Watch the replay

This event took place on October 15, 2021

Read the transcript

00:22 [Upbeat Music]
00:24 [Annual Meetings 2021]
00:26 [TRADE TO THE RESCUE] [UNLEASHING GLOBAL TRADE TO SUPPORT ECONOMIC GROWTH]
00:33 [MAGGIE LAKE] Welcome live to the atrium
00:35 of the World Bank Group in Washington DC.
00:38 We're glad you could join us for this, the last public event
00:41 of the Annual Meetings
00:43 Unleashing Global Trade to Support Economic Growth
00:46 I'm Maggie Lake, and I'll be your host
00:47 [MAGGIE LAKE, FINANCIAL JOURNALIST] for the next hour and 15 minutes.
00:50 The Pandemic has dealt the global economy
00:52 an unprecedented shock,
00:54 and the recovery has been uneven.
00:55 Hundreds of millions more people have lost their livelihoods
00:59 and fallen back into poverty.
01:00 A swift recovery in goods trade last year helped limit
01:04 the extent of the global recession.
01:06 But trade could do so much more to support growth.
01:09 Today we're going to look at what can be done
01:11 to unleash trade and support a faster and deeper economic recovery.
01:16 Let's take a quick look at what's coming up.
01:18 [VIRTUAL ANNUAL MEETING 2021] [COMING UP]
01:21 [UNLEASHING TRADE FOR GROWTH AND DEVELOPMENT]
01:25 DAVID MALPASS, PRESIDENT, WORLD BANK GROUP]
01:28 [NGOZI OKONJO-IWEALA, DIRECTOR-GENERAL, WTO]
01:30 [MAKING RECOVERY GLOBAL, GREEN AND RESILIENT]
01:34 [MARI PANGESTU, MANAGING DIRECTOR, DEVELOPMENT POLICY AND PARTNERSHIPS, WORLD BANK]
01:39 [BETTY MAINA, MINISTER OF INDUSTRALIZATION, TRADE AND ENTERPRISE DEVELOPMENT, KENIA]
01:45 [MEHDI TAZI-RIFFI, CEO, TANGER MED SPECIAL AGENCY]
01:48 [THE POTENTIAL OF TRADE FINANCE]
01:51 [MAKHTAR DIOP, MANAGING DIRECTOR, IFC]
01:54 [BILL WINTERS, CEO, STANDARD CHARTERED BANK]
01:57 [MAGGIE LAKE] Our guests will be focusing on
02:00 how trade can help make the global economy
02:02 more inclusive, greener and resilient.
02:05 We'll discuss the need for stronger trade links
02:08 and investment in transportation and logistics,
02:11 as well as the challenges of high trade costs
02:14 and scarce trade finance.
02:16 To kick things off,
02:17 I am delighted to welcome the top leaders
02:19 in international trade and development.
02:22 Ngozi Okonjo-Iweala is the Director General
02:25 of the World Trade Organization,
02:27 and David Malpass is the President of the World Bank Group.
02:30 David, over to you.
02:31 [DAVID MALPASS] Thank you, Maggie.
02:33 It's a pleasure to welcome Ngozi back to the World Bank.
02:37 WTO and World Bank are natural partners.
02:39 We're both trying to have development.
02:41 We're trying to have more trade.
02:43 Trade was really disrupted by the Pandemic.
02:47 Goods trade is back.
02:48 As we heard, has more to go,
02:51 but services trade is still down.
02:54 Now we're seeing these supply bottlenecks.
02:57 I hope we can discuss that,
02:59 what are some of the modalities of the supply bottleneck?
03:04 How can they be reduced?
03:06 How can we have it be transitory in terms of the price impact of those?
03:11 We'll look at those this morning.
03:13 I also really want to think about growth and getting it back on track.
03:17 So that's the intro.
03:19 I want to ask,
03:22 what is the role of trade and how can we make it better?
03:25 So in the real big picture standpoint,
03:28 is it important to smaller countries?
03:30 Why is it important and how can we make it go better?
03:33 [NGOZI OKONJO-IWEALA] Well, David, thank you.
03:35 It's an absolute pleasure to be back here in the World Bank
03:39 and the wonderful atrium.
03:42 Today, we did a joint policy note between the World Bank and the WTO
03:48 on the role of trade in the road to recovery
03:51 for developing countries.
03:52 And we've just released it.
03:54 You talked about the partnership, it's really robust.
03:57 [LIVE: WORLD BANK GROUP PRESIDENT AND WTO DIRECTOR-GENERAL]
03:58 Of course, trade plays a very important role.
04:01 Let me just say that we released
04:03 our latest forecast for the growth of merchandise trade
04:07 a few days ago last week, actually.
04:10 It shows a very robust rebound of 10.8% for this year,
04:16 4.7% for next year.
04:19 Trade is really following the strong recovery
04:25 that we also see for output growth.
04:27 But there's one thing I want to mention there
04:29 that we should not be too complacent.
04:32 There's a two-track rebound, a K-shaped recovery.
04:36 You've got those countries
04:39 that have been able to implement strong fiscal stimulus,
04:44 accommodative monetary policy
04:47 as well as access to vaccines
04:49 who are rebounding very well
04:51 and those without access
04:52 who have very little fiscal space.
04:55 Logging behind access to vaccines
04:57 has become a very important determinant.
04:59 I often joke that trade policies, vaccine policy and vice versa.
05:04 But we need trade back because we need to have
05:07 those countries that are not recovering
05:10 have access to external demand
05:12 for their products.
05:13 This is how some of the poorer countries can also recover.
05:17 [DAVID MALPASS] Exactly and often the poor people.
05:19 So between cities, villages, that trade is vital
05:23 and then across borders, it's vital.
05:25 Right now, we're seeing some bottlenecks
05:27 in the supply lines, which are concerning.
05:30 Some of our data shows that
05:31 there's 8% of the containers are stalled, not getting into ports.
05:36 That's double what the normal would have been.
05:39 And so that adds to the cost of shipping
05:44 and adds to the cost of goods.
05:45 So we're seeing it in inflation as well.
05:48 Any thoughts on ways to break the supply bottlenecks?
05:52 Does WTO work on that?
05:54 What's the thinking on the bottlenecks?
05:56 [NGOZI OKONJO-IWEALA] Well, let me answer in two ways.
05:59 We've actually been doing excellent work, as you know,
06:02 supply bottlenecks for vaccine manufacturers
06:05 and trying to help them monitor
06:07 what is holding them back, where their shortfalls are,
06:10 where their export restrictions and prohibitions are
06:13 that could be lifted by a member.
06:15 So that's going well.
06:16 On the supply bottleneck, we're seeing now
06:18 these supply chain problems.
06:19 I think they arise out of a demand side push.
06:24 The fiscal stimulus, of course,
06:26 put money in the hands of households, in the hands of businesses.
06:31 I also think that there's been some inventory accumulation going on
06:35 done by businesses
06:37 as they worry about the robustness of their supply chains,
06:40 they want to manage risk by accumulating inventory.
06:43 There's also a demand push from the business side.
06:47 All of these factors, supply and demand mismatch is
06:50 what we're seeing now, and that's resulting in
06:53 this inflationary push which we hope
06:55 over the next few months, will work itself out.
06:59 At the beginning,
07:01 I think the shipping lines cut down in anticipation
07:05 of a downward push
07:08 on growth by the pandemic.
07:11 I think the cut down containers were left in the wrong places,
07:15 and there's a mismatch of that.
07:17 I'm hoping that over time, or we hope, this will work itself out.
07:22 But in the meantime, there are other things
07:23 that we could also do.
07:25 We need to monitor what is happening with trade facilitation.
07:30 We need to take as many measures
07:32 to make sure that trade flows smoothly.
07:34 I'm happy to say that, actually,
07:37 members of the WTO have taken more trade facilitative measures
07:41 than they've done restrictions.
07:43 And that's very helpful.
07:44 [DAVID MALPASS] In some of the past crisis,
07:47 there were export restrictions that were put on when there were shortages.
07:50 We haven't seen as much of that now, and I think that's really welcome.
07:54 One of the challenges early in COVID was the loss of trade financing.
08:00 World Bank tried to step into that, and did step into that,
08:03 with IFC, the International Finance Corporation, provided trade finance,
08:08 and MIGA is now joining IFC and providing trade finance.
08:13 But the correspondent banking problems feed into the problems.
08:18 I think quite a few small logistics firms went out of business
08:24 and that's contributing some to the supply bottlenecks.
08:28 They'll come back, but it takes time.
08:30 [NGOZI OKONJO-IWEALA] David, I'm so happy you mentioned
08:32 the issue of trade finance.
08:34 You're on to something very important
08:36 which isn't talked about as much as we would like.
08:39 I think this is critical.
08:41 The Asian Development Bank has actually estimated
08:43 a $1.7 trillion dollars trade finance gap in the world,
08:48 which about half of that is in developing poor countries,
08:55 including the African continent.
08:59 The most important thing is that these countries don't have access
09:03 to this finance for their trade.
09:05 How can you trade if you don't have what makes oils the wheels?
09:09 And I think because it's a problem
09:11 of developing countries and not of rich countries,
09:14 it's not talked about as much.
09:16 This is an area, I'm glad to hear the IFC and MIGA are moving.
09:21 We'd like to collaborate with you more
09:23 in identifying where the problems lie and what we can jointly do about it.
09:28 [DAVID MALPASS] We're doing some technical assistance with countries, too,
09:32 because some part of it is compliance, their compliance with international rules,
09:37 that are well meaning,
09:38 they're meant to reduce money laundering,
09:43 financing for terrorism,
09:45 but they end up with blocking trade.
09:48 So we need to find ways through that.
09:51 I wonder about other challenges on trade.
09:53 The agriculture sector has blockages within it.
09:59 The industrial sector, some of it is tariff barriers,
10:02 and some is non-tariff barriers.
10:05 Do you have a sense of whether things are getting worse or better in that line?
10:09 [NGOZI OKONJO-IWEALA] Let me say that in the agricultural sector,
10:14 we have a very big problem
10:16 of what we call domestic support or subsidies,
10:20 agricultural subsidies, which are growing in leaps and bounds.
10:24 And of course, we have to worry about how distorted these subsidies are
10:29 and whether they result in a barrier to competition.
10:35 We talk about it as domestic support at the WTO.
10:38 And most members want to look at this and solve this problem.
10:44 Recently, we had the Food Summit and they measured that
10:48 agriculture subsidies are about 540 billion dollars.
10:52 There are some estimates of about 700 billion,
10:56 which could reach over a trillion by 2030.
10:59 So it's huge.
11:01 If we don't do something to take care of this,
11:03 there will be many poor countries who cannot compete
11:06 because of the large subsidies from rich countries.
11:09 So that's a problem.
11:11 Right now, we're actually looking at fisheries.
11:13 Harmful fisheries subsidies, which are about 22 billion.
11:17 I'm trying to see how we can negotiate away that.
11:20 [DAVID MALPASS] Your point that distortions,
11:22 these cause distortions, may be overfishing
11:25 because there's a subsidy.
11:26 We know it in agriculture,
11:28 the US has the big ethanol requirement
11:31 which really pushes up the price of corn.
11:35 In other parts of the world, there are blockages on trade.
11:38 I'll pick a little on one of your former homes of Nigeria,
11:43 there are barriers to the rice trade.
11:47 So around the world, I think, there could be benefit
11:50 in your point of the costliness of some of the agriculture subsidies,
11:56 particularly in the advanced economies, but it extends worldwide.
12:00 It's a huge cost and it's distortive.
12:02 So if we can find a way forward on that, I think it would be good.
12:06 [NGOZI OKONJO-IWEALA] On that, I must mention
12:09 the cotton subsidies which are particularly impeding.
12:12 There are four or five poor countries in the African continent,
12:18 low-income countries in the Sahel, Bukina, Niger and so on,
12:22 who have this as their main crop,
12:24 but they can't really compete because of the huge subsidies.
12:27 That's a real problem.
12:29 Industrial subsidies also.
12:31 We have more information on agricultural state subsidies,
12:34 but I just want to thank you for the collaboration
12:38 that we have with you, the IMF and the OECD on trying to do this study
12:43 on subsidies across the board, industrial subsidies
12:46 as well as agricultural subsidies.
12:49 [DAVID MALPASS] It's closely connected to climate.
12:51 If we think of the water subsidies,
12:53 some countries have too low a cost for water
12:56 and it goes into crops that shouldn't be in that particular part or region.
13:02 It costs the country a lot of money
13:04 And then it distorts as well.
13:08 That drains the water shed or the water base.
13:11 All of these issues relate or are interrelated.
13:16 Fertilizer subsidies, we should mention because it distorts.
13:20 It changes what crops are grown,
13:23 It's also expensive, and the chemical runoff is a big part of ocean pollution.
13:28 [NGOZI OKONJO-IWEALA] I wanted to mention in that regard,
13:32 agriculture is responsible for about 25% of greenhouse gas emissions.
13:38 So in that respect, we also need to think about
13:41 the impact that subsidies have on that.
13:44 If we want to have a better approach
13:48 to the climate change problem,
13:50 we need to look at that sector as well as the subsidies going in.
13:53 [DAVID MALPASS] I want to ask you about a tough one,
13:54 the carbon border adjustment mechanism, CBAM.
13:58 The European Union has identified
14:01 that they want less carbon dioxide in their products,
14:05 they're working to have that be part of the common market.
14:11 Maybe almost like what's done with phytosanitary kinds of restrictions.
14:17 There's a reason for it
14:18 but then it causes friction on the borders.
14:22 I've recently met with countries around the European Union
14:26 who are looking for ways to keep access to the markets.
14:31 Do you have any thoughts on that and where the world is headed
14:34 on these restrictive carbon dioxide practices?
14:38 [NGOZI OKONJO-IWEALA] Let me, David, first say that for the EU,
14:42 they're really trying to advance their targets and goals
14:47 for reaching net zero by 2050.
14:49 I think they've really considerably increased
14:52 the targets for 2030, for instance.
14:56 In a bid to do that, they are looking at various mechanisms.
14:59 I think we must commend them for what they're doing.
15:01 But of course, the CBAM.
15:04 There's a lot of worry by some WTO members,
15:07 particularly the poorer countries, the developing countries,
15:11 about what this would mean and they're hoping
15:13 this does not result in protective trade protectionism,
15:18 which will keep their products out.
15:20 We at the WTO,
15:22 these measures have to be WTO compliant.
15:24 But because the devil is in the detail,
15:27 we haven't seen the detailed design.
15:29 So we are waiting.
15:31 We're looking at this.
15:32 We hope to work with the EU
15:34 in a very collaborative fashion.
15:37 One of the things that really bothers me is
15:40 there's a very fragmented approach to carbon pricing.
15:44 There are different approaches, different systems,
15:47 different prices all over the world,
15:49 from less than a dollar a ton in Ukraine of CO2
15:52 to 130 or plus in Sweden.
15:58 For businesses and households,
15:59 this kind of fragmented approach is very tough.
16:02 So why don't we,
16:04 you are doing work on it, so it's the IMF, the OECD, the WTO.
16:07 I was thinking that we should all get together
16:10 and develop a common methodology for a global carbon price.
16:13 [DAVID MALPASS] I think that's good.
16:16 It recognizes also that incentives within agriculture, within climate
16:20 are going to be really important.
16:23 Countries are still subsidizing fossil fuels.
16:25 We were talking about the agriculture subsidies
16:28 but fossil fuels is a big one.
16:29 Well, you're in a very tough job.
16:32 There's frictions among various members
16:34 but there's also, I think, a shared desire to see trade
16:39 going up and doing it in a fair way, and actually making progress.
16:43 So good luck in all of that.
16:45 I look forward to our organizations working well together.
16:49 [NGOZI OKONJO-IWEALA] Thank you, David.
16:50 One of the things I would really like for us
16:53 to push jointly is just transition
16:56 for developing countries.
16:58 As far as this net zero lowering carbon emissions is concerned,
17:03 we need to get that 100 billion that was promised
17:07 to enable developing countries do what they should do in transitioning.
17:12 Thank you for the very big push that
17:15 the World Bank is making in this direction.
17:17 [DAVID MALPASS] We'll be working on all of those going into COP26 in Glasgow.
17:20 Ngozi, great to see you, as always.
17:24 [NGOZI OKONJO-IWEALA] Thank you, David.
17:27 [MAGGIE LAKE] Thank you, David and Dr. Ngozi
17:30 for what is really a perfect set up.
17:33 We are going to delve deeper into those topics that were just mentioned.
17:38 Now, this pandemic has exposed
17:39 the fragility of the global supply chain and its complexity.
17:44 Disruptions have had a devastating impact on trade
17:47 and underscored the need to improve the way we move goods across borders.
17:51 In Sierra Leone, trade facilitation is central
17:54 to the government's ambitious national development plans.
17:57 With the support of the World Bank, those efforts are making it easier
18:00 for businesses, like the country's only juice processing plant,
18:04 to access global markets.
18:06 [MORE OPEN TRADE IS CHANGING LIVES IN SIERRA LEONE]
18:07 [GIVING COMPANIES GREATER ACCESS TO GLOBAL MARKETS AND SUPPORTING JOBS]
18:12 [ABDULAI BANGURA, SUPPLY CHAIN MANAGER SIERRA AGRA]
18:16 We work with over 3500 local farmers.
18:19 We collect their locally grown mango, pineapple and coconut
18:20 to process it at the factory here.
18:21 [SIERRA AGRA IS THE ONLY COMPANY EXPORTING FRUIT JUICE TO EUROPE.]
18:23 [RELIABLE AND FAST SHIPMENTS ARE VITAL FOR THE BUSINESS AND THOUSANDS OF FARMERS.]
18:28 We are one [inaudible speech] from the port in Freetown.
18:38 Our products are taken from here to the port
18:39 and then they are being exported all around the world.
18:40 [FREETOWN SEAPORT IS THE MAIN GATEWAY TO GOODS IN AND OUR OF SIERRA LEONE]
18:41 [WITH 80% OF TRADE PASSING THROUGH THIS PORT]
18:46 We used to face big challenges.
18:50 Our vehicle will be in the queue for hours, at times, even days.
18:57 The documentation process was really complicated.
18:58 But it is now getting better because of the upgrade and modernisation.
18:59 [MODERNIZING TRADE IS AN IMPORTANT PART OF SIERRA LEONE'S VISION
19:03 TO BECOME A MIDDLE-INCOME COUNTRY BY 2039.]
19:06 [KPANA CONTEH, ASSISTANT COMMISSIONER OF CUSTOMS, NATIONAL REVENUE AUTHORITY]
19:10 One of the improvements we've done is upgrading
19:12 to a new computer system, the ASYCUDA, which is web based.
19:14 It is so efficient and effective by connecting all the agencies.
19:20 And this has made local business very effective.
19:21 [GOVERNMENT'S TRADE FACILITATION ACTION PLAN IS BEING DEVELOPED WITH SUPPORT
19:22 FROM THE WORLD BANK GROUP]
19:23 [IT AIMS TO SIGNIFICANTLY REDUCE THE TIME AND COST OF MOVING GOODS
19:27 ACROSS THE BORDER BY 2024]
19:32 [ABDULAI BANGURA] It is now becoming faster, cheaper and easier to trade.
19:38 I'm so excited about the future.
19:41 [MAGGIE LAKE] We're streaming this event in
19:46 English, Spanish, French and Arabic on World Bank Live
19:50 and on our social media channels.
19:52 And to tell us how you can get involved, I'm joined now by Sri Sridhar.
19:55 Welcome, Sri.
19:56 It was so great to hear that discussion with David and Dr. Ngozi
20:01 but how can people listening get involved?
20:03 [SRI SRIDHAR] Thanks, Maggie.
20:04 So they can follow us on our social media channels.
20:06 We are on Facebook, Twitter and Instagram.
20:09 You can also share your comments at any time
20:11 using the hashtag for today's event, which is Unleashed Trade.
20:14 You can also post your questions and comments
20:17 directly on live.worldbank.org.
20:19 So a lot of ways to join in on the conversation.
20:22 You did mention that the event is being streamed as well
20:24 in English, Spanish, French and Arabic.
20:26 We do have experts that are standing by in all four languages
20:29 to answer as many questions as possible and hard at work right now.
20:32 [MAGGIE LAKE] Hard at work right now.
20:33 [SRI SRIDHAR] Hard at work right now.
20:34 In fact, some of the most popular questions that come in, I think have a chance
20:37 of being asked here later today, right?
20:39 [MAGGIE LAKE] Yes, that's right.
20:40 We are actually going to have a return with us,
20:42 Mari Pangestu who is head of Development Policy at the Bank,
20:45 and Paul Brenton, one of the leading economists here on trade.
20:49 They are going to be fielding those questions live,
20:50 which is super exciting.
20:52 You also have a quiz up your sleeve, I understand.
20:55 [SRI SRIDHAR] Yes, we do have a quiz.
20:57 So today's quiz asks, over ten years,
21:00 how much does comprehensive trade liberalization
21:03 raise average income in developing countries?
21:06 And we've made it a bit easier.
21:07 It's a multiple choice question here.
21:09 Is it going to be A, 5 to 7%, B, 7 to 10% or C, 10% to 20%?
21:16 So once again, today's quiz,
21:18 over ten years, how much does comprehensive trade liberalization
21:21 raise average income in developing countries?
21:24 5 to 7%, 7% to 10% or 10% to 20%?
21:28 All right.
21:29 [MAGGIE LAKE] I'm going to start doing my calculations
21:30 and you're going to come back later to give us the answer.
21:32 Thank you so much, Sri.
21:34 [MARIANA SARACI] Hi, everyone.
21:37 I'm Mariana Saraci from Brazilia, Brazil.
21:40 You're watching the World Bank Group-IMF Annual Meetings.
21:45 [MAGGIE LAKE] If you've just joined us, I'm Maggie Lake,
21:51 and we're discussing how we can unleash trade
21:54 to support economic growth and reduce poverty.
21:56 Let's take a closer look at the historic role trade has played
22:01 in reducing global poverty.
22:02 Back in the late 1980s and early 1090s, many developing countries liberalized
22:08 their trade regimes, eliminating or drastically cutting high tariffs.
22:12 As economies opened up, international trade flourished
22:15 and low and middle-income countries
22:18 rapidly increased their share of global exports.
22:21 As you can see, they almost doubled between 1990 and 2017.
22:25 Now.
22:26 look how that increase was mirrored by a fall in extreme poverty
22:30 over the same period,
22:32 36% of people were living on less than 1.90 dollar a day in 1990,
22:38 but that figure was just 9% by 2017.
22:42 We know the Pandemic reversed progress as it disrupted trade
22:45 and pushed 97 million more people into extreme poverty this year.
22:49 But even during those years of export growth
22:52 and progress in poverty reduction,
22:55 the gains from trade were not inclusive everywhere.
22:58 A contributing factor is that high trade costs
23:01 resulting from non-tariff barriers,
23:04 such as customs red-tape and limited transportation infrastructure
23:08 have dampened trade in many developing countries.
23:11 The World Bank estimates that these extra costs,
23:14 in effect, double prices of imports for consumers in developing countries.
23:20 Now we're going to turn to the actions policymakers and private sector leaders
23:25 could take to overcome tariff and non-tariff barriers
23:29 and help boost trade.
23:31 I'm joined now by Mari Pangestu,
23:34 World Bank Managing Director for Development Policy and Partnerships,
23:38 Betty Maina, Minister for Industrialization, Trade and Enterprise Development for Kenya,
23:44 and Mehdi Tazi-Riffi, Managing Director for Tanger Special Agency,
23:48 a global logistics hub and port in Morocco.
23:51 Thanks to all of you for being with us today.
23:53 Mari, we have just heard a compelling case
23:56 for how unleashing trade could support economic recovery.
24:00 What are some of the specific measures policymakers could undertake to boost trade?
24:05 [MARI PANGESTU] Yes, Maggie.
24:07 We have seen just in the recent crisis
24:10 that trade plays an important role in recovery,
24:13 as in past crisis when the pandemic started, trade really dropped.
24:17 But within six months actually, trade recovered.
24:20 But it was uneven.
24:22 Countries which were better integrated in the world market
24:24 as well as having being participants of the global value chain
24:28 recovered much more quickly compared to those that didn't.
24:32 So the main message there is that global economic integration matters.
24:36 Therefore, what should policymakers do to ensure that their markets
24:41 are being integrated with the global market
24:43 integrated with the global market because that's part of the recovery,
