries and people remain marginalized and have failed to benefit from the resulting growth. And despite the projection that by 2030 the region will account for two-thirds of the world’s middle class, income inequalities have grown, many workers receive rock-bottom wages to keep sectors competitive, and growth in many countries has failed to trigger productive employment.
In general, research indicates that international trade openness alone may have little effect on employment opportunities, but the interactions between openness and governmental policies are important considerations. There is gaining recognition that ethical responsibilities of private enterprise are another key contributor to inclusive trade and investment. Business as usual focused on maximizing profit alone will no longer be acceptable. Instead, business champions need to lead by example, by taking an active stance and advocating both the moral and the business case for sustainable development and responsible business conduct. This is especially true in issues of environmental protection, labour standards, anti-corruption, and support for basic human rights.
Various international instruments for corporate sustainability already exist, including those under the United Nations Global Compact and the United Nations Guiding Principles on Business and Human Rights, which were created to implement the “Protect, Respect, Remedy” framework. They outline business responsibilities with regard to upholding rights in very clear and simple terms, by linking the State’s duty to protect human rights, with the duty of businesses to respect these rights, and the need for access to appropriate remedies when rights are violated.
For their part, governments need to ensure an equitable distribution of the wealth created by trade and investment, to ensure that ultimately society at-large benefits in the long run, and that in the short-run trade at least does not disproportionally affect vulnerable groups. In this regard, access to education, especially for women, investment in technology, in particular ICT, and functioning labour markets could spread the benefits of trade and investment more widely.
Lastly, better business needs an empowered and active civil society and media, engaged communities, and critically, it requires regulation, careful monitoring, and firm enforcement by governments, coupled with visible proof that our political leaders and institutions “walk the talk” in their own contractual arrangements and dealings with business.
Inclusive and sustainable development, therefore, is as much the business of business as it is of governments and of all of us. This shared responsibility is to not only accelerate growth, but also to change the nature and pattern of growth, making it more inclusive, more resilient, more sustainable, and ultimately more supportive of people and our planet.
Excellencies, ladies and gentlemen,
As you can see, the Asia-Pacific Trade and Investment Report shows that it is possible to enhance both the direct and indirect contribution of trade and investment to inclusive growth, although the mechanisms involved are sometimes complex and require political will and commitment.
This Committee on Trade and Investment provides countries with the intergovernmental platform to take stock of further development needs, derive useful lessons from past experiences and make the necessary policy adjustments to ensure that trade and investment leave no-one behind.
You will see that the agenda of the Committee has undergone some changes as compared to previous sessions to reflect our desire to engage member States deeper in the work of the secretariat. In particular, the Committee will discuss its strategic direction and way forward, with particular reference to the implementation of the development agenda beyond 2015 and formulation of the secretariat’s strategic framework. It will assess the various activities undertaken to promote regional cooperation under the subprogramme on trade and investment and, in this regard, discuss the need for enhanced cooperation with other global and regional organizations working in the area of trade and investment.
It will also review global initiatives and mandates which have as much relevance for our work as regional ones, including those resulting from the Commission, but are often overlooked. We present some innovative ideas to enhance the relevance and role of the Committee. We look forward, therefore, to your interactive debate and outcomes on these issues and I am confident that this session will be a great success.
I thank you for your participation.