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Address by External Affairs Minister at the Commonwealth Business Forum

November 26, 2009

Mr. Chairman,
Distinguished participants,
Ladies and Gentlemen,

I am delighted and honoured to have this opportunity to address this meeting of the Commonwealth Business Forum focusing on"Trading for a More Equitable and Sustainable Future".

The Commonwealth Business Council is doing a commendable job of bringing together the private sector and governments, in order to foster a conducive environment for business and investments in the Commonwealth and beyond. It provides valuable inputs to the CHOGM deliberations, both at the policy level and in finding practical ways to enhance trade and investment. I am also happy to note that it is working closely with Indian institutions, to find ways and means to tap the emerging business opportunities in India.

Distinguished participants, Ladies and Gentlemen,

The theme of this Session is apt, particularly in the context of global economic and financial crisis. Today, international trade is key to promoting long term sustainable, global economic growth. The world has come a long way from the mercantilist thinking of 16th-18th centuries. It is now widely accepted that international trade is not a zero-sum game and the benefits of trade accrue to all partners in the game – albeit in varying degrees. The challenge today is to find ways to ensure equitable distribution of these fruits.

Furthermore, almost all the major challenges the world faces today are trans-national in nature. Be it the financial crisis, food and energy shortages, terrorism, drug-trafficking, pandemics or climate change, the situation in one part of the world deeply affects another. We can face these challenges successfully only if we cooperate closely, and ensure sustainable and fair development for everyone, thereby reducing disparities of income and wealth. Development should also respect pluralism and diversity.

Let me briefly touch upon the global financial crisis in particular. It is now well known that developing countries were in no way responsible for it, but in many ways, they are the hardest hit. About 90 million people in the developing world are likely to be pushed below the poverty line due to the erosion of the gains made under their poverty eradication programmes over nearly a decade. Lower revenues will result in lower spend on rural infrastructure, health and education, hampering future growth. Also, the global economic downturn has caused a very substantial loss of export demand, particularly for non-oil developing countries. Their exports will remain well below the trajectory earlier projected for several years.

Distinguished guests, Ladies and gentlemen,

The past quarter century has witnessed an unprecedented level of activity on trade liberalization. In many respects, this most recent phase of global economic integration stands out when compared with any other in human history. It is for the first time that more than 180 nation states have engaged in the multilateral economic process. The WTO has provided an invaluable institutional forum for countries to find ways of expanding trade and investment. The WTO efforts have also been supplemented by bilateral and/or regional free trade agreements (FTAs). In recent years, the FTAs have increasingly taken the form of comprehensive economic partnership agreements (CEPAs) that cover not only goods, but also services and investment.

Notwithstanding the above, trade liberalization efforts seem to have been set within fundamentally narrow limits. Sufficient efforts have not been made to ensure "inclusive” outcomes. WTO’s laudable objectives - raising living standards, full employment and sustainable development - remain unrealized. Negotiations under the Doha Round - called the "Doha Development Agenda” - have not come to fruition more than eight years after its launch, primarily due to lack of commitment. There is a lack of agreement on issues that would help make the multilateral trading system more "development” friendly. The G-20 leaders have, in unison, emphasised the need early conclusion of the Doha Round, a step that would not only go a long way towards re-balancing the global trading regime, but would also reinforce the need to keep markets open.

I am happy to note that the WTO Ministerial in New Delhi in September this year succeeded in reviving momentum for the Doha Round negotiations. The Delhi Ministerial meeting brought together a wide spectrum of interests and positions, with the objective of developing a broad-based consensus and providing clear directions to negotiators to re-energise the process. There was a unanimous affirmation on the need to conclude the Doha Round in 2010. On their part, India and other developing countries are making significant contribution to the Round. Other members, especially the developed countries, must show the same degree of flexibility so that the Doha Round reaches a successful conclusion. India is ready to engage with all WTO Members to complete the modalities and address any outstanding issues.

Distinguished guests, Ladies and gentlemen,

Let me now outline some of our specific concerns.

First, easy access to trade finance at reasonable rates is an important lubricant for trade. Increase in the cost of trade finance impacts the emerging and poorer economies proportionately more than the developed ones. Appropriate monetary and risk mitigating policies need to be designed to tackle these challenges.

Second, the assistance provided to developing countries, particularly LDCs, for strengthening their trade-related capacities, i.e., ‘Aid-for-Trade’, should help these countries build supply-side capacity and trade-related infrastructure, in order to implement and benefit from WTO agreements. The principles enshrined in the 2005 Paris Declaration on Aid Effectiveness should be rigorously implemented. It should be kept in mind that the process of building internationally competitive economies takes time and is highly country specific.

Lastly, protectionism is a major barrier. The history of economic development has shown that the erection of trade barriers diminishes economic growth and creates instability. Shrinking demand in export markets makes it all the more important that the market access of developing countries is not further constrained by protectionism. We also need to be cautious about new protectionist measures that impact on trade prospects, either in the name of protecting jobs or introducing environmental standards.

I would like to point out here that equitable access to natural resources is seriously hampered by unsustainable patterns of production and consumption in the developed world. Developed countries must shoulder the main responsibility for preventing and reversing environmental degradation. It is equally important to provide access to developing countries to environmentally sound technologies on preferential terms and to support capacity building for inducting these technologies. Environmental protection cannot be isolated from the general issues of development.

Distinguished guests, Ladies and gentlemen,

Let me now touch upon some aspects of the role that the Commonwealth can play in promoting more equitable and sustainable growth. The Commonwealth currently generates an annual intra-Commonwealth trade turnover of about US$ 225 billion, of which India’s share alone accounts for about US$ 80 billion. Like many of its Commonwealth partners, India too has benefitted immensely from opening up of world trade. For some of the smaller Commonwealth countries, bulk (70%) of their global trade is with other Commonwealth countries.

In order to sustain growth, developing countries have to overcome a set of challenges, that are thrown up in the wake of economic development. One such challenge is capacity building. India and Indian industry can set up such capacity building centres in needy Commonwealth countries. There is need to invest in skills and it is here that industry can play a major role. For instance, Indian industry is running successful skill development programmes in the African region. Another challenge before the developing countries is ‘climate change’. India’s national action plan on climate change accords over-riding priority to maintaining high growth rates for raising living standards while also yielding co-benefits for climate change. Developing countries including India can benefit from technology transfer in this area from the developed Commonwealth countries.

In conclusion, let me emphasize that the Commonwealth governments and businesses should work closer together to ensure positive outcomes of international inter-governmental mechanisms on pressing issues of the day including climate change, food and energy security and pandemics. Let us resolve to make full use of the Commonwealth mechanisms in order to address these issues frontally and comprehensively, which would help sustain equitable and inclusive development.

Thank you.

Port of Spain
November 26, 2009


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