24:45 because that's part of the recovery.
24:46 So first, how do you increase access and diversify markets?
24:51 That is about domestic reforms keeping openness
24:54 in place on the trade and investment side,
24:57 entering into a deeper and more ambitious trade agreements,
25:01 whether at the multilateral level or at the regional level.
25:05 And second, how do we deepen global value chains?
25:08 Because that is going to be a key part
25:10 in this current pandemic.
25:12 We found firms who are not part
25:14 of the global value chain suffered more with cancelation of contracts,
25:19 whereas those who were, had some support
25:21 from the suppliers or from the buyers.
25:24 So how do we increase participation in global value chains?
25:28 It is about the domestic reforms, trade and investment climate
25:32 that allows firms to come and relocate to your country.
25:36 And lastly,
25:37 a very important one is reducing trade costs and trade distortions.
25:41 We just did a recent study which estimated that actually,
25:45 internationally traded goods
25:46 are about double the cost of domestic goods
25:50 And for developing countries, it's even more it's about 114%
25:53 equivalent of tariffs out of that, tariffs are a small part of it.
25:58 The bigger part of it is the cross border customs procedures
26:04 and the logistics.
26:06 So a very easy thing to do.
26:08 What I call a costless stimulus is the first part
26:11 streamline your procedures,
26:13 make it easier to do automate, use one single window.
26:17 And this is something that governments can do actually immediately now.
26:21 But it does require political will
26:23 to get all the agencies to come together on that.
26:26 Secondly, of course, address the infrastructure
26:28 and logistics issues, which is partly a physical infrastructure problem,
26:33 but also, regulatory...
26:36 Deregulation and making sure it's more competitive.
26:40 These are things that governments can do and should do.
26:43 [MAGGIE LAKE] And you have to do all of them
26:45 for it to be successful.
26:46 Ms. Maina, speaking about the importance of agreements,
26:50 trade agreements, Kenya is one of the most active
26:52 African countries in terms of international trade negotiations.
26:56 There's the WTO, the East African Common Market
26:59 trade agreements with the UK and the US that are being negotiated.
27:03 How do these negotiations complement each other
27:05 other and foster economic growth for Kenya?
27:09 [BETTY MAINA]
27:10 Thank you very much, Maggie.
27:14 And good to join this forum.
27:16 Our development objective as a country is to transform Kenya
27:21 into a newly industrializing and middle-income country
27:24 by the year 2030.
27:27 We can't do that by relying on the domestic market alone.
27:31 So over the years,
27:33 Kenya has pursued, as you have clearly said,
27:35 a trade liberalization agenda.
27:38 And we have signed up to various trade partnerships,
27:42 and agreements the latest of which is the agreement to the United Kingdom.
27:47 Because we believe that trade can really be a powerful catalyst
27:51 in forceful growth and socioeconomic development
27:54 and poverty reduction,
27:56 particularly if we implement it with the poor in mind.
28:01 Trade agreements provide us with a predictable
28:03 and preferential framework
28:07 for undertaking trade.
28:08 A lot of developing countries have relied on unilateral market access
28:13 have relied on unilateral market access agreements like GOA
28:15 agreements like GOA or everything but arms.
28:17 But as you go up the development ladder,
28:21 countries like Kenya, which really requires predictable--
28:26 predictable and preferential terms because that enables us to attract
28:33 the necessary investment in our countries
28:36 and to create jobs and to reduce prices for consumers as well.
28:44 So in our view, these trade agreements,
28:46 such as the Africa Continental Free Trade Area and EPS,
28:50 provide and opens us, opens up
28:52 regional and continental and global markets
28:55 that can also help us to become more competitive.
28:59 And as I mentioned earlier,
29:01 it actually enables us to attract the necessary investment
29:05 both in industry, in agriculture and in the service sector
29:10 and therefore we do everything possible
29:14 to open up new markets, but at the same time address
29:19 any challenges facing investments in our country.
29:23 Thank you.
29:24 [MAGGIE LAKE] Mr. Tazi-Riffi, I can see you
29:26 nodding your head in agreement with a lot of what's been said.
29:29 Tanger Med has been one of the most successful examples
29:33 of investment to promote that regional integration.
29:36 Tell us about Tanger Med and do you have lessons for other countries?
29:40 [MEHDI TAZI-RIFFI] The subject is particularly
29:42 of interest and I'm delighted to give our perspective.
29:45 I just want to start from the inception.
29:47 So Tanger Med started-- is born out of a vision,
29:51 the vision of His Majesty, King Mohammad VI
29:54 to position Morocco in global trade.
29:57 The two main pillars of this vision are
30:00 first, connecting to global trade
30:04 on the Strait of Gibraltar, which is one of the unique points
30:09 seeing where global trade is flowing.
30:11 The second one is to develop a platform of competitiveness for companies
30:15 from multinationals to use Morocco as their base for global exports.
30:21 As we stand today, we are the first port in the Med.
30:25 We are the first port in Africa.
30:27 We're connected to 180 ports worldwide
30:30 and at the same time, Tanger Med is the home
30:34 for almost a thousand companies
30:37 using Tanger Med's base for manufacturing of components,
30:43 aeronautics, automotive, cars.
30:46 And sending that across global markets.
30:49 Now the second fold of your question relates to the impacts or returns.
30:53 I think we can address them from two viewpoints or two angles.
30:56 First, from the global players that we have attracted.
30:59 The main maritime liners such as Merck, CMA
31:03 are today present and they're using Tanger Med to maintain
31:07 and to develop supply chains using our ports.
31:12 Likewise, the large multinationals
31:15 in the sector of logistics such as DHL, others, are here,
31:19 but the spillover is also very important for the Kingdom.
31:22 Morocco has entered the top 20--
31:24 The top 20 ranking
31:28 of the UNCTAD Global Maritime Connectivity Index,
31:32 which means that we are becoming a player in global trade.
31:35 And obviously one of the other spillovers,
31:38 which is of the essence,
31:40 is the attraction of FDI-- industrial FDI
31:42 that the excellence Minister was referring to
31:45 as we have attracted in excess of 6 billion USD to date,
31:49 and generated more than 90,000 jobs for Moroccan men and women.
31:53 The example of Renault because
31:54 in the direct vicinity of the Port we have today the largest car plant
32:00 in Africa
32:01 that has managed to export
32:03 more than 2 million cars to date
32:05 but also almost 100 tier one and tier two suppliers
32:10 manufacturing components and sending that
32:13 across global markets.
32:14 And this is, I think, a good demonstration
32:17 of what was mentioned a bit earlier
32:19 by Minister and Mari.
32:21 [MAGGIE LAKE] It certainly is.
32:23 And Mari, that brings us to a very interesting question.
32:25 Which is...
32:26 We started--
32:27 We hear the examples offered from the Tanger Med.
32:31 We talked about a data graph
32:32 at the beginning that showed how export growth in developing countries
32:36 coincided with a steady decline in poverty.
32:40 And yet many people view trade negatively.
32:43 How does trade really affect poverty?
32:46 What do we need to focus on?
32:47 [MARI PANGESTU] Yeah, I think trade
32:50 has and will continue to be
32:52 a main driver to reducing poverty through growth.
32:56 We have the evidence on that.
32:58 But what is obvious is that the benefits
33:00 are not shared widely,
33:02 so it's not so much the poverty reduction,
33:04 but the unequal sharing of benefits,
33:06 which is at the heart of the problem
33:08 and the backlash against globalization and trade liberalization.
33:12 And so on.
33:14 The issue is really not the trade, but the lack of complementary policies
33:18 because workers in the uncompetitive industries
33:21 will lose jobs.
33:22 There are those that cannot participate in trade
33:26 whether the informal sector or whether SMEs.
33:29 So what we need is a set of complementary policies
33:32 to address the issue of inclusiveness in trade--
33:35 [MAGGIE LAKE] Inclusive trade.
33:36 I knew we were going to hear
33:37 that word because it is so important,
33:39 Ms. Maina, what type of support could the World Bank
33:42 provide to foster investment,
33:44 and jobs from trade agreements in developing countries
33:47 and make sure we have the inclusive part of the trade picture?
33:51 [BETTY MAINA] The World Bank has been a great partner
33:54 for many countries in supporting their economic development,
33:59 investment in infrastructure, investment in social development,
34:04 and investment in other soft sectors.
34:08 But I expect that there is still quite a bit to be done.
34:14 One of the things that we and Mari mentioned
34:19 is that in order to trade,
34:21 one has to have the capacity to trade,
34:23 one has to have the infrastructure to trade,
34:29 and one has to have the linkages,
34:31 and therefore there's a lot of capacity building
34:34 required to support productive value chains,
34:38 and especially for export-oriented products.
34:43 But at the same time, we also need to invest
34:45 in the soft infrastructure, standards,
34:48 trade facilitation classification,
34:51 movement across borders.
34:54 It can take several weeks, sometimes,
34:58 to clear goods across the border
34:59 but these ones, the border posts are helping a lot.
35:03 So supporting trade facilitation is important.
35:08 But thirdly, also in policy--
35:11 in policy analysis and policy environment.
35:16 The tensions around trade between the losers and the gainers
35:21 have political ramifications and working with countries
35:25 to reorient their policies,
35:28 so that each know there is something
35:32 for everyone in order to maintain
35:34 the political support for openness, is critical.
35:37 Otherwise, we face what we're starting to face globally
35:41 with more nationalism, with more protectionism,
35:44 both at regional level and at a global level.
35:49 But we need to maintain the global support for open trade.
35:53 [CROSSTALK]
35:54 [MAGGIE LAKE] That is a very important point to make.
35:58 Briefly, Mr. Tazi-Riffi,
36:00 what do you see as the greatest challenge
36:03 for trade logistics briefly.
36:04 [MEHDI TAZI-RIFFI] When we speak about challenges lying ahead,
36:07 I'll try to tackle it from two angles,
36:10 being the leading port in Africa,
36:13 there is obviously a great opportunity
36:16 that was mentioned by Minister a bit earlier,
36:18 which is the African Continental Free Trade Area.
36:22 And the logistics part of it,
36:24 which we could be playing a key role there.
36:27 You know that the level of the intra-African trade
36:29 is far below what we see in other blocks.
36:31 The second one is, when we speak about
36:33 trade efficiency in Africa, we cannot decouple it
36:37 from logistics costs,
36:39 and the subsequent impact on buying power.
36:43 On the other perspective, which is...
36:46 On a global scale, on a larger scale,
36:49 what we are seeing today with impacts on the efficiency
36:52 of supply chains shows also the sheer needs
36:56 for the different industry players to increase, and to strengthen
37:02 their cooperation to deliver efficiency and competitiveness
37:07 for the logistics supply chain.
37:10 [MAGGIE LAKE] Let me just--
37:11 We'll leave it there for a second.
37:13 Of course, this conversation is going to continue beyond this panel.
37:15 I do just want to bring up one more point
37:18 to Mari, which is in the list of challenges,
37:21 we must talk about climate change.
37:22 We have seen that
37:24 and we continue to see it glaring across our screens.
37:27 The urgencies become evident.
37:30 What are some of the key opportunities
37:31 for strengthening environmental protection
37:34 in trade negotiations?
37:35 I have to think that's critical.
37:36 [MARI PANGESTU] Yeah.
37:37 I think we have to look at trade
37:40 as not just oftentimes seeing as contributing to mitigation,
37:44 contributing to emissions.
37:46 We should see trade as part of the solution
37:49 for climate change.
37:50 And you mentioned the trade negotiations,
37:53 the negotiations around environmental regulations and trade.
37:57 I think that's key and developing countries
37:59 need to be at the table to make sure
38:02 that whatever carbon emissions that's being linked
38:06 to the production or being part
38:07 of the sustainable global value chain
38:09 is going to be in line with what developing countries capacity
38:14 to be involved as well as data.
38:17 A lot of that has to do--
38:18 How do you measure the carbon emission
38:20 of a particular production or the global value chain?
38:24 So, for instance,
38:25 it's more-- carbon--
38:27 Carbon emission is less importing
38:29 tulips grown in some part of Africa
38:32 compared to a greenhouse production in Holland,
38:36 for instance, even though it's closer.
38:39 Right?
38:40 So these are the measures that we need
38:41 to happen because otherwise we have another important number.
38:44 One estimation showed that sugar exports
38:48 from developing countries would be
38:50 1900 more carbon emissions compared to developed countries
38:54 because they don't have the data that can actually properly measure
38:58 these carbon emissions.
39:00 So I think the standards and the capacity
39:02 for developing countries to be able to meet
39:04 those standards, the carbon taxes that are emerging,
39:06 how can we help developing countries meet those.
39:09 Those are really important issues.
39:11 Otherwise, you'll end up
39:13 in the name of climate change,
39:15 all kinds of standards and barriers emerge
39:18 that will actually cut out the developing countries
39:21 from being involved.
39:22 [MAGGIE LAKE] So many fantastic points that were brought up.
39:25 Mari Pangestu, World Bank Managing Director
39:27 for Development Policy and Partnerships, Betty Maina,
39:30 Minister for Industrialization Trade and Enterprise Development in Kenya, and,
39:34 of course, Mehdi Tazi-Riffi, Managing Director for Tanger Med Special.
39:37 Thank you all for joining your thoughts and being with us today.
39:39 [MAN] Hi, I'm [inaudible], from Dhaka, Bangladesh,
39:43 and you are watching the World Bank Group-IMF Annual Meetings.
39:49 [MAGGIE LAKE] A real insight there into the importance
39:54 of tackling nontariff barriers and a reminder,
39:57 you can use the hashtag #UNLEASHTRADE
40:00 to share your thoughts on this event at any time.
40:02 In a moment, we'll hear from another high-level global panel
40:06 on the important role the private sector can play
40:09 in unleashing trade.
40:11 But before that, let's take a closer look
40:12 at another essential instrument for opening up markets.
40:16 Trade finance, that's the financial instruments and products
40:19 that are used to facilitate international trade and commerce.
40:23 According to the latest estimates,
40:25 80% to 90% of world trade relies on trade finance.
40:29 This financing is fundamental to the growth of poorer countries,
40:34 but securing access to it is often difficult.
40:37 Emerging market exporters cite access to trade finance
40:40 as their biggest concern.
40:42 The difference between how much trade finance
40:45 is requested and the amount that banks provide,
40:49 also known as the trade finance gap,
40:51 is estimated to stand at a staggering 1.7 trillion US dollars,
40:57 and that gap is likely to widen further as the world
40:59 continues to confront COVID-19.
41:02 It's clear that trade finance will be crucial
41:04 in restarting production and trade, and there's now
41:07 real opportunity to innovate
41:09 and create new instruments and products that could help
41:12 developing countries emerge from this crisis.
41:16 That topic was the focus for my guests in this next discussion.
41:20 I'd like to welcome Bill Winters, Group Chief Executive
41:23 of Standard Chartered, who joins us from London,
41:25 and Makhtar Diop, Managing Director
41:27 of the World Bank Group's private sector arm,
41:30 the IFC joins me here at the Bank's headquarters.
41:34 Thanks so much to both of you for being with us today.
41:35 Makhtar, I'd like to start with you.
41:37 The trillion dollar global trade finance gap
41:40 is increasing as a result of COVID-19, the crisis
41:44 as the largest global trade finance provider
41:48 among development finance institutions,
41:50 how can the IFC contribute to closing the gap in trade finance?
41:54 [MAKHTAR DIOP] Thank you so very much.
41:57 This gap has been increasing during COVID-19,
41:59 countries have been downgraded.
42:01 We have seen risk perception and risk in emerging economy increasing,
42:06 so banks are now less comfortable in lending,
42:09 in supporting transaction coming from developing countries.
42:13 So there is a need to fill that gap.
42:15 Is that what I've seen
42:16 I've done during the crisis.
42:18 We put $18 billion dollars
42:21 since the beginning of the COVID-19 crisis
42:23 to support trade financing in countries.
42:26 Why was it important?
42:27 It's because half of the SMEs in developing countries
42:31 have been denied requests for increase in trade financing,
42:37 and 70% of the SMEs don't have access currently to this trade financing.
42:42 So it was important for a development institution
42:45 to fill that gap.
42:46 And what we did is
42:49 we developed with our colleagues from MIGA, an initiative that aims
42:54 at supporting SMEs, supporting companies
42:57 which are owned by women to increase their access to financing.
43:03 We have invested in the value chain not only
43:06 on the trade finance employee itself, the post-shipment as well.
43:11 So we are looking at the system as a whole.
43:13 And we have been able to increase significantly our resources.
43:17 And we planned to do it.
43:20 Lastly,
43:21 a few months ago, President Macron has called
43:23 a big conference on financing African economies,
43:27 and we have talked up already what we are doing
43:29 in African trade financing with an additional billion dollars
43:33 and that will make a big difference, we believe
43:35 in the recovery of some companies.
43:36 [MAGGIE LAKE] We certainly hope so.
43:38 And Bill, as we know, SMEs are such a critical part of the global economy.
43:43 Standard Chartered, of course, is on the frontline
43:44 in many of these situations.
43:46 Leading trade finance, a bank in emerging markets.
43:50 What have you seen since the pandemic?
43:52 And how is Standard Chartered Bank promoting access to trade finance,
43:57 particularly in low-income in fragile countries?
44:00 [BILL WINTERS] As Makhtar said,
44:02 the pandemic had a very adverse effect
44:06 on many companies.
44:08 But it turned out
44:10 that the larger companies had many more means of accessing financing
44:13 starting with withdrawing down revolving credit facilities
44:16 which was actually problematic
44:18 for a period back in March, April and May of last year,
44:22 when there was
44:23 a meaningful liquidity drain out of the banking system.
44:26 Thankfully, in that case,
44:27 the central banks of the world stepped in with tremendous amounts
44:31 of liquidity, which we obviously are continuing to see.
44:33 But the large corporations that had ready access to banks
44:37 and capital markets
44:39 were able to work through that very straightforwardly.
44:40 The SMEs had to struggle.
44:41 They did struggle and had to work much harder
44:45 to sort things through.
44:46 And what Standard Chartered has tried to do,
44:48 And I think it has been pretty successful in doing
44:51 was to step up our direct engagement
44:53 with our SME clients.
44:55 I'm always happy
44:57 to hear of the IFC talking about that particular focus on
45:00 female-led businesses because that's a significant overlap with our own.
45:05 But the fact was this pandemic didn't discriminate
45:08 between male and female, and businesses.
45:10 SMEs had a hard time
45:11 because of the fewer borrowing options they had.
45:14 They're much more dependent on banks
45:15 and typically had fewer banks that they could turn to.
45:18 So our approach was to be in the field
45:21 as quickly and as aggressively as we could be.
45:24 So we did see the financing gap open up quite a bit.
45:28 As importantly, we saw trade volumes drop significantly in the early period,
45:32 and that's the bad news.
45:34 The good news is that they recovered quite quickly as well.
45:37 So the recovery was largely in place
45:40 by the end of 2020.
45:42 And as we sit here today,
45:44 we could expect that overall trade volumes
45:47 in the--
45:48 in the next six to eight months
45:52 will be well ahead of prepandemic levels.
45:55 I think we can say that broadly, the banking system
45:57 re engaged with the SME population
46:00 relatively quickly, but that doesn't mean that that period
46:03 of disruption in the early days of the pandemic wasn't severe.
46:06 It was severe.
46:07 [MAGGIE LAKE] It was,
46:08 and t's going to take time to recover from that.
46:10 So it's important to look ahead.
46:11 And as we do, Makhtar what's needed to expand the trade finance,
46:16 keep it moving in the right direction and support those local supply chains.
46:18 [MAKHTAR DIOP] Let me just say something
46:20 about a very important point that has been made.
46:22 Let me list trade by trade financing means
46:26 because often people are talking about
46:28 these things about big large companies.
46:31 The segment that Bill and us are working
46:35 is the farmer in Kenya.
46:37 We need to import inputs to be able to increase his yield
46:41 and production in tea and export it
46:43 to the rest of the world.
46:44 This is what we are talking about.
46:45 We are talking about the small enterprises of women
46:50 in West Africa, without being able to import the leather,
46:54 the input, some small machineries, so they need to produce goods in import.
46:59 We will be able to do it more.
47:01 That's why you would be focusing on SMEs
47:04 because it creates jobs but also
47:07 touches the bottom of the pyramid and try to illustrate it a little bit.
47:13 I'm a big fan of Kenyan tea.
47:15 Today, I am buying online my tea from Kenya.
47:21 And if those Kenyan farmers were not able to use
47:24 the digital world, all the digitalization
47:27 that is being developed in countries, being on the FinTech.
47:31 And we talked about it yesterday,
47:32 or use all the logistics or have it financed,
47:36 you'll not be able to do that.
47:37 So when we're talking about trade financing,
47:40 I don't want the people to think
47:42 that you're talking about big machine, big companies.
47:44 [MAGGIE LAKE] It's important to make that distinction.
47:47 [MAKHTAR DIOP] Exactly.
47:48 It's about-- also about people, really,
47:50 who need it, and who are at the bottom of the pyramid.
47:52 So what needs to be done in the future?
47:54 I see two main actions.
47:56 One is to continue digitization.
47:57 In the past, I started my career in the banking sector
48:02 when I was young, just after graduate school and at that time
48:07 everything was paper and it is still largely paper-based.
48:10 And we need to move towards digitization, digitization, digitization.
48:15 That will help processes to go faster, to be more accurate.
48:19 Secondly, I'm a big fan of blockchain.
48:22 I think blockchain in trade financing
48:25 will make a big difference for a lot of countries.
48:28 Why?
48:29 Because people once they want to finance trade
48:31 in remote markets that they don't know very well.
48:34 They're not sure that things will be going
48:36 the way they are used to.
48:37 So having blockchain will secure the transaction at every step,
48:41 and make it much more secure and give much
49:25 more
49:26 [BILL WINTERS] I absolutely pick up the team around digitization, and of course,
50:00 we all experienced both at a personal and a professional level,
50:03 the ways that digital tools can help us during this pandemic,
50:07 because in many cases, it was the only way that we could get this done,
50:10 including SMEs, and the fact that the technology has become
50:14 cheap and ubiquitous, and thankfully,
50:17 reasonably acceptable broadband connections
50:19 are also becoming ubiquitous, if only through the mobile network,
50:23 in many cases, obviously through fix lines.
50:25 So we had a dramatic increase in the level of digital engagement
50:28 with our customers.
