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Copenhagen Consensus Center

Post-2015 Consensus: Trade Viewpoint, Fernandez de Cordoba Vanzetti

Viewpoint Paper

Fernandez de Cordoba (UNCTAD) and Vanzetti (ANU) point out that economic growth is itself a necessary but not sufficient condition to achieve a broader development outcome. International trade tends to have a positive relationship in the long-term with economic growth, and hence development. Poverty reduction has coincided with expansion in world trade and global GDP. Nevertheless, liberalizing economies are likely to face short- to medium-term adjustment costs so a phasing-in of reforms is desirable to ease the burden of adjustment.

Tariff peaks in developed countries for certain products of interest to developing countries still remain an unresolved issue. High tariffs in developing countries continue to inhibit South-South trade. Rather than merely reducing tariffs, freer trade requires behind-the-border reforms in areas such as investment, competition, government procurement, state-owned enterprises and intellectual property. Non-tariff measures (NTM) are not often designed to restrict trade, but their overall restrictiveness is often much higher than for tariffs, with particular burdens on agricultural produce via sanitary and phyto-sanitary measures.

Despite partial success in Bali, the DDA seems to be paralyzed. Aid for Trade could be one way forward, but the benefits so far, particularly for LDCs, seem to be modest, with little improvement in export performance, growth, or poverty reduction. While trade is most likely a necessary condition for growth, other factors such as investment are also vital. It is not necessary to take resources away from one goal while achieving another. A rising tide lifts all boats.