50:30 And that was a trend that was happening in any case,
50:33 but as I think we've seen in every walk of life that accelerated during
50:36 the pandemic, and I think it opened everybody's eyes
50:40 to just how much more efficient we could become.
50:42 But maybe more importantly than just efficiency.
50:44 It's how we could survive in terms of day to day operations
50:49 in the absence of the old ways of doing business.
50:53 That trend was well established.
50:54 But the opportunities from here, I think, are broadly recognized
50:58 as absolutely critical.
51:00 When we get into the discussions of blockchain and other things that would
51:05 more fundamentally transform the nature of trade finance.
51:09 I have no doubt that we will be using distributed ledger technology
51:13 in one form or other
51:15 for the vast majority of our trade business
51:17 at some point in the future.
51:18 Now, whether that's three years, five years or ten years from now
51:21 remains to be seen.
51:22 But the technology just lends itself so wonderfully
51:25 to this very document-heavy and also paper heavy, right?
51:30 I think...
51:31 Our business is using something like 50,000 trees a year,
51:36 or at least we're processing 50,000 trees a year.
51:39 I'm expressing a paper in tree terms, but that is where the paper comes from.
51:44 This is not sustainable.
51:45 This is not our idea of sustainability,
51:48 but apart from the sustainability dimension,
51:50 it's not efficient, it's not efficient at all.
51:52 It's error prone, it's complicated.
51:56 It exposes all players in the value chain
51:59 to an increased fraud risk.
52:01 So DLT technology, blockchain technology will absolutely be part of the future.
52:06 I think we're probably participating in about 11 different ventures right now,
52:09 some bilateral between countries, some multilateral, and they work.
52:14 Each individual trade is still quite a process.
52:16 So this is not institutionalized yet.
52:19 But it will be.
52:20 And I think one of the beautiful things about the combination of digitization
52:23 and the blockchain technology is once we've worked out the bugs,
52:27 once the infrastructure is in place, the standards are in place,
52:32 we don't have many competing standards,
52:34 it will be much simpler for an SME to conduct their trade,
52:38 much easier, cheaper, faster, easier to get financing.
52:43 This would be a big boost to the local business population
52:47 in many of the markets that we serve.
52:49 This is not something that will just benefit the super tech savvy
52:54 multinational corporations that can afford to invest a fortune
52:58 in their underlying technology.
53:00 This will be the thing that equalizes across the value chain,
53:05 which is why we're so committed
53:06 to developing these technologies at Standard Chartered,
53:08 and we're doing that through some of these pilots that I mentioned.
53:11 We're doing this through partnerships with people like Linklogis.
53:15 Linklogis is a FinTech effectively in China,
53:19 it has become very successful.
53:21 Thus helping us to really understand our multinational corporation supply chains,
53:25 2, 3, 4, 5 tiers into their supply chain
53:28 to help get the financing that these companies need
53:31 companies need all the way through the chain.
53:33 It will all be digital.
53:35 Every step of that will be digital.
53:37 Eventually, I would say every step of that will also
53:39 be enshrined in a distributed ledger in one way or another.
53:42 But this is the future and the future
53:44 is coming at us faster than it would have otherwise after the pandemic.
53:49 [MAGGIE LAKE] And it's exciting to think about bringing down those barriers,
53:53 getting that inclusive growth that we're looking for.
53:55 Makthar, I do want to circle back and end on this thought.
53:58 Bill mentioned sustainability.
54:00 How do we need to think about this conversation
54:02 against the backdrop of the SDGs and climate change?
54:06 [MAKHTAR DIOP] I think this is really a time, which is quite exciting.
54:09 We have been facing a lot of challenges, but solutions are coming together.
54:13 And I think that one of the things that we learned is that everything is linked.
54:17 So we are talking about trade finance today,
54:19 but it's certainly one of the best ways to greet the financial sector
54:24 because the financial sector is financing trade largely.
54:28 So a way of using sensor, of using a ledger to be able to have in blockchain,
54:34 to trace exactly how a production is done.
54:39 If it's green, what is its CO2 footprint?
54:41 And translating it into the incentive
54:44 and the support that the international community
54:46 will be bringing in countries and companies that want to decarbonize,
54:51 would be a very powerful instrument.
54:53 So, what we would like to do, is to use also very much trade financing,
54:58 our increased role in trade financing,
55:01 especially in the emerging economy, to help small companies
55:04 to decarbonize and to be able to meet their objective in climate change.
55:08 [MAGGIE LAKE] A lot of challenges, but also a lot of opportunity.
55:12 Bill Winters from Standard Chartered and Makhtar Diop.
55:15 Thank you so much for joining us today.
55:16 [MAKHTAR DIOP] Thank you so very much.
55:17 [HASSAN JAFAR] I am Hassan Jafar from Sudan, Khartoum.
55:18 You are watching the Annual Meetings for the World Bank Group and IMF.
55:27 [MAGGIE LAKE] If you've just joined us, welcome.
55:30 I'm Maggie Lake and we're discussing how trade can support a green,
55:35 resilient and inclusive economic recovery.
55:37 I'm joined once again by Sri,
55:39 who has been following the conversation online and on social media.
55:42 Sri, what are some of the topics that are coming up?
55:44 [SRI SRIDHAR] Thanks, Maggie.
55:46 The conversation, the hashtag for today, more importantly, was unleashed trade.
55:50 And we've gotten comments from all over the world.
55:55 Including India, Saudi Arabia, Colombia, Switzerland, Argentina, Uganda,
55:58 Indonesia, Germany, Ghana, El Salvador...
56:00 [MAGGIE LAKE] Really underscoring
56:02 how much of an issue this is for everyone, regardless of where you live.
56:05 [SRI SRIDHAR] Exactly.
56:06 It's very global.
56:07 But what are they talking about?
56:08 The online conversation has focused
56:10 mainly on the importance of trade and economic activity,
56:13 especially during this pandemic, lowering trade costs and barriers,
56:17 and also how better trade agreements can benefit countries and citizens.
56:22 And we've also been looking at some
56:24 of the conversation across our social media channel.
56:26 So here's some of what folks are saying on our LinkedIn and Facebook channels.
56:30 On LinkedIn, Ronald Pinto says that we must take this opportunity
56:33 to develop inclusive recovery models that help us tackle vaccine distribution,
56:38 climate change and sustainable trade.
56:41 To me, they're all part of the same conversation when it comes to resilience.
56:45 On Facebook, Anna Zgambo, says that the COVID-19 financial crisis
56:50 revealed that economic activity is essential
56:53 to sustain communities in Zambia.
56:55 Trade is a vital economic activity.
56:58 Trade equips Zambians with food, goods and tools and Zambia survived
57:02 the financial recession caused by COVID-19
57:04 because citizens kept trading local products.
57:08 A great success story of trade in Zambia.
57:12 And finally on Facebook,
57:13 Christian Peters says that it's important to create free trade zones,
57:17 export promotion councils, and also reduce corruption.
57:20 [MAGGIE LAKE] Interesting how many of them see the topics
57:23 the topics of climate, of economy and trade all together.
57:26 So we also-- I just understand the quiz.
57:28 Let's not forget about the quiz.
57:29 We have the results.
57:30 [SRI SRIDHAR] We do have the results.
57:31 And now we have had 2379 people as of last check
57:35 take this quiz here today.
57:37 And again, it asked, over ten years,
57:39 how much does comprehensive trade liberalization
57:41 raise average incomes in developing countries?
57:44 We had three choices.
57:46 Was it 5% to 7%?
57:48 7% to 10% or 10% to 20%?
57:51 Now, before I reveal the right answer,
57:54 let's see how people individually voted for each one of these.
57:57 And it was pretty tight here, Maggie, as you can see.
58:00 [MAGGIE LAKE] Spread right across the three.
58:02 [SRI SRIDHAR] Yeah, most people think that the right answer
58:04 here is 7% to 10%.
58:06 What do you think the right answer is?
58:08 [MAGGIE LAKE] No help from phone a friend for me
58:09 on this, so I'm not going to be able to go with the majority.
58:11 I'm actually going to buck the trend.
58:13 I am going to say C, 10% to 20%.
58:15 [SRI SRIDHAR] Okay, well, let's see if you're right.
58:17 Because the correct answer here is C. It is 10% to 20%.
58:21 [MAGGIE LAKE] I knew that from listening to all our panelists.
58:24 That gave me a slight edge.
58:25 Sri, thank you so much.
58:26 [SRI SRIDHAR] Thanks, Maggie.
58:28 [ERIC] Hello.
58:29 I'm Eric Kaglan in Togo
58:31 and you're watching the World Bank Group-IMF Annual Meetings.
58:34 [ANNUAL MEETINGS 2021 WASHINGTON DC]
58:37 [RON DOUBLE] Hi, I'm Ron Double,
58:42 in the World Bank Group archives in Pennsylvania.
58:45 And you're watching the World Bank Group-IMF Annual Meetings.
58:51 [MAGGIE LAKE] Our audience has been posting questions
58:55 both before and throughout this broadcast.
58:57 And we're joined now by two World Bank Group experts
59:00 to respond to some of them.
59:02 Welcome back to Mari Pangestu, Director of Development,
59:05 Policy and Partnerships at the Bank,
59:08 and Paul Brenton, who is a lead economist
59:11 on trade, investment and competitiveness team.
59:14 Team, thanks to both of you for joining us to field
59:16 some of these questions.
59:17 We had so many good ones, but we pulled out a couple.
59:19 And Mari, I'll send the first one to you.
59:22 This comes from [inaudible] Mujhandar, who's in India, and they ask:
59:26 Increasingly, trade blocks are being created.
59:29 Are these blocks hampering free global trade,
59:32 and stunting economic development in some countries?
59:35 [MARI PANGESTU] That's a really good question.
59:38 I think we've seen sort of the waning of the multilateral negotiations
59:44 leading to an increase in bilateral and regional negotiations.
59:48 So it went up from like, 50 in 1990 to 350 now.
59:54 But is that hampering trade or not?
59:57 We've been having debates about whether regional agreements
01:00:00 and bilateral agreements are stumbling blocks or building blocks.
01:00:04 So on the building blocks side, meaning that these agreements
01:00:07 also lead to greater opening up beyond their regional agreements.
01:00:12 I would say that on balance, it seems that countries,
01:00:16 as they enter into regional agreements, they're also opening up multilaterally,
01:00:21 so not just within the partners in the regional agreement.
01:00:25 Second,
01:00:26 in many cases, they go further in the regional agreements
01:00:29 than they do in the multilateral agreements that they have.
01:00:33 You can take services, you can take investment
01:00:36 and because they are beginning to trade with each other,
01:00:39 trade facilitation has also become a very important realization
01:00:45 of trade between countries, and that helps, obviously
01:00:47 not just the countries in question but also, other trading partners.
01:00:52 Lastly, I think it also
01:00:54 shows you the importance of the WTO because it's anchored
01:00:59 within the WTO principles and all the regional agreements,
01:01:03 actually, most of them, I would say, except for maybe NAFTA,
01:01:07 they use the WTO dispute settlement
01:01:09 when they have disagreements with each other
01:01:12 Is it a stumbling block, could be moving forward?
01:01:16 I think there's a lot of geopolitical tensions
01:01:18 around many of these regional agreements,
01:01:20 so sometimes they can be more closed than
01:01:24 what they have been traditionally in the past.
01:01:26 And there's a lot of uncertainties ahead where you might see more
01:01:30 protectionist closed blocks rather than open blocks.
01:01:35 And this is where it's key to have the multilateral trading system,
01:01:38 which is still the anchor for all these regional agreements to also move forward
01:01:43 and shape the future issues, because there are many new issues
01:01:47 that will enter into agreements which need to be done multilaterally.
01:01:52 You can talk about subsidies or the digital trade on technology,
01:01:56 on even the health issues.
01:01:57 They need to be settled.
01:01:59 Multilaterally, not regionally or even trade an environment.
01:02:03 That's another area you would want that to be dealt with
01:02:05 multilaterally, not regionally.
01:02:07 [MAGGIE LAKE] Fantastic answer.
01:02:09 Our next question, Paul, also comes from India.
01:02:12 Dr. Vendetta Mishra asks, what steps should nations take to rebuild
01:02:17 the global value chains disrupted during the pandemic?
01:02:21 There was so much on this.
01:02:23 In this context, how should
01:02:24 a developing nation build its presence across the globe?
01:02:28 [PAUL BRENTON] Thanks.
01:02:29 Another great question.
01:02:30 Let's start by explaining what we mean by global value chains.
01:02:33 This is where production of a product is split up into a number of distinct
01:02:36 activities or tasks that are then distributed around the world.
01:02:41 And what we've seen during the crisis is
01:02:43 that those value chains have been relatively resilient.
01:02:45 Our analysis from trade flows and from interviews with companies
01:02:50 shows that global value chains have been a source of resilience,
01:02:53 and that means they're also driving the recovery.
01:02:55 There have been some high profile challenges.
01:02:58 The apparel sector is one fairly early on in the crisis.
01:03:02 We saw buyers in developed countries
01:03:06 abruptly canceling contracts and causing
01:03:08 problems for suppliers in developing countries.
01:03:12 We're also seeing the logistics problems
01:03:13 arising in some of the current high profile value chains.
01:03:18 So, investing in infrastructure and logistics is one
01:03:22 where globally the world needs to put some more attention.
01:03:25 But for developing countries to increase their presence.
01:03:29 One big challenge is increasing the diversification of their trade.
01:03:34 Developing countries and low-income countries particularly
01:03:36 tend to depend on a small number of products both to export and in terms
01:03:41 of their supplies, and that makes them vulnerable to shocks.
01:03:44 So, export diversification is crucial.
01:03:49 Improving information
01:03:50 for firms in developing countries so that they can make
01:03:52 better matches with buyers in overseas countries is also important,
01:03:55 and so that they can identify potential bottlenecks in their suppliers.
01:04:00 And then finally, new technology is coming.
01:04:02 The digital revolution.
01:04:03 And it's absolutely crucial that developing countries
01:04:05 are able to participate in that digital revolution.
01:04:09 And we see that poor communities,
01:04:11 women, small firms, they're the ones who are at the moment
01:04:14 facing the greatest challenges with access to the digital revolution.
01:04:17 [MAGGIE LAKE] Which I like that the opportunity that presents.
01:04:20 But it is clear that we all really need to take the lessons of what's happened
01:04:24 and try to apply them to the future,
01:04:26 because this is an issue that is critical.
01:04:28 This next question received lots of votes
01:04:31 on our website, and it is one of the most popular.
01:04:32 It comes from Eileen Murphy in Germany who sent us this video.
01:04:36 [EILEEN MURPHY LOPEZ] Hello, my name is Eileen Murphy Lopez
01:04:41 in Stralsund, in Germany.
01:04:43 I am a professor at the University of Applied Sciences here.
01:04:48 And my question is, if international trade
01:04:51 is to be part of the solution to economic growth,
01:04:55 how do we ensure it is sustainable?
01:04:58 Thank you.
01:04:59 [MAGGIE LAKE] I can understand why that's a popular one.
01:05:03 Mari let's start with you.
01:05:05 [MARI PANGESTU] Eileen, thank you very much.
01:05:06 That was really a great question
01:05:07 and it's at the heart, I think, of what we're discussing,
01:05:10 we have been discussing and trying to understand better.
01:05:13 We really believe that trade...
01:05:16 What is the role of trade in a green, resilient and inclusive growth?
01:05:21 And what does that really mean?
01:05:22 You've got to look at it in an integrated way.
01:05:25 And the World Bank and the WTO recently
01:05:27 came out with a policy note on this, on trade and development.
01:05:31 So, it does cover many of the issues.
01:05:33 Let me just briefly summarize it.
01:05:35 So, what does it mean to be green?
01:05:37 Trade is often blamed for contributing
01:05:39 to climate change and emitting
01:05:43 carbon emissions and greenhouse gas.
01:05:46 But it's also the solution in the sense that if we can really
01:05:49 reduce the barriers to environmental goods and services, that can also be
01:05:56 helping the climate change solutions.
01:05:59 You can talk about weather resistance seeds
01:06:02 all the way to environmental services that are needed
01:06:06 to make sure that you can have efficient solar panels
01:06:10 contribute to renewable energy.
01:06:11 So, the services part is also important.
01:06:14 And I think to Paul's earlier point about global value chains
01:06:18 we are increasingly going to see
01:06:20 the call for sustainability within these global value chains.
01:06:24 But we have to make sure that whatever carbon standards
01:06:27 or like the carbon border adjustment mechanism
01:06:29 that's being introduced in Europe, they come out with the right standards
01:06:34 that are universal and can be measured in a standard and transparent way.
01:06:39 So, it doesn't discriminate against developing countries.
01:06:41 So, any discussion on trading environment
01:06:44 really needs to involve developing countries.
01:06:47 Second, what does it mean to be resilient?
01:06:50 Resilient really means we're going to have
01:06:52 increased shocks that will disrupt the supply of food,
01:06:56 disrupt the supply of medical supplies
01:06:59 and vaccines like we have just seen in the recent pandemic.
01:07:02 So, resilience also means that trade restrictions
01:07:06 need to be managed and reduced or managed so that you don't have
01:07:12 unequal access to the critical products
01:07:19 that will allow you to be able to respond to the shocks.
01:07:22 And that is also another big issue in trade.
01:07:25 And finally, inclusive.
01:07:28 Trade is good.
01:07:29 It has led to growth,
01:07:30 it has led to the reduction of poverty.
01:07:32 But it's not so clear on the distribution of gains.
01:07:35 And this is really where
01:07:36 politically we need to get this right as well as
01:07:40 making it right for the people, because otherwise,
01:07:43 the appetite for continued opening up and market integration,
01:07:49 which we still believe is still the big part
01:07:52 of the answer for trade in recovery and growth needs to be addressed.
01:07:57 And this is about
01:07:59 having the effective and right complementary policies,
01:08:03 whether it's labor mobility, upskilling, labor,
01:08:06 making sure that you have integration within your country
01:08:10 so that it's not just the booming regions that develop.
01:08:14 How do you bring along the lagging regions?
01:08:17 How do you bring along SMEs into the global value chain, and so on?
01:08:22 So, we really need to have more targeted and better
01:08:24 effective policies to make sure that trade benefits all.
01:08:27 [MAGGIE LAKE] Absolutely.
01:08:28 And we saw that come up in many
01:08:30 of the questions and comments that you just went over with us.
01:08:32 Paul, thoughts.
01:08:33 [PAUL BRENTON] Mari gave a great and comprehensive answer.
01:08:35 But just very quickly.
01:08:36 I think this transition.
01:08:37 As we incorporate environmental issues
01:08:39 into development strategies, is going to create a lot of challenges
01:08:42 but also, opportunities for developing countries.
01:08:44 We see that in trade and it's our job to help
01:08:47 those countries identify where they are competitive in a low carbon sense
01:08:51 and make sure that they can exploit those opportunities.
01:08:53 [MAGGIE LAKE] Yes.
01:08:54 And I think that's such an important point.
01:08:55 There are the challenges, but the opportunities
01:08:57 are right, right now,
01:08:59 and it's a fantastic conversation happening around it.
01:09:01 Mari and Paul, thank you so much for fielding those questions.
01:09:04 We appreciate it.
01:09:05 [MARI PANGESTU] Thank you, Maggie.
01:09:06 [MAGGIE LAKE] And please do continue to post your questions.
01:09:08 Remember, our live expert bloggers are still online
01:09:11 answering as many as possible.
01:09:14 Now we've heard in our conversations today with stakeholders
01:09:17 and policy makers about the ways that global trade
01:09:19 has supported post-pandemic recovery and enabled economic growth.
01:09:24 Now let's hear from young people around the globe
01:09:26 about how trade impacts them today
01:09:28 and how they hope it can improve their lives in the future.
01:09:35 [ANNUAL MEETINGS 2021 WASHINGTON DC]
01:09:36 [EDWARD NEEQUAYE] International trade is important
01:09:37 to my country because it expands our markets
01:09:40 and opens us up for investment
01:09:42 in the strategic sectors of our economy,
01:09:45 to increase economic opportunities and reduce poverty and inequalities.
01:09:50 [AISHA RAHEEM] It is important because
01:09:52 of the opportunity for smallholder farmers to earn
01:09:55 an economic return on the harvest they produce.
01:09:57 [EMILIA MALAVOLONEQUE] Permits my firms to come here,
01:10:01 invest in the technical expertise and capacity building of locals
01:10:06 At the same time that it helps with the generation
01:10:09 of employment, and therefore, in our fight against poverty.
01:10:13 [CECIY LIU] International trade is important for China
01:10:17 as well as many other developing countries
01:10:20 because they will be able to catch up
01:10:24 with the developed economies
01:10:26 by learning from the best and the brightest.
01:10:30 [EDWARD NEEQUAYE] By making services more widely available.
01:10:33 [EMILIA MALAVOLONEQUE] If not for international trade,
01:10:34 I wouldn't be able to have the latest iPhone, for example.
01:10:37 [CECIY LIU] Because it allows me to travel around the world,
01:10:41 to get to know different cultures and work with likeminded
01:10:45 friends and colleagues so that I can broaden my vision
01:10:49 and contribute productively towards the world.
01:10:52 [FRANCISCO ABAD] Trade has made my life better
01:10:54 because I help entrepreneurs every day to create goods
01:10:57 and services that they can experiment within our city,
01:10:59 in our country, but then bring to the rest of the world.
01:11:02 [EMILIA MALAVOLONEQUE] In the future, more international trade
01:11:05 will allow the services that I provide to become
01:11:08 more international available.
01:11:10 [EDWARD NEEQUAYE] In the future, more international trade will allow me
01:11:14 to expand my business across Africa easily
01:11:17 and achieve my vision of driving financial access
01:11:20 to the over 44 million small businesses across Africa.
01:11:24 [FRANCISCO ABAD] In the future, trade is really important for us
01:11:28 because the more that we can expand this, share, being able to trade abroad
01:11:31 and bring in also things from other cultures
01:11:34 and have the rest of the world at our table,
01:11:37 at our feet, and in our stores.
01:11:40 It's amazing for development
01:11:41 and for us to be able to grow as a country, and as a people.
01:11:46 [ANNUAL MEETINGS 2021 WASHINGTON DC]
01:11:48 [MAGGIE LAKE] Now we're approaching the end of these annual meetings.
01:11:52 We hope you've found these conversations stimulating and inspiring.
01:11:56 There's still a chance to watch back this event as well as previous ones
01:11:59 on economic growth, ending the pandemic and climate action.
01:12:03 They are all available at Live.WorldBank.org.
01:12:07 There's also still time to join the conversation around these meetings.
01:12:10 Just use the hashtag #RESILIENTRECOVERY.
01:12:14 But for now, for me and everyone here,
01:12:16 at the World Bank Group headquarters in Washington, DC,
01:12:19 thank you and goodbye.
01:12:20 [Upbeat Music]
01:12:21 [ANNUAL MEETINGS 2021 WORLD BANK GROUP INTERNATIONAL MONETARY FUND]
01:12:22 [TRADE TO THE RESCUE]
01:12:23 [UNLEASHING GLOBAL TRADE TO SUPPORT ECONOMIC GROWTH]

Trade to the Rescue: Unleashing Global Trade to Support Economic Growth

Follow the event on Twitter #UnleashTrade

Expanding trade flows can be part of the solutions to global challenges, when accompanied by the right policies. World Bank President David Malpass and WTO Director General Ngozi Onkonjo-Iweala discussed how global trade has limited the extend of the current global recession and laid out the practical steps countries could take to spread the benefits of trade more widely. Trade costs, on average, are equal to a 114 percent tariff on imported goods in developing countries. Much of that burden on consumers is the result of inefficient border procedures and poor transportation infrastructure. Trade facilitation reforms and investment in infrastructure could give a big boost to trade within regions. Betty Maina, Kenya’s Minister of Industrialization, Trade and Enterprise Development, spoke of how trade liberalization is a central part of her country’s aspirations for incomes and development.

“Trade can be a powerful catalyst for growth and social economic development and poverty reduction, particularly if we implement it with the poor in mind,” Maina said.

Leaders from the public and private sectors discussed the importance of investments in logistics and expanding trade finance that could strengthen the contribution of trade to economic recovery, and noted the ways that trade could help developing countries mitigate and adapt to climate change.

See the list of speakers ˅

Event Program

David Malpass, President, World Bank Group
Ngozi Okonjo-Iweala, Director General, World Trade Organization

Mari Pangestu, Managing Director, WBG
Mehdi Tazi-Riffi, CEO, TANGER MED
Hon. Betty C. Maina, Cabinet Secretary, Ministry of Industrialization, Trade and Enterprise Development. Republic of Kenya

Makhtar Diop, IFC Managing Director
Bill Winters, CEO, Standard Chartered

Quiz & Questions From the Audience

131 VOTES / Ricardo
How can we use trade to lift poor countries out of underdevelopment?

105 VOTES / Eileen Murphy
If international trade is to be part of the solution to economic recovery - how do we ensure it is sustainable?

80 VOTES / Isa kwambo Dagona
How can you tackle unemployment in African countries? We have graduates who don’t have work and they remain in poverty

60 VOTES / Asmarelda Chivore
Has trade finance for developing countries been increasing over the past 10 years, and what are the expectations for the future regarding stimulating trade in view of the global COVID-19 pandemic?

54 VOTES / Maxwell Masego
In Africa, our problem is small businesses who are disintegrated but could do better if they were grouped to allow for consolidated stock supply. How can this barrier be overcome for more trade?

Resources

Publications

Blogs

Websites

Read the transcript

00:22 [Upbeat Music]
00:24 [Annual Meetings 2021]
00:26 [TRADE TO THE RESCUE] [UNLEASHING GLOBAL TRADE TO SUPPORT ECONOMIC GROWTH]
00:33 [MAGGIE LAKE] Welcome live to the atrium
00:35 of the World Bank Group in Washington DC.
00:38 We're glad you could join us for this, the last public event
00:41 of the Annual Meetings
00:43 Unleashing Global Trade to Support Economic Growth
00:46 I'm Maggie Lake, and I'll be your host
00:47 [MAGGIE LAKE, FINANCIAL JOURNALIST] for the next hour and 15 minutes.
00:50 The Pandemic has dealt the global economy
00:52 an unprecedented shock,
00:54 and the recovery has been uneven.
00:55 Hundreds of millions more people have lost their livelihoods
00:59 and fallen back into poverty.
01:00 A swift recovery in goods trade last year helped limit
01:04 the extent of the global recession.
01:06 But trade could do so much more to support growth.
01:09 Today we're going to look at what can be done
01:11 to unleash trade and support a faster and deeper economic recovery.
01:16 Let's take a quick look at what's coming up.
01:18 [VIRTUAL ANNUAL MEETING 2021] [COMING UP]
01:21 [UNLEASHING TRADE FOR GROWTH AND DEVELOPMENT]
01:25 DAVID MALPASS, PRESIDENT, WORLD BANK GROUP]
01:28 [NGOZI OKONJO-IWEALA, DIRECTOR-GENERAL, WTO]
01:30 [MAKING RECOVERY GLOBAL, GREEN AND RESILIENT]
01:34 [MARI PANGESTU, MANAGING DIRECTOR, DEVELOPMENT POLICY AND PARTNERSHIPS, WORLD BANK]
01:39 [BETTY MAINA, MINISTER OF INDUSTRALIZATION, TRADE AND ENTERPRISE DEVELOPMENT, KENIA]
01:45 [MEHDI TAZI-RIFFI, CEO, TANGER MED SPECIAL AGENCY]
01:48 [THE POTENTIAL OF TRADE FINANCE]
01:51 [MAKHTAR DIOP, MANAGING DIRECTOR, IFC]
01:54 [BILL WINTERS, CEO, STANDARD CHARTERED BANK]
01:57 [MAGGIE LAKE] Our guests will be focusing on
02:00 how trade can help make the global economy
02:02 more inclusive, greener and resilient.
02:05 We'll discuss the need for stronger trade links
02:08 and investment in transportation and logistics,
02:11 as well as the challenges of high trade costs
02:14 and scarce trade finance.
02:16 To kick things off,
02:17 I am delighted to welcome the top leaders
02:19 in international trade and development.
02:22 Ngozi Okonjo-Iweala is the Director General
02:25 of the World Trade Organization,
02:27 and David Malpass is the President of the World Bank Group.
02:30 David, over to you.
02:31 [DAVID MALPASS] Thank you, Maggie.
02:33 It's a pleasure to welcome Ngozi back to the World Bank.
02:37 WTO and World Bank are natural partners.
02:39 We're both trying to have development.
02:41 We're trying to have more trade.
02:43 Trade was really disrupted by the Pandemic.
02:47 Goods trade is back.
02:48 As we heard, has more to go,
02:51 but services trade is still down.
02:54 Now we're seeing these supply bottlenecks.
02:57 I hope we can discuss that,
02:59 what are some of the modalities of the supply bottleneck?
03:04 How can they be reduced?
03:06 How can we have it be transitory in terms of the price impact of those?
03:11 We'll look at those this morning.
03:13 I also really want to think about growth and getting it back on track.
03:17 So that's the intro.
03:19 I want to ask,
03:22 what is the role of trade and how can we make it better?
03:25 So in the real big picture standpoint,
03:28 is it important to smaller countries?
03:30 Why is it important and how can we make it go better?
03:33 [NGOZI OKONJO-IWEALA] Well, David, thank you.
03:35 It's an absolute pleasure to be back here in the World Bank
03:39 and the wonderful atrium.
03:42 Today, we did a joint policy note between the World Bank and the WTO
03:48 on the role of trade in the road to recovery
03:51 for developing countries.
03:52 And we've just released it.
03:54 You talked about the partnership, it's really robust.
03:57 [LIVE: WORLD BANK GROUP PRESIDENT AND WTO DIRECTOR-GENERAL]
03:58 Of course, trade plays a very important role.
04:01 Let me just say that we released
04:03 our latest forecast for the growth of merchandise trade
04:07 a few days ago last week, actually.
04:10 It shows a very robust rebound of 10.8% for this year,
04:16 4.7% for next year.
04:19 Trade is really following the strong recovery
04:25 that we also see for output growth.
04:27 But there's one thing I want to mention there
04:29 that we should not be too complacent.
04:32 There's a two-track rebound, a K-shaped recovery.
04:36 You've got those countries
04:39 that have been able to implement strong fiscal stimulus,
04:44 accommodative monetary policy
04:47 as well as access to vaccines
04:49 who are rebounding very well
04:51 and those without access
04:52 who have very little fiscal space.
04:55 Logging behind access to vaccines
04:57 has become a very important determinant.
04:59 I often joke that trade policies, vaccine policy and vice versa.
05:04 But we need trade back because we need to have
05:07 those countries that are not recovering
05:10 have access to external demand
05:12 for their products.
05:13 This is how some of the poorer countries can also recover.
05:17 [DAVID MALPASS] Exactly and often the poor people.
05:19 So between cities, villages, that trade is vital
05:23 and then across borders, it's vital.
05:25 Right now, we're seeing some bottlenecks
05:27 in the supply lines, which are concerning.
05:30 Some of our data shows that
05:31 there's 8% of the containers are stalled, not getting into ports.
05:36 That's double what the normal would have been.
05:39 And so that adds to the cost of shipping
05:44 and adds to the cost of goods.
05:45 So we're seeing it in inflation as well.
05:48 Any thoughts on ways to break the supply bottlenecks?
05:52 Does WTO work on that?
05:54 What's the thinking on the bottlenecks?
05:56 [NGOZI OKONJO-IWEALA] Well, let me answer in two ways.
05:59 We've actually been doing excellent work, as you know,
06:02 supply bottlenecks for vaccine manufacturers
06:05 and trying to help them monitor
06:07 what is holding them back, where their shortfalls are,
06:10 where their export restrictions and prohibitions are
06:13 that could be lifted by a member.
06:15 So that's going well.
06:16 On the supply bottleneck, we're seeing now
06:18 these supply chain problems.
06:19 I think they arise out of a demand side push.
06:24 The fiscal stimulus, of course,
06:26 put money in the hands of households, in the hands of businesses.
06:31 I also think that there's been some inventory accumulation going on
06:35 done by businesses
06:37 as they worry about the robustness of their supply chains,
06:40 they want to manage risk by accumulating inventory.
06:43 There's also a demand push from the business side.
06:47 All of these factors, supply and demand mismatch is
06:50 what we're seeing now, and that's resulting in
06:53 this inflationary push which we hope
06:55 over the next few months, will work itself out.
06:59 At the beginning,
07:01 I think the shipping lines cut down in anticipation
07:05 of a downward push
07:08 on growth by the pandemic.
07:11 I think the cut down containers were left in the wrong places,
07:15 and there's a mismatch of that.
07:17 I'm hoping that over time, or we hope, this will work itself out.
07:22 But in the meantime, there are other things
07:23 that we could also do.
07:25 We need to monitor what is happening with trade facilitation.
07:30 We need to take as many measures
07:32 to make sure that trade flows smoothly.
07:34 I'm happy to say that, actually,
07:37 members of the WTO have taken more trade facilitative measures
07:41 than they've done restrictions.
07:43 And that's very helpful.
07:44 [DAVID MALPASS] In some of the past crisis,
07:47 there were export restrictions that were put on when there were shortages.
07:50 We haven't seen as much of that now, and I think that's really welcome.
07:54 One of the challenges early in COVID was the loss of trade financing.
08:00 World Bank tried to step into that, and did step into that,
08:03 with IFC, the International Finance Corporation, provided trade finance,
08:08 and MIGA is now joining IFC and providing trade finance.
08:13 But the correspondent banking problems feed into the problems.
08:18 I think quite a few small logistics firms went out of business
08:24 and that's contributing some to the supply bottlenecks.
08:28 They'll come back, but it takes time.
08:30 [NGOZI OKONJO-IWEALA] David, I'm so happy you mentioned
08:32 the issue of trade finance.
08:34 You're on to something very important
08:36 which isn't talked about as much as we would like.
08:39 I think this is critical.
08:41 The Asian Development Bank has actually estimated
08:43 a $1.7 trillion dollars trade finance gap in the world,
08:48 which about half of that is in developing poor countries,
08:55 including the African continent.
08:59 The most important thing is that these countries don't have access
09:03 to this finance for their trade.
09:05 How can you trade if you don't have what makes oils the wheels?
09:09 And I think because it's a problem
09:11 of developing countries and not of rich countries,
09:14 it's not talked about as much.
09:16 This is an area, I'm glad to hear the IFC and MIGA are moving.
09:21 We'd like to collaborate with you more
09:23 in identifying where the problems lie and what we can jointly do about it.
09:28 [DAVID MALPASS] We're doing some technical assistance with countries, too,
09:32 because some part of it is compliance, their compliance with international rules,
09:37 that are well meaning,
09:38 they're meant to reduce money laundering,
09:43 financing for terrorism,
09:45 but they end up with blocking trade.
09:48 So we need to find ways through that.
09:51 I wonder about other challenges on trade.
09:53 The agriculture sector has blockages within it.
09:59 The industrial sector, some of it is tariff barriers,
10:02 and some is non-tariff barriers.
10:05 Do you have a sense of whether things are getting worse or better in that line?
10:09 [NGOZI OKONJO-IWEALA] Let me say that in the agricultural sector,
10:14 we have a very big problem
10:16 of what we call domestic support or subsidies,
10:20 agricultural subsidies, which are growing in leaps and bounds.
10:24 And of course, we have to worry about how distorted these subsidies are
10:29 and whether they result in a barrier to competition.
10:35 We talk about it as domestic support at the WTO.
10:38 And most members want to look at this and solve this problem.
10:44 Recently, we had the Food Summit and they measured that
10:48 agriculture subsidies are about 540 billion dollars.
10:52 There are some estimates of about 700 billion,
10:56 which could reach over a trillion by 2030.
10:59 So it's huge.
11:01 If we don't do something to take care of this,
11:03 there will be many poor countries who cannot compete
11:06 because of the large subsidies from rich countries.
11:09 So that's a problem.
11:11 Right now, we're actually looking at fisheries.
11:13 Harmful fisheries subsidies, which are about 22 billion.
11:17 I'm trying to see how we can negotiate away that.
11:20 [DAVID MALPASS] Your point that distortions,
11:22 these cause distortions, may be overfishing
11:25 because there's a subsidy.
11:26 We know it in agriculture,
11:28 the US has the big ethanol requirement
11:31 which really pushes up the price of corn.
11:35 In other parts of the world, there are blockages on trade.
11:38 I'll pick a little on one of your former homes of Nigeria,
11:43 there are barriers to the rice trade.
11:47 So around the world, I think, there could be benefit
11:50 in your point of the costliness of some of the agriculture subsidies,
11:56 particularly in the advanced economies, but it extends worldwide.
12:00 It's a huge cost and it's distortive.
12:02 So if we can find a way forward on that, I think it would be good.
12:06 [NGOZI OKONJO-IWEALA] On that, I must mention
12:09 the cotton subsidies which are particularly impeding.
12:12 There are four or five poor countries in the African continent,
12:18 low-income countries in the Sahel, Bukina, Niger and so on,
12:22 who have this as their main crop,
12:24 but they can't really compete because of the huge subsidies.
12:27 That's a real problem.
12:29 Industrial subsidies also.
12:31 We have more information on agricultural state subsidies,
12:34 but I just want to thank you for the collaboration
12:38 that we have with you, the IMF and the OECD on trying to do this study
12:43 on subsidies across the board, industrial subsidies
12:46 as well as agricultural subsidies.
12:49 [DAVID MALPASS] It's closely connected to climate.
12:51 If we think of the water subsidies,
12:53 some countries have too low a cost for water
12:56 and it goes into crops that shouldn't be in that particular part or region.
13:02 It costs the country a lot of money
13:04 And then it distorts as well.
13:08 That drains the water shed or the water base.
13:11 All of these issues relate or are interrelated.
13:16 Fertilizer subsidies, we should mention because it distorts.
13:20 It changes what crops are grown,
13:23 It's also expensive, and the chemical runoff is a big part of ocean pollution.
13:28 [NGOZI OKONJO-IWEALA] I wanted to mention in that regard,
13:32 agriculture is responsible for about 25% of greenhouse gas emissions.
13:38 So in that respect, we also need to think about
13:41 the impact that subsidies have on that.
13:44 If we want to have a better approach
13:48 to the climate change problem,
13:50 we need to look at that sector as well as the subsidies going in.
13:53 [DAVID MALPASS] I want to ask you about a tough one,
13:54 the carbon border adjustment mechanism, CBAM.
13:58 The European Union has identified
14:01 that they want less carbon dioxide in their products,
14:05 they're working to have that be part of the common market.
14:11 Maybe almost like what's done with phytosanitary kinds of restrictions.
14:17 There's a reason for it
14:18 but then it causes friction on the borders.
14:22 I've recently met with countries around the European Union
14:26 who are looking for ways to keep access to the markets.
14:31 Do you have any thoughts on that and where the world is headed
14:34 on these restrictive carbon dioxide practices?
14:38 [NGOZI OKONJO-IWEALA] Let me, David, first say that for the EU,
14:42 they're really trying to advance their targets and goals
14:47 for reaching net zero by 2050.
14:49 I think they've really considerably increased
14:52 the targets for 2030, for instance.
14:56 In a bid to do that, they are looking at various mechanisms.
14:59 I think we must commend them for what they're doing.
15:01 But of course, the CBAM.
15:04 There's a lot of worry by some WTO members,
15:07 particularly the poorer countries, the developing countries,
15:11 about what this would mean and they're hoping
15:13 this does not result in protective trade protectionism,
15:18 which will keep their products out.
15:20 We at the WTO,
15:22 these measures have to be WTO compliant.
15:24 But because the devil is in the detail,
15:27 we haven't seen the detailed design.
15:29 So we are waiting.
15:31 We're looking at this.
15:32 We hope to work with the EU
15:34 in a very collaborative fashion.
15:37 One of the things that really bothers me is
15:40 there's a very fragmented approach to carbon pricing.
15:44 There are different approaches, different systems,
15:47 different prices all over the world,
15:49 from less than a dollar a ton in Ukraine of CO2
15:52 to 130 or plus in Sweden.
15:58 For businesses and households,
15:59 this kind of fragmented approach is very tough.
16:02 So why don't we,
16:04 you are doing work on it, so it's the IMF, the OECD, the WTO.
16:07 I was thinking that we should all get together
16:10 and develop a common methodology for a global carbon price.
16:13 [DAVID MALPASS] I think that's good.
16:16 It recognizes also that incentives within agriculture, within climate
16:20 are going to be really important.
16:23 Countries are still subsidizing fossil fuels.
16:25 We were talking about the agriculture subsidies
16:28 but fossil fuels is a big one.
16:29 Well, you're in a very tough job.
16:32 There's frictions among various members
16:34 but there's also, I think, a shared desire to see trade
16:39 going up and doing it in a fair way, and actually making progress.
16:43 So good luck in all of that.
16:45 I look forward to our organizations working well together.
16:49 [NGOZI OKONJO-IWEALA] Thank you, David.
16:50 One of the things I would really like for us
16:53 to push jointly is just transition
16:56 for developing countries.
16:58 As far as this net zero lowering carbon emissions is concerned,
17:03 we need to get that 100 billion that was promised
17:07 to enable developing countries do what they should do in transitioning.
17:12 Thank you for the very big push that
17:15 the World Bank is making in this direction.
17:17 [DAVID MALPASS] We'll be working on all of those going into COP26 in Glasgow.
17:20 Ngozi, great to see you, as always.
17:24 [NGOZI OKONJO-IWEALA] Thank you, David.
17:27 [MAGGIE LAKE] Thank you, David and Dr. Ngozi
17:30 for what is really a perfect set up.
17:33 We are going to delve deeper into those topics that were just mentioned.
17:38 Now, this pandemic has exposed
17:39 the fragility of the global supply chain and its complexity.
17:44 Disruptions have had a devastating impact on trade
17:47 and underscored the need to improve the way we move goods across borders.
17:51 In Sierra Leone, trade facilitation is central
17:54 to the government's ambitious national development plans.
17:57 With the support of the World Bank, those efforts are making it easier
18:00 for businesses, like the country's only juice processing plant,
18:04 to access global markets.
18:06 [MORE OPEN TRADE IS CHANGING LIVES IN SIERRA LEONE]
18:07 [GIVING COMPANIES GREATER ACCESS TO GLOBAL MARKETS AND SUPPORTING JOBS]
18:12 [ABDULAI BANGURA, SUPPLY CHAIN MANAGER SIERRA AGRA]
18:16 We work with over 3500 local farmers.
18:19 We collect their locally grown mango, pineapple and coconut
18:20 to process it at the factory here.
18:21 [SIERRA AGRA IS THE ONLY COMPANY EXPORTING FRUIT JUICE TO EUROPE.]
18:23 [RELIABLE AND FAST SHIPMENTS ARE VITAL FOR THE BUSINESS AND THOUSANDS OF FARMERS.]
18:28 We are one [inaudible speech] from the port in Freetown.
18:38 Our products are taken from here to the port
18:39 and then they are being exported all around the world.
18:40 [FREETOWN SEAPORT IS THE MAIN GATEWAY TO GOODS IN AND OUR OF SIERRA LEONE]
18:41 [WITH 80% OF TRADE PASSING THROUGH THIS PORT]
18:46 We used to face big challenges.
18:50 Our vehicle will be in the queue for hours, at times, even days.
18:57 The documentation process was really complicated.
18:58 But it is now getting better because of the upgrade and modernisation.
18:59 [MODERNIZING TRADE IS AN IMPORTANT PART OF SIERRA LEONE'S VISION
19:03 TO BECOME A MIDDLE-INCOME COUNTRY BY 2039.]
19:06 [KPANA CONTEH, ASSISTANT COMMISSIONER OF CUSTOMS, NATIONAL REVENUE AUTHORITY]
19:10 One of the improvements we've done is upgrading
19:12 to a new computer system, the ASYCUDA, which is web based.
19:14 It is so efficient and effective by connecting all the agencies.
19:20 And this has made local business very effective.
19:21 [GOVERNMENT'S TRADE FACILITATION ACTION PLAN IS BEING DEVELOPED WITH SUPPORT
19:22 FROM THE WORLD BANK GROUP]
19:23 [IT AIMS TO SIGNIFICANTLY REDUCE THE TIME AND COST OF MOVING GOODS
19:27 ACROSS THE BORDER BY 2024]
19:32 [ABDULAI BANGURA] It is now becoming faster, cheaper and easier to trade.
19:38 I'm so excited about the future.
19:41 [MAGGIE LAKE] We're streaming this event in
19:46 English, Spanish, French and Arabic on World Bank Live
19:50 and on our social media channels.
19:52 And to tell us how you can get involved, I'm joined now by Sri Sridhar.
19:55 Welcome, Sri.
19:56 It was so great to hear that discussion with David and Dr. Ngozi
20:01 but how can people listening get involved?
20:03 [SRI SRIDHAR] Thanks, Maggie.
20:04 So they can follow us on our social media channels.
20:06 We are on Facebook, Twitter and Instagram.
20:09 You can also share your comments at any time
20:11 using the hashtag for today's event, which is Unleashed Trade.
20:14 You can also post your questions and comments
20:17 directly on live.worldbank.org.
20:19 So a lot of ways to join in on the conversation.
20:22 You did mention that the event is being streamed as well
20:24 in English, Spanish, French and Arabic.
20:26 We do have experts that are standing by in all four languages
20:29 to answer as many questions as possible and hard at work right now.
20:32 [MAGGIE LAKE] Hard at work right now.
20:33 [SRI SRIDHAR] Hard at work right now.
20:34 In fact, some of the most popular questions that come in, I think have a chance
20:37 of being asked here later today, right?
20:39 [MAGGIE LAKE] Yes, that's right.
20:40 We are actually going to have a return with us,
20:42 Mari Pangestu who is head of Development Policy at the Bank,
20:45 and Paul Brenton, one of the leading economists here on trade.
20:49 They are going to be fielding those questions live,
20:50 which is super exciting.
20:52 You also have a quiz up your sleeve, I understand.
20:55 [SRI SRIDHAR] Yes, we do have a quiz.
20:57 So today's quiz asks, over ten years,
21:00 how much does comprehensive trade liberalization
21:03 raise average income in developing countries?
21:06 And we've made it a bit easier.
21:07 It's a multiple choice question here.
21:09 Is it going to be A, 5 to 7%, B, 7 to 10% or C, 10% to 20%?
21:16 So once again, today's quiz,
21:18 over ten years, how much does comprehensive trade liberalization
21:21 raise average income in developing countries?
21:24 5 to 7%, 7% to 10% or 10% to 20%?
21:28 All right.
21:29 [MAGGIE LAKE] I'm going to start doing my calculations
21:30 and you're going to come back later to give us the answer.
21:32 Thank you so much, Sri.
21:34 [MARIANA SARACI] Hi, everyone.
21:37 I'm Mariana Saraci from Brazilia, Brazil.
21:40 You're watching the World Bank Group-IMF Annual Meetings.
21:45 [MAGGIE LAKE] If you've just joined us, I'm Maggie Lake,
21:51 and we're discussing how we can unleash trade
21:54 to support economic growth and reduce poverty.
21:56 Let's take a closer look at the historic role trade has played
22:01 in reducing global poverty.
22:02 Back in the late 1980s and early 1090s, many developing countries liberalized
22:08 their trade regimes, eliminating or drastically cutting high tariffs.
22:12 As economies opened up, international trade flourished
22:15 and low and middle-income countries
22:18 rapidly increased their share of global exports.
22:21 As you can see, they almost doubled between 1990 and 2017.
22:25 Now.
22:26 look how that increase was mirrored by a fall in extreme poverty
22:30 over the same period,
22:32 36% of people were living on less than 1.90 dollar a day in 1990,
22:38 but that figure was just 9% by 2017.
22:42 We know the Pandemic reversed progress as it disrupted trade
22:45 and pushed 97 million more people into extreme poverty this year.
22:49 But even during those years of export growth
22:52 and progress in poverty reduction,
22:55 the gains from trade were not inclusive everywhere.
22:58 A contributing factor is that high trade costs
23:01 resulting from non-tariff barriers,
23:04 such as customs red-tape and limited transportation infrastructure
23:08 have dampened trade in many developing countries.
23:11 The World Bank estimates that these extra costs,
23:14 in effect, double prices of imports for consumers in developing countries.
23:20 Now we're going to turn to the actions policymakers and private sector leaders
23:25 could take to overcome tariff and non-tariff barriers
23:29 and help boost trade.
23:31 I'm joined now by Mari Pangestu,
23:34 World Bank Managing Director for Development Policy and Partnerships,
23:38 Betty Maina, Minister for Industrialization, Trade and Enterprise Development for Kenya,
23:44 and Mehdi Tazi-Riffi, Managing Director for Tanger Special Agency,
23:48 a global logistics hub and port in Morocco.
23:51 Thanks to all of you for being with us today.
23:53 Mari, we have just heard a compelling case
23:56 for how unleashing trade could support economic recovery.
24:00 What are some of the specific measures policymakers could undertake to boost trade?
24:05 [MARI PANGESTU] Yes, Maggie.
24:07 We have seen just in the recent crisis
24:10 that trade plays an important role in recovery,
24:13 as in past crisis when the pandemic started, trade really dropped.
24:17 But within six months actually, trade recovered.
24:20 But it was uneven.
24:22 Countries which were better integrated in the world market
24:24 as well as having being participants of the global value chain
24:28 recovered much more quickly compared to those that didn't.
24:32 So the main message there is that global economic integration matters.
24:36 Therefore, what should policymakers do to ensure that their markets
24:41 are being integrated with the global market
24:43 integrated with the global market because that's part of the recovery,
24:45 because that's part of the recovery.
24:46 So first, how do you increase access and diversify markets?
24:51 That is about domestic reforms keeping openness
24:54 in place on the trade and investment side,
24:57 entering into a deeper and more ambitious trade agreements,
25:01 whether at the multilateral level or at the regional level.
25:05 And second, how do we deepen global value chains?
25:08 Because that is going to be a key part
25:10 in this current pandemic.
25:12 We found firms who are not part
25:14 of the global value chain suffered more with cancelation of contracts,
25:19 whereas those who were, had some support
25:21 from the suppliers or from the buyers.
25:24 So how do we increase participation in global value chains?
25:28 It is about the domestic reforms, trade and investment climate
25:32 that allows firms to come and relocate to your country.
25:36 And lastly,
25:37 a very important one is reducing trade costs and trade distortions.
25:41 We just did a recent study which estimated that actually,
25:45 internationally traded goods
25:46 are about double the cost of domestic goods
25:50 And for developing countries, it's even more it's about 114%
25:53 equivalent of tariffs out of that, tariffs are a small part of it.
25:58 The bigger part of it is the cross border customs procedures
26:04 and the logistics.
26:06 So a very easy thing to do.
26:08 What I call a costless stimulus is the first part
26:11 streamline your procedures,
26:13 make it easier to do automate, use one single window.
26:17 And this is something that governments can do actually immediately now.
26:21 But it does require political will
26:23 to get all the agencies to come together on that.
26:26 Secondly, of course, address the infrastructure
26:28 and logistics issues, which is partly a physical infrastructure problem,
26:33 but also, regulatory...
26:36 Deregulation and making sure it's more competitive.
26:40 These are things that governments can do and should do.
26:43 [MAGGIE LAKE] And you have to do all of them
26:45 for it to be successful.
26:46 Ms. Maina, speaking about the importance of agreements,
26:50 trade agreements, Kenya is one of the most active
26:52 African countries in terms of international trade negotiations.
26:56 There's the WTO, the East African Common Market
26:59 trade agreements with the UK and the US that are being negotiated.
27:03 How do these negotiations complement each other
27:05 other and foster economic growth for Kenya?
27:09 [BETTY MAINA]
27:10 Thank you very much, Maggie.
27:14 And good to join this forum.
27:16 Our development objective as a country is to transform Kenya
27:21 into a newly industrializing and middle-income country
27:24 by the year 2030.
27:27 We can't do that by relying on the domestic market alone.
27:31 So over the years,
27:33 Kenya has pursued, as you have clearly said,
27:35 a trade liberalization agenda.
27:38 And we have signed up to various trade partnerships,
27:42 and agreements the latest of which is the agreement to the United Kingdom.
27:47 Because we believe that trade can really be a powerful catalyst
27:51 in forceful growth and socioeconomic development
27:54 and poverty reduction,
27:56 particularly if we implement it with the poor in mind.
28:01 Trade agreements provide us with a predictable
28:03 and preferential framework
28:07 for undertaking trade.
28:08 A lot of developing countries have relied on unilateral market access
28:13 have relied on unilateral market access agreements like GOA
28:15 agreements like GOA or everything but arms.
28:17 But as you go up the development ladder,
28:21 countries like Kenya, which really requires predictable--
28:26 predictable and preferential terms because that enables us to attract
28:33 the necessary investment in our countries
28:36 and to create jobs and to reduce prices for consumers as well.
28:44 So in our view, these trade agreements,
28:46 such as the Africa Continental Free Trade Area and EPS,
28:50 provide and opens us, opens up
28:52 regional and continental and global markets
28:55 that can also help us to become more competitive.
28:59 And as I mentioned earlier,
29:01 it actually enables us to attract the necessary investment
29:05 both in industry, in agriculture and in the service sector
29:10 and therefore we do everything possible
29:14 to open up new markets, but at the same time address
29:19 any challenges facing investments in our country.
29:23 Thank you.
29:24 [MAGGIE LAKE] Mr. Tazi-Riffi, I can see you
29:26 nodding your head in agreement with a lot of what's been said.
29:29 Tanger Med has been one of the most successful examples
29:33 of investment to promote that regional integration.
29:36 Tell us about Tanger Med and do you have lessons for other countries?
29:40 [MEHDI TAZI-RIFFI] The subject is particularly
29:42 of interest and I'm delighted to give our perspective.
29:45 I just want to start from the inception.
29:47 So Tanger Med started-- is born out of a vision,
29:51 the vision of His Majesty, King Mohammad VI
29:54 to position Morocco in global trade.
29:57 The two main pillars of this vision are
30:00 first, connecting to global trade
30:04 on the Strait of Gibraltar, which is one of the unique points
30:09 seeing where global trade is flowing.
30:11 The second one is to develop a platform of competitiveness for companies
30:15 from multinationals to use Morocco as their base for global exports.
30:21 As we stand today, we are the first port in the Med.
30:25 We are the first port in Africa.
30:27 We're connected to 180 ports worldwide
30:30 and at the same time, Tanger Med is the home
30:34 for almost a thousand companies
30:37 using Tanger Med's base for manufacturing of components,
30:43 aeronautics, automotive, cars.
30:46 And sending that across global markets.
30:49 Now the second fold of your question relates to the impacts or returns.
30:53 I think we can address them from two viewpoints or two angles.
30:56 First, from the global players that we have attracted.
30:59 The main maritime liners such as Merck, CMA
31:03 are today present and they're using Tanger Med to maintain
31:07 and to develop supply chains using our ports.
31:12 Likewise, the large multinationals
31:15 in the sector of logistics such as DHL, others, are here,
31:19 but the spillover is also very important for the Kingdom.
31:22 Morocco has entered the top 20--
31:24 The top 20 ranking
31:28 of the UNCTAD Global Maritime Connectivity Index,
31:32 which means that we are becoming a player in global trade.
31:35 And obviously one of the other spillovers,
31:38 which is of the essence,
31:40 is the attraction of FDI-- industrial FDI
31:42 that the excellence Minister was referring to
31:45 as we have attracted in excess of 6 billion USD to date,
31:49 and generated more than 90,000 jobs for Moroccan men and women.
31:53 The example of Renault because
31:54 in the direct vicinity of the Port we have today the largest car plant
32:00 in Africa
32:01 that has managed to export
32:03 more than 2 million cars to date
32:05 but also almost 100 tier one and tier two suppliers
32:10 manufacturing components and sending that
32:13 across global markets.
32:14 And this is, I think, a good demonstration
32:17 of what was mentioned a bit earlier
32:19 by Minister and Mari.
32:21 [MAGGIE LAKE] It certainly is.
32:23 And Mari, that brings us to a very interesting question.
32:25 Which is...
32:26 We started--
32:27 We hear the examples offered from the Tanger Med.
32:31 We talked about a data graph
32:32 at the beginning that showed how export growth in developing countries
32:36 coincided with a steady decline in poverty.
32:40 And yet many people view trade negatively.
32:43 How does trade really affect poverty?
32:46 What do we need to focus on?
32:47 [MARI PANGESTU] Yeah, I think trade
32:50 has and will continue to be
32:52 a main driver to reducing poverty through growth.
32:56 We have the evidence on that.
32:58 But what is obvious is that the benefits
33:00 are not shared widely,
33:02 so it's not so much the poverty reduction,
33:04 but the unequal sharing of benefits,
33:06 which is at the heart of the problem
33:08 and the backlash against globalization and trade liberalization.
33:12 And so on.
33:14 The issue is really not the trade, but the lack of complementary policies
33:18 because workers in the uncompetitive industries
33:21 will lose jobs.
33:22 There are those that cannot participate in trade
33:26 whether the informal sector or whether SMEs.
33:29 So what we need is a set of complementary policies
33:32 to address the issue of inclusiveness in trade--
33:35 [MAGGIE LAKE] Inclusive trade.
33:36 I knew we were going to hear
33:37 that word because it is so important,
33:39 Ms. Maina, what type of support could the World Bank
33:42 provide to foster investment,
33:44 and jobs from trade agreements in developing countries
33:47 and make sure we have the inclusive part of the trade picture?
33:51 [BETTY MAINA] The World Bank has been a great partner
33:54 for many countries in supporting their economic development,
33:59 investment in infrastructure, investment in social development,
34:04 and investment in other soft sectors.
34:08 But I expect that there is still quite a bit to be done.
34:14 One of the things that we and Mari mentioned
34:19 is that in order to trade,
34:21 one has to have the capacity to trade,
34:23 one has to have the infrastructure to trade,
34:29 and one has to have the linkages,
34:31 and therefore there's a lot of capacity building
34:34 required to support productive value chains,
34:38 and especially for export-oriented products.
34:43 But at the same time, we also need to invest
34:45 in the soft infrastructure, standards,
34:48 trade facilitation classification,
34:51 movement across borders.
34:54 It can take several weeks, sometimes,
34:58 to clear goods across the border
34:59 but these ones, the border posts are helping a lot.
35:03 So supporting trade facilitation is important.
35:08 But thirdly, also in policy--
35:11 in policy analysis and policy environment.
35:16 The tensions around trade between the losers and the gainers
35:21 have political ramifications and working with countries
35:25 to reorient their policies,
35:28 so that each know there is something
35:32 for everyone in order to maintain
35:34 the political support for openness, is critical.
35:37 Otherwise, we face what we're starting to face globally
35:41 with more nationalism, with more protectionism,
35:44 both at regional level and at a global level.
35:49 But we need to maintain the global support for open trade.
35:53 [CROSSTALK]
35:54 [MAGGIE LAKE] That is a very important point to make.
35:58 Briefly, Mr. Tazi-Riffi,
36:00 what do you see as the greatest challenge
36:03 for trade logistics briefly.
36:04 [MEHDI TAZI-RIFFI] When we speak about challenges lying ahead,
36:07 I'll try to tackle it from two angles,
36:10 being the leading port in Africa,
36:13 there is obviously a great opportunity
36:16 that was mentioned by Minister a bit earlier,
36:18 which is the African Continental Free Trade Area.
36:22 And the logistics part of it,
36:24 which we could be playing a key role there.
36:27 You know that the level of the intra-African trade
36:29 is far below what we see in other blocks.
36:31 The second one is, when we speak about
36:33 trade efficiency in Africa, we cannot decouple it
36:37 from logistics costs,
36:39 and the subsequent impact on buying power.
36:43 On the other perspective, which is...
36:46 On a global scale, on a larger scale,
36:49 what we are seeing today with impacts on the efficiency
36:52 of supply chains shows also the sheer needs
36:56 for the different industry players to increase, and to strengthen
37:02 their cooperation to deliver efficiency and competitiveness
37:07 for the logistics supply chain.
37:10 [MAGGIE LAKE] Let me just--
37:11 We'll leave it there for a second.
37:13 Of course, this conversation is going to continue beyond this panel.
37:15 I do just want to bring up one more point
37:18 to Mari, which is in the list of challenges,
37:21 we must talk about climate change.
37:22 We have seen that
37:24 and we continue to see it glaring across our screens.
37:27 The urgencies become evident.
37:30 What are some of the key opportunities
37:31 for strengthening environmental protection
37:34 in trade negotiations?
37:35 I have to think that's critical.
37:36 [MARI PANGESTU] Yeah.
37:37 I think we have to look at trade
37:40 as not just oftentimes seeing as contributing to mitigation,
37:44 contributing to emissions.
37:46 We should see trade as part of the solution
37:49 for climate change.
37:50 And you mentioned the trade negotiations,
37:53 the negotiations around environmental regulations and trade.
37:57 I think that's key and developing countries
37:59 need to be at the table to make sure
38:02 that whatever carbon emissions that's being linked
38:06 to the production or being part
38:07 of the sustainable global value chain
38:09 is going to be in line with what developing countries capacity
38:14 to be involved as well as data.
38:17 A lot of that has to do--
38:18 How do you measure the carbon emission
38:20 of a particular production or the global value chain?
38:24 So, for instance,
38:25 it's more-- carbon--
38:27 Carbon emission is less importing
38:29 tulips grown in some part of Africa
38:32 compared to a greenhouse production in Holland,
38:36 for instance, even though it's closer.
38:39 Right?
38:40 So these are the measures that we need
38:41 to happen because otherwise we have another important number.
38:44 One estimation showed that sugar exports
38:48 from developing countries would be
38:50 1900 more carbon emissions compared to developed countries
38:54 because they don't have the data that can actually properly measure
38:58 these carbon emissions.
39:00 So I think the standards and the capacity
39:02 for developing countries to be able to meet
39:04 those standards, the carbon taxes that are emerging,
39:06 how can we help developing countries meet those.
39:09 Those are really important issues.
39:11 Otherwise, you'll end up
39:13 in the name of climate change,
39:15 all kinds of standards and barriers emerge
39:18 that will actually cut out the developing countries
39:21 from being involved.
39:22 [MAGGIE LAKE] So many fantastic points that were brought up.
39:25 Mari Pangestu, World Bank Managing Director
39:27 for Development Policy and Partnerships, Betty Maina,
39:30 Minister for Industrialization Trade and Enterprise Development in Kenya, and,
39:34 of course, Mehdi Tazi-Riffi, Managing Director for Tanger Med Special.
39:37 Thank you all for joining your thoughts and being with us today.
39:39 [MAN] Hi, I'm [inaudible], from Dhaka, Bangladesh,
39:43 and you are watching the World Bank Group-IMF Annual Meetings.
39:49 [MAGGIE LAKE] A real insight there into the importance
39:54 of tackling nontariff barriers and a reminder,
39:57 you can use the hashtag #UNLEASHTRADE
40:00 to share your thoughts on this event at any time.
40:02 In a moment, we'll hear from another high-level global panel
40:06 on the important role the private sector can play
40:09 in unleashing trade.
40:11 But before that, let's take a closer look
40:12 at another essential instrument for opening up markets.
40:16 Trade finance, that's the financial instruments and products
40:19 that are used to facilitate international trade and commerce.
40:23 According to the latest estimates,
40:25 80% to 90% of world trade relies on trade finance.
40:29 This financing is fundamental to the growth of poorer countries,
40:34 but securing access to it is often difficult.
40:37 Emerging market exporters cite access to trade finance
40:40 as their biggest concern.
40:42 The difference between how much trade finance
40:45 is requested and the amount that banks provide,
40:49 also known as the trade finance gap,
40:51 is estimated to stand at a staggering 1.7 trillion US dollars,
40:57 and that gap is likely to widen further as the world
40:59 continues to confront COVID-19.
41:02 It's clear that trade finance will be crucial
41:04 in restarting production and trade, and there's now
41:07 real opportunity to innovate
41:09 and create new instruments and products that could help
41:12 developing countries emerge from this crisis.
41:16 That topic was the focus for my guests in this next discussion.
41:20 I'd like to welcome Bill Winters, Group Chief Executive
41:23 of Standard Chartered, who joins us from London,
41:25 and Makhtar Diop, Managing Director
41:27 of the World Bank Group's private sector arm,
41:30 the IFC joins me here at the Bank's headquarters.
41:34 Thanks so much to both of you for being with us today.
41:35 Makhtar, I'd like to start with you.
41:37 The trillion dollar global trade finance gap
41:40 is increasing as a result of COVID-19, the crisis
41:44 as the largest global trade finance provider
41:48 among development finance institutions,
41:50 how can the IFC contribute to closing the gap in trade finance?
41:54 [MAKHTAR DIOP] Thank you so very much.
41:57 This gap has been increasing during COVID-19,
41:59 countries have been downgraded.
42:01 We have seen risk perception and risk in emerging economy increasing,
42:06 so banks are now less comfortable in lending,
42:09 in supporting transaction coming from developing countries.
42:13 So there is a need to fill that gap.
42:15 Is that what I've seen
42:16 I've done during the crisis.
42:18 We put $18 billion dollars
42:21 since the beginning of the COVID-19 crisis
42:23 to support trade financing in countries.
42:26 Why was it important?
42:27 It's because half of the SMEs in developing countries
42:31 have been denied requests for increase in trade financing,
42:37 and 70% of the SMEs don't have access currently to this trade financing.
42:42 So it was important for a development institution
42:45 to fill that gap.
42:46 And what we did is
42:49 we developed with our colleagues from MIGA, an initiative that aims
42:54 at supporting SMEs, supporting companies
42:57 which are owned by women to increase their access to financing.
43:03 We have invested in the value chain not only
43:06 on the trade finance employee itself, the post-shipment as well.
43:11 So we are looking at the system as a whole.
43:13 And we have been able to increase significantly our resources.
43:17 And we planned to do it.
43:20 Lastly,
43:21 a few months ago, President Macron has called
43:23 a big conference on financing African economies,
43:27 and we have talked up already what we are doing
43:29 in African trade financing with an additional billion dollars
43:33 and that will make a big difference, we believe
43:35 in the recovery of some companies.
43:36 [MAGGIE LAKE] We certainly hope so.
43:38 And Bill, as we know, SMEs are such a critical part of the global economy.
43:43 Standard Chartered, of course, is on the frontline
43:44 in many of these situations.
43:46 Leading trade finance, a bank in emerging markets.
43:50 What have you seen since the pandemic?
43:52 And how is Standard Chartered Bank promoting access to trade finance,
43:57 particularly in low-income in fragile countries?
44:00 [BILL WINTERS] As Makhtar said,
44:02 the pandemic had a very adverse effect
44:06 on many companies.
44:08 But it turned out
44:10 that the larger companies had many more means of accessing financing
44:13 starting with withdrawing down revolving credit facilities
44:16 which was actually problematic
44:18 for a period back in March, April and May of last year,
44:22 when there was
44:23 a meaningful liquidity drain out of the banking system.
44:26 Thankfully, in that case,
44:27 the central banks of the world stepped in with tremendous amounts
44:31 of liquidity, which we obviously are continuing to see.
44:33 But the large corporations that had ready access to banks
44:37 and capital markets
44:39 were able to work through that very straightforwardly.
44:40 The SMEs had to struggle.
44:41 They did struggle and had to work much harder
44:45 to sort things through.
44:46 And what Standard Chartered has tried to do,
44:48 And I think it has been pretty successful in doing
44:51 was to step up our direct engagement
44:53 with our SME clients.
44:55 I'm always happy
44:57 to hear of the IFC talking about that particular focus on
45:00 female-led businesses because that's a significant overlap with our own.
45:05 But the fact was this pandemic didn't discriminate
45:08 between male and female, and businesses.
45:10 SMEs had a hard time
45:11 because of the fewer borrowing options they had.
45:14 They're much more dependent on banks
45:15 and typically had fewer banks that they could turn to.
45:18 So our approach was to be in the field
45:21 as quickly and as aggressively as we could be.
45:24 So we did see the financing gap open up quite a bit.
45:28 As importantly, we saw trade volumes drop significantly in the early period,
45:32 and that's the bad news.
45:34 The good news is that they recovered quite quickly as well.
45:37 So the recovery was largely in place
45:40 by the end of 2020.
45:42 And as we sit here today,
45:44 we could expect that overall trade volumes
45:47 in the--
45:48 in the next six to eight months
45:52 will be well ahead of prepandemic levels.
45:55 I think we can say that broadly, the banking system
45:57 re engaged with the SME population
46:00 relatively quickly, but that doesn't mean that that period
46:03 of disruption in the early days of the pandemic wasn't severe.
46:06 It was severe.
46:07 [MAGGIE LAKE] It was,
46:08 and t's going to take time to recover from that.
46:10 So it's important to look ahead.
46:11 And as we do, Makhtar what's needed to expand the trade finance,
46:16 keep it moving in the right direction and support those local supply chains.
46:18 [MAKHTAR DIOP] Let me just say something
46:20 about a very important point that has been made.
46:22 Let me list trade by trade financing means
46:26 because often people are talking about
46:28 these things about big large companies.
46:31 The segment that Bill and us are working
46:35 is the farmer in Kenya.
46:37 We need to import inputs to be able to increase his yield
46:41 and production in tea and export it
46:43 to the rest of the world.
46:44 This is what we are talking about.
46:45 We are talking about the small enterprises of women
46:50 in West Africa, without being able to import the leather,
46:54 the input, some small machineries, so they need to produce goods in import.
46:59 We will be able to do it more.
47:01 That's why you would be focusing on SMEs
47:04 because it creates jobs but also
47:07 touches the bottom of the pyramid and try to illustrate it a little bit.
47:13 I'm a big fan of Kenyan tea.
47:15 Today, I am buying online my tea from Kenya.
47:21 And if those Kenyan farmers were not able to use
47:24 the digital world, all the digitalization
47:27 that is being developed in countries, being on the FinTech.
47:31 And we talked about it yesterday,
47:32 or use all the logistics or have it financed,
47:36 you'll not be able to do that.
47:37 So when we're talking about trade financing,
47:40 I don't want the people to think
47:42 that you're talking about big machine, big companies.
47:44 [MAGGIE LAKE] It's important to make that distinction.
47:47 [MAKHTAR DIOP] Exactly.
47:48 It's about-- also about people, really,
47:50 who need it, and who are at the bottom of the pyramid.
47:52 So what needs to be done in the future?
47:54 I see two main actions.
47:56 One is to continue digitization.
47:57 In the past, I started my career in the banking sector
48:02 when I was young, just after graduate school and at that time
48:07 everything was paper and it is still largely paper-based.
48:10 And we need to move towards digitization, digitization, digitization.
48:15 That will help processes to go faster, to be more accurate.
48:19 Secondly, I'm a big fan of blockchain.
48:22 I think blockchain in trade financing
48:25 will make a big difference for a lot of countries.
48:28 Why?
48:29 Because people once they want to finance trade
48:31 in remote markets that they don't know very well.
48:34 They're not sure that things will be going
48:36 the way they are used to.
48:37 So having blockchain will secure the transaction at every step,
48:41 and make it much more secure and give much
49:25 more
49:26 [BILL WINTERS] I absolutely pick up the team around digitization, and of course,
50:00 we all experienced both at a personal and a professional level,
50:03 the ways that digital tools can help us during this pandemic,
50:07 because in many cases, it was the only way that we could get this done,
50:10 including SMEs, and the fact that the technology has become
50:14 cheap and ubiquitous, and thankfully,
50:17 reasonably acceptable broadband connections
50:19 are also becoming ubiquitous, if only through the mobile network,
50:23 in many cases, obviously through fix lines.
50:25 So we had a dramatic increase in the level of digital engagement
50:28 with our customers.
50:30 And that was a trend that was happening in any case,
50:33 but as I think we've seen in every walk of life that accelerated during
50:36 the pandemic, and I think it opened everybody's eyes
50:40 to just how much more efficient we could become.
50:42 But maybe more importantly than just efficiency.
50:44 It's how we could survive in terms of day to day operations
50:49 in the absence of the old ways of doing business.
50:53 That trend was well established.
50:54 But the opportunities from here, I think, are broadly recognized
50:58 as absolutely critical.
51:00 When we get into the discussions of blockchain and other things that would
51:05 more fundamentally transform the nature of trade finance.
51:09 I have no doubt that we will be using distributed ledger technology
51:13 in one form or other
51:15 for the vast majority of our trade business
51:17 at some point in the future.
51:18 Now, whether that's three years, five years or ten years from now
51:21 remains to be seen.
51:22 But the technology just lends itself so wonderfully
51:25 to this very document-heavy and also paper heavy, right?
51:30 I think...
51:31 Our business is using something like 50,000 trees a year,
51:36 or at least we're processing 50,000 trees a year.
51:39 I'm expressing a paper in tree terms, but that is where the paper comes from.
51:44 This is not sustainable.
51:45 This is not our idea of sustainability,
51:48 but apart from the sustainability dimension,
51:50 it's not efficient, it's not efficient at all.
51:52 It's error prone, it's complicated.
51:56 It exposes all players in the value chain
51:59 to an increased fraud risk.
52:01 So DLT technology, blockchain technology will absolutely be part of the future.
52:06 I think we're probably participating in about 11 different ventures right now,
52:09 some bilateral between countries, some multilateral, and they work.
52:14 Each individual trade is still quite a process.
52:16 So this is not institutionalized yet.
52:19 But it will be.
52:20 And I think one of the beautiful things about the combination of digitization
52:23 and the blockchain technology is once we've worked out the bugs,
52:27 once the infrastructure is in place, the standards are in place,
52:32 we don't have many competing standards,
52:34 it will be much simpler for an SME to conduct their trade,
52:38 much easier, cheaper, faster, easier to get financing.
52:43 This would be a big boost to the local business population
52:47 in many of the markets that we serve.
52:49 This is not something that will just benefit the super tech savvy
52:54 multinational corporations that can afford to invest a fortune
52:58 in their underlying technology.
53:00 This will be the thing that equalizes across the value chain,
53:05 which is why we're so committed
53:06 to developing these technologies at Standard Chartered,
53:08 and we're doing that through some of these pilots that I mentioned.
53:11 We're doing this through partnerships with people like Linklogis.
53:15 Linklogis is a FinTech effectively in China,
53:19 it has become very successful.
53:21 Thus helping us to really understand our multinational corporation supply chains,
53:25 2, 3, 4, 5 tiers into their supply chain
53:28 to help get the financing that these companies need
53:31 companies need all the way through the chain.
53:33 It will all be digital.
53:35 Every step of that will be digital.
53:37 Eventually, I would say every step of that will also
53:39 be enshrined in a distributed ledger in one way or another.
53:42 But this is the future and the future
53:44 is coming at us faster than it would have otherwise after the pandemic.
53:49 [MAGGIE LAKE] And it's exciting to think about bringing down those barriers,
53:53 getting that inclusive growth that we're looking for.
53:55 Makthar, I do want to circle back and end on this thought.
53:58 Bill mentioned sustainability.
54:00 How do we need to think about this conversation
54:02 against the backdrop of the SDGs and climate change?
54:06 [MAKHTAR DIOP] I think this is really a time, which is quite exciting.
54:09 We have been facing a lot of challenges, but solutions are coming together.
54:13 And I think that one of the things that we learned is that everything is linked.
54:17 So we are talking about trade finance today,
54:19 but it's certainly one of the best ways to greet the financial sector
54:24 because the financial sector is financing trade largely.
54:28 So a way of using sensor, of using a ledger to be able to have in blockchain,
54:34 to trace exactly how a production is done.
54:39 If it's green, what is its CO2 footprint?
54:41 And translating it into the incentive
54:44 and the support that the international community
54:46 will be bringing in countries and companies that want to decarbonize,
54:51 would be a very powerful instrument.
54:53 So, what we would like to do, is to use also very much trade financing,
54:58 our increased role in trade financing,
55:01 especially in the emerging economy, to help small companies
55:04 to decarbonize and to be able to meet their objective in climate change.
55:08 [MAGGIE LAKE] A lot of challenges, but also a lot of opportunity.
55:12 Bill Winters from Standard Chartered and Makhtar Diop.
55:15 Thank you so much for joining us today.
55:16 [MAKHTAR DIOP] Thank you so very much.
55:17 [HASSAN JAFAR] I am Hassan Jafar from Sudan, Khartoum.
55:18 You are watching the Annual Meetings for the World Bank Group and IMF.
55:27 [MAGGIE LAKE] If you've just joined us, welcome.
55:30 I'm Maggie Lake and we're discussing how trade can support a green,
55:35 resilient and inclusive economic recovery.
55:37 I'm joined once again by Sri,
55:39 who has been following the conversation online and on social media.
55:42 Sri, what are some of the topics that are coming up?
55:44 [SRI SRIDHAR] Thanks, Maggie.
55:46 The conversation, the hashtag for today, more importantly, was unleashed trade.
55:50 And we've gotten comments from all over the world.
55:55 Including India, Saudi Arabia, Colombia, Switzerland, Argentina, Uganda,
55:58 Indonesia, Germany, Ghana, El Salvador...
56:00 [MAGGIE LAKE] Really underscoring
56:02 how much of an issue this is for everyone, regardless of where you live.
56:05 [SRI SRIDHAR] Exactly.
56:06 It's very global.
56:07 But what are they talking about?
56:08 The online conversation has focused
56:10 mainly on the importance of trade and economic activity,
56:13 especially during this pandemic, lowering trade costs and barriers,
56:17 and also how better trade agreements can benefit countries and citizens.
56:22 And we've also been looking at some
56:24 of the conversation across our social media channel.
56:26 So here's some of what folks are saying on our LinkedIn and Facebook channels.
56:30 On LinkedIn, Ronald Pinto says that we must take this opportunity
56:33 to develop inclusive recovery models that help us tackle vaccine distribution,
56:38 climate change and sustainable trade.
56:41 To me, they're all part of the same conversation when it comes to resilience.
56:45 On Facebook, Anna Zgambo, says that the COVID-19 financial crisis
56:50 revealed that economic activity is essential
56:53 to sustain communities in Zambia.
56:55 Trade is a vital economic activity.
56:58 Trade equips Zambians with food, goods and tools and Zambia survived
57:02 the financial recession caused by COVID-19
57:04 because citizens kept trading local products.
57:08 A great success story of trade in Zambia.
57:12 And finally on Facebook,
57:13 Christian Peters says that it's important to create free trade zones,
57:17 export promotion councils, and also reduce corruption.
57:20 [MAGGIE LAKE] Interesting how many of them see the topics
57:23 the topics of climate, of economy and trade all together.
57:26 So we also-- I just understand the quiz.
57:28 Let's not forget about the quiz.
57:29 We have the results.
57:30 [SRI SRIDHAR] We do have the results.
57:31 And now we have had 2379 people as of last check
57:35 take this quiz here today.
57:37 And again, it asked, over ten years,
57:39 how much does comprehensive trade liberalization
57:41 raise average incomes in developing countries?
57:44 We had three choices.
57:46 Was it 5% to 7%?
57:48 7% to 10% or 10% to 20%?
57:51 Now, before I reveal the right answer,
57:54 let's see how people individually voted for each one of these.
57:57 And it was pretty tight here, Maggie, as you can see.
58:00 [MAGGIE LAKE] Spread right across the three.
58:02 [SRI SRIDHAR] Yeah, most people think that the right answer
58:04 here is 7% to 10%.
58:06 What do you think the right answer is?
58:08 [MAGGIE LAKE] No help from phone a friend for me
58:09 on this, so I'm not going to be able to go with the majority.
58:11 I'm actually going to buck the trend.
58:13 I am going to say C, 10% to 20%.
58:15 [SRI SRIDHAR] Okay, well, let's see if you're right.
58:17 Because the correct answer here is C. It is 10% to 20%.
58:21 [MAGGIE LAKE] I knew that from listening to all our panelists.
58:24 That gave me a slight edge.
58:25 Sri, thank you so much.
58:26 [SRI SRIDHAR] Thanks, Maggie.
58:28 [ERIC] Hello.
58:29 I'm Eric Kaglan in Togo
58:31 and you're watching the World Bank Group-IMF Annual Meetings.
58:34 [ANNUAL MEETINGS 2021 WASHINGTON DC]
58:37 [RON DOUBLE] Hi, I'm Ron Double,
58:42 in the World Bank Group archives in Pennsylvania.
58:45 And you're watching the World Bank Group-IMF Annual Meetings.
58:51 [MAGGIE LAKE] Our audience has been posting questions
58:55 both before and throughout this broadcast.
58:57 And we're joined now by two World Bank Group experts
59:00 to respond to some of them.
59:02 Welcome back to Mari Pangestu, Director of Development,
59:05 Policy and Partnerships at the Bank,
59:08 and Paul Brenton, who is a lead economist
59:11 on trade, investment and competitiveness team.
59:14 Team, thanks to both of you for joining us to field
59:16 some of these questions.
59:17 We had so many good ones, but we pulled out a couple.
59:19 And Mari, I'll send the first one to you.
59:22 This comes from [inaudible] Mujhandar, who's in India, and they ask:
59:26 Increasingly, trade blocks are being created.
59:29 Are these blocks hampering free global trade,
59:32 and stunting economic development in some countries?
59:35 [MARI PANGESTU] That's a really good question.
59:38 I think we've seen sort of the waning of the multilateral negotiations
59:44 leading to an increase in bilateral and regional negotiations.
59:48 So it went up from like, 50 in 1990 to 350 now.
59:54 But is that hampering trade or not?
59:57 We've been having debates about whether regional agreements
01:00:00 and bilateral agreements are stumbling blocks or building blocks.
01:00:04 So on the building blocks side, meaning that these agreements
01:00:07 also lead to greater opening up beyond their regional agreements.
01:00:12 I would say that on balance, it seems that countries,
01:00:16 as they enter into regional agreements, they're also opening up multilaterally,
01:00:21 so not just within the partners in the regional agreement.
01:00:25 Second,
01:00:26 in many cases, they go further in the regional agreements
01:00:29 than they do in the multilateral agreements that they have.
01:00:33 You can take services, you can take investment
01:00:36 and because they are beginning to trade with each other,
01:00:39 trade facilitation has also become a very important realization
01:00:45 of trade between countries, and that helps, obviously
01:00:47 not just the countries in question but also, other trading partners.
01:00:52 Lastly, I think it also
01:00:54 shows you the importance of the WTO because it's anchored
01:00:59 within the WTO principles and all the regional agreements,
01:01:03 actually, most of them, I would say, except for maybe NAFTA,
01:01:07 they use the WTO dispute settlement
01:01:09 when they have disagreements with each other
01:01:12 Is it a stumbling block, could be moving forward?
01:01:16 I think there's a lot of geopolitical tensions
01:01:18 around many of these regional agreements,
01:01:20 so sometimes they can be more closed than
01:01:24 what they have been traditionally in the past.
01:01:26 And there's a lot of uncertainties ahead where you might see more
01:01:30 protectionist closed blocks rather than open blocks.
01:01:35 And this is where it's key to have the multilateral trading system,
01:01:38 which is still the anchor for all these regional agreements to also move forward
01:01:43 and shape the future issues, because there are many new issues
01:01:47 that will enter into agreements which need to be done multilaterally.
01:01:52 You can talk about subsidies or the digital trade on technology,
01:01:56 on even the health issues.
01:01:57 They need to be settled.
01:01:59 Multilaterally, not regionally or even trade an environment.
01:02:03 That's another area you would want that to be dealt with
01:02:05 multilaterally, not regionally.
01:02:07 [MAGGIE LAKE] Fantastic answer.
01:02:09 Our next question, Paul, also comes from India.
01:02:12 Dr. Vendetta Mishra asks, what steps should nations take to rebuild
01:02:17 the global value chains disrupted during the pandemic?
01:02:21 There was so much on this.
01:02:23 In this context, how should
01:02:24 a developing nation build its presence across the globe?
01:02:28 [PAUL BRENTON] Thanks.
01:02:29 Another great question.
01:02:30 Let's start by explaining what we mean by global value chains.
01:02:33 This is where production of a product is split up into a number of distinct
01:02:36 activities or tasks that are then distributed around the world.
01:02:41 And what we've seen during the crisis is
01:02:43 that those value chains have been relatively resilient.
01:02:45 Our analysis from trade flows and from interviews with companies
01:02:50 shows that global value chains have been a source of resilience,
01:02:53 and that means they're also driving the recovery.
01:02:55 There have been some high profile challenges.
01:02:58 The apparel sector is one fairly early on in the crisis.
01:03:02 We saw buyers in developed countries
01:03:06 abruptly canceling contracts and causing
01:03:08 problems for suppliers in developing countries.
01:03:12 We're also seeing the logistics problems
01:03:13 arising in some of the current high profile value chains.
01:03:18 So, investing in infrastructure and logistics is one
01:03:22 where globally the world needs to put some more attention.
01:03:25 But for developing countries to increase their presence.
01:03:29 One big challenge is increasing the diversification of their trade.
01:03:34 Developing countries and low-income countries particularly
01:03:36 tend to depend on a small number of products both to export and in terms
01:03:41 of their supplies, and that makes them vulnerable to shocks.
01:03:44 So, export diversification is crucial.
01:03:49 Improving information
01:03:50 for firms in developing countries so that they can make
01:03:52 better matches with buyers in overseas countries is also important,
01:03:55 and so that they can identify potential bottlenecks in their suppliers.
01:04:00 And then finally, new technology is coming.
01:04:02 The digital revolution.
01:04:03 And it's absolutely crucial that developing countries
01:04:05 are able to participate in that digital revolution.
01:04:09 And we see that poor communities,
01:04:11 women, small firms, they're the ones who are at the moment
01:04:14 facing the greatest challenges with access to the digital revolution.
01:04:17 [MAGGIE LAKE] Which I like that the opportunity that presents.
01:04:20 But it is clear that we all really need to take the lessons of what's happened
01:04:24 and try to apply them to the future,
01:04:26 because this is an issue that is critical.
01:04:28 This next question received lots of votes
01:04:31 on our website, and it is one of the most popular.
01:04:32 It comes from Eileen Murphy in Germany who sent us this video.
01:04:36 [EILEEN MURPHY LOPEZ] Hello, my name is Eileen Murphy Lopez
01:04:41 in Stralsund, in Germany.
01:04:43 I am a professor at the University of Applied Sciences here.
01:04:48 And my question is, if international trade
01:04:51 is to be part of the solution to economic growth,
01:04:55 how do we ensure it is sustainable?
01:04:58 Thank you.
01:04:59 [MAGGIE LAKE] I can understand why that's a popular one.
01:05:03 Mari let's start with you.
01:05:05 [MARI PANGESTU] Eileen, thank you very much.
01:05:06 That was really a great question
01:05:07 and it's at the heart, I think, of what we're discussing,
01:05:10 we have been discussing and trying to understand better.
01:05:13 We really believe that trade...
01:05:16 What is the role of trade in a green, resilient and inclusive growth?
01:05:21 And what does that really mean?
01:05:22 You've got to look at it in an integrated way.
01:05:25 And the World Bank and the WTO recently
01:05:27 came out with a policy note on this, on trade and development.
01:05:31 So, it does cover many of the issues.
01:05:33 Let me just briefly summarize it.
01:05:35 So, what does it mean to be green?
01:05:37 Trade is often blamed for contributing
01:05:39 to climate change and emitting
01:05:43 carbon emissions and greenhouse gas.
01:05:46 But it's also the solution in the sense that if we can really
01:05:49 reduce the barriers to environmental goods and services, that can also be
01:05:56 helping the climate change solutions.
01:05:59 You can talk about weather resistance seeds
01:06:02 all the way to environmental services that are needed
01:06:06 to make sure that you can have efficient solar panels
01:06:10 contribute to renewable energy.
01:06:11 So, the services part is also important.
01:06:14 And I think to Paul's earlier point about global value chains
01:06:18 we are increasingly going to see
01:06:20 the call for sustainability within these global value chains.
01:06:24 But we have to make sure that whatever carbon standards
01:06:27 or like the carbon border adjustment mechanism
01:06:29 that's being introduced in Europe, they come out with the right standards
01:06:34 that are universal and can be measured in a standard and transparent way.
01:06:39 So, it doesn't discriminate against developing countries.
01:06:41 So, any discussion on trading environment
01:06:44 really needs to involve developing countries.
01:06:47 Second, what does it mean to be resilient?
01:06:50 Resilient really means we're going to have
01:06:52 increased shocks that will disrupt the supply of food,
01:06:56 disrupt the supply of medical supplies
01:06:59 and vaccines like we have just seen in the recent pandemic.
01:07:02 So, resilience also means that trade restrictions
01:07:06 need to be managed and reduced or managed so that you don't have
01:07:12 unequal access to the critical products
01:07:19 that will allow you to be able to respond to the shocks.
01:07:22 And that is also another big issue in trade.
01:07:25 And finally, inclusive.
01:07:28 Trade is good.
01:07:29 It has led to growth,
01:07:30 it has led to the reduction of poverty.
01:07:32 But it's not so clear on the distribution of gains.
01:07:35 And this is really where
01:07:36 politically we need to get this right as well as
01:07:40 making it right for the people, because otherwise,
01:07:43 the appetite for continued opening up and market integration,
01:07:49 which we still believe is still the big part
01:07:52 of the answer for trade in recovery and growth needs to be addressed.
01:07:57 And this is about
01:07:59 having the effective and right complementary policies,
01:08:03 whether it's labor mobility, upskilling, labor,
01:08:06 making sure that you have integration within your country
01:08:10 so that it's not just the booming regions that develop.
01:08:14 How do you bring along the lagging regions?
01:08:17 How do you bring along SMEs into the global value chain, and so on?
01:08:22 So, we really need to have more targeted and better
01:08:24 effective policies to make sure that trade benefits all.
01:08:27 [MAGGIE LAKE] Absolutely.
01:08:28 And we saw that come up in many
01:08:30 of the questions and comments that you just went over with us.
01:08:32 Paul, thoughts.
01:08:33 [PAUL BRENTON] Mari gave a great and comprehensive answer.
01:08:35 But just very quickly.
01:08:36 I think this transition.
01:08:37 As we incorporate environmental issues
01:08:39 into development strategies, is going to create a lot of challenges
01:08:42 but also, opportunities for developing countries.
01:08:44 We see that in trade and it's our job to help
01:08:47 those countries identify where they are competitive in a low carbon sense
01:08:51 and make sure that they can exploit those opportunities.
01:08:53 [MAGGIE LAKE] Yes.
01:08:54 And I think that's such an important point.
01:08:55 There are the challenges, but the opportunities
01:08:57 are right, right now,
01:08:59 and it's a fantastic conversation happening around it.
01:09:01 Mari and Paul, thank you so much for fielding those questions.
01:09:04 We appreciate it.
01:09:05 [MARI PANGESTU] Thank you, Maggie.
01:09:06 [MAGGIE LAKE] And please do continue to post your questions.
01:09:08 Remember, our live expert bloggers are still online
01:09:11 answering as many as possible.
01:09:14 Now we've heard in our conversations today with stakeholders
01:09:17 and policy makers about the ways that global trade
01:09:19 has supported post-pandemic recovery and enabled economic growth.
01:09:24 Now let's hear from young people around the globe
01:09:26 about how trade impacts them today
01:09:28 and how they hope it can improve their lives in the future.
01:09:35 [ANNUAL MEETINGS 2021 WASHINGTON DC]
01:09:36 [EDWARD NEEQUAYE] International trade is important
01:09:37 to my country because it expands our markets
01:09:40 and opens us up for investment
01:09:42 in the strategic sectors of our economy,
01:09:45 to increase economic opportunities and reduce poverty and inequalities.
01:09:50 [AISHA RAHEEM] It is important because
01:09:52 of the opportunity for smallholder farmers to earn
01:09:55 an economic return on the harvest they produce.
01:09:57 [EMILIA MALAVOLONEQUE] Permits my firms to come here,
01:10:01 invest in the technical expertise and capacity building of locals
01:10:06 At the same time that it helps with the generation
01:10:09 of employment, and therefore, in our fight against poverty.
01:10:13 [CECIY LIU] International trade is important for China
01:10:17 as well as many other developing countries
01:10:20 because they will be able to catch up
01:10:24 with the developed economies
01:10:26 by learning from the best and the brightest.
01:10:30 [EDWARD NEEQUAYE] By making services more widely available.
01:10:33 [EMILIA MALAVOLONEQUE] If not for international trade,
01:10:34 I wouldn't be able to have the latest iPhone, for example.
01:10:37 [CECIY LIU] Because it allows me to travel around the world,
01:10:41 to get to know different cultures and work with likeminded
01:10:45 friends and colleagues so that I can broaden my vision
01:10:49 and contribute productively towards the world.
01:10:52 [FRANCISCO ABAD] Trade has made my life better
01:10:54 because I help entrepreneurs every day to create goods
01:10:57 and services that they can experiment within our city,
01:10:59 in our country, but then bring to the rest of the world.
01:11:02 [EMILIA MALAVOLONEQUE] In the future, more international trade
01:11:05 will allow the services that I provide to become
01:11:08 more international available.
01:11:10 [EDWARD NEEQUAYE] In the future, more international trade will allow me
01:11:14 to expand my business across Africa easily
01:11:17 and achieve my vision of driving financial access
01:11:20 to the over 44 million small businesses across Africa.
01:11:24 [FRANCISCO ABAD] In the future, trade is really important for us
01:11:28 because the more that we can expand this, share, being able to trade abroad
01:11:31 and bring in also things from other cultures
01:11:34 and have the rest of the world at our table,
01:11:37 at our feet, and in our stores.
01:11:40 It's amazing for development
01:11:41 and for us to be able to grow as a country, and as a people.
01:11:46 [ANNUAL MEETINGS 2021 WASHINGTON DC]
01:11:48 [MAGGIE LAKE] Now we're approaching the end of these annual meetings.
01:11:52 We hope you've found these conversations stimulating and inspiring.
01:11:56 There's still a chance to watch back this event as well as previous ones
01:11:59 on economic growth, ending the pandemic and climate action.
01:12:03 They are all available at Live.WorldBank.org.
01:12:07 There's also still time to join the conversation around these meetings.
01:12:10 Just use the hashtag #RESILIENTRECOVERY.
01:12:14 But for now, for me and everyone here,
01:12:16 at the World Bank Group headquarters in Washington, DC,
01:12:19 thank you and goodbye.
01:12:20 [Upbeat Music]
01:12:21 [ANNUAL MEETINGS 2021 WORLD BANK GROUP INTERNATIONAL MONETARY FUND]
01:12:22 [TRADE TO THE RESCUE]
01:12:23 [UNLEASHING GLOBAL TRADE TO SUPPORT ECONOMIC GROWTH]

Meet the Experts

Heidi Stensland Warren

Senior Private Sector Specialist, World Bank Group
Makiko Toyoda

Program Lead of the Global Trade Finance Program, IFC
Maryla Maliszewska

Senior Economist, Macroeconomics, Trade & Investment, World Bank Group

Watch More Events

ANNUAL MEETINGS 2021

Tune in, ask questions, and share your views with participants from all over the world during the 2021 Annual Meetings of the World Bank Group and the International Monetary Fund (IMF).

Watch the World Bank Group public events:

Oct. 11: Growth in a Time of Crisis
Oct. 12: Civil Society Townhall
Oct. 12: Ending the Pandemic
Oct. 13: Opening Press Conference
Oct. 14: Making Climate Action Count
Oct. 15: Trade to the Rescue

Speakers

David R. Malpass

Former President, World Bank Group
@DavidMalpassWBG
Ngozi Okonjo-Iweala

Director General, World Trade Organization
@NOIweala
Mari Pangestu

Former World Bank Managing Director of Development Policy and Partnerships
@Mari_Pangestu
Makhtar Diop

Managing Director, IFC
@Diop_IFC
Mehdi Tazi-Riffi

CEO, TANGER MED
Bill Winters

Chief Executive Officer, Standard Chartered
Hon. Betty C. Maina

Cabinet Secretary, Ministry of Industrialization, Trade and Enterprise Development. Republic of Kenya
@maina_betty
Paul Brenton

Lead Economist, Macroeconomics, Trade and Investment, World Bank

Moderator

Maggie Lake

Veteran Journalist

Status message

Thank you for requesting an event reminder for email We have just sent you a confirmation.

Error message

It looks as though the e-mail address: email is already registered for reminders for this event.

Error message

Something went wrong