Plenary 1: Panel Remarks by ADB President Takehiko Nakao at the 5th WTO Global Review on Aid for Trade: Reducing Trade Costs for Inclusive, Sustainable Growth on 30 June 2015 in Geneva, Switzerland (as drafted).
Director-General Azevêdo, my fellow panelists and guests, ladies and gentlemen:
I am honored to be here at this important meeting today.
First, let me congratulate the WTO on its 20th anniversary. I want to stress ADB’s continuing support in attaining WTO goals—whether implementing the Bali Package or supporting the case for Aid for Trade.
In Asia and the Pacific, open trade and investment will continue to be an engine of growth and poverty reduction. Our region’s economy remains strong. We expect the 2014 growth of 6.3% to continue in 2015 and 2016. Structural reforms and prudent macroeconomic policies in many Asian countries are increasingly driving growth. In an environment of open trade and investment regimes, global value chains are thriving, particularly in East and Southeast Asia. Of course, we should not be complacent and must continue to fight remaining poverty and increasing inequality by promoting inclusive growth. In ADB’s 45 developing member economies more than 500 million live below a poverty threshold of $1.25 a day. This is despite remarkable progress in the region.
What ADB is doing
Aid for Trade is essential to address high trade costs and support trade integration, hence promoting trade-led inclusive growth. What is ADB doing to promote Aid for Trade in Asia and the Pacific? We use a three-pronged approach. These are: (i) infrastructure finance, (ii) trade facilitation and trade reform, and (iii) trade finance. At our annual meeting last month, I said we need a stronger, better, and faster ADB. Let me explain how this applies to Aid for Trade.
First, stronger ADB infrastructure lending improves connectivity across our region. Good roads, railways, sea and airport facilities, power distribution and telecommunications are prerequisite to trade, and provide entry into global value chains. Our recently approved, precedent-setting merger of ordinary and concessionary lending windows will increase our annual approvals of projects and programs from $13 billion to as much as $20 billion, or 50% above the current level. Our assistance to poor countries will expand up to 70%. We will expand our concessional loans to poor countries on the same terms and conditions as before. We will also retain and strengthen the Asian Development Fund as a grant-only donor fund to assist eligible poorest countries.
An important part of ADB infrastructure lending is to finance cross-border roads, railways, electricity and customs. Such infrastructure facilitates trade, investment and mobility of people between countries. Given the investment risks, most of these projects are publically-financed and involve subregional economic cooperation. We work with groups such as ASEAN, the Central Asia Regional Economic Cooperation (CAREC) program, and the South Asian Subregion Economic Cooperation (SASEC) program to help plan, prepare and implement cross-border projects. With our developing member countries and cofinancing partners, we committed nearly $50 billion since 1990 for cross-border infrastructure through these programs.
In addition to publically-financed projects, public-private partnerships, or PPPs, have become more important for infrastructure finance. Our new Office of Public Private Partnerships provides transaction advisory services and facilitate PPP identification and project preparation.
Second, ADB aims to offer better support for trade facilitation and trade reform. This helps countries and businesses reduce high trade costs and increase competitiveness.
We focus on implementing international agreements on trade facilitation, streamlining regulations, improving information sharing, and reforming customs agencies. From this perspective, we support the WTO Trade Facilitation Agreement, or TFA. We work with our developing members to ascend to the Revised Kyoto Convention, which is a framework to simplify and harmonize customs procedures to support TFA.
It should be noted that the ASEAN Economic Community will be launched by the end of 2015. This will facilitate trade within ASEAN members and create a market of more than 600 people. It also provides a peer-review framework towards sound economic policies and market-oriented reforms. ADB provides technical assistance for the ASEAN Single Window and National Single Windows to speed up the movement of goods within the community.
We are increasing support for trade facilitation in South Asia, Central Asia, and the Pacific. Some of this work is done through our partnerships with the World Customs Organization (WCO) and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP). These subregions are lagging behind East Asia and Southeast Asia in terms of trade and investment linkage within the subregion and with other parts of the world.
Third, we will support fast and effective financing for trade. Our Trade Finance Program has helped expand trade opportunities—especially since the global financial crisis. When trade finance was squeezed due to the liquidity shortage after the crisis, ADB expanded the program in 2007 and usage accelerated. Today, this program turns over some $3.8 billion annually in guarantees and loans. We work with over 200 partner banks and have financed more than 1,500 SMEs in untapped or difficult markets.
ADB report “Aid for Trade in Asia and the Pacific 2015”
This afternoon, in Parallel plenary session 6, we will discuss ADB’s draft report on Aid for Trade in Asia and the Pacific. The report was prepared in partnership with Australia’s Department of Foreign Affairs and Trade (DFAT), WTO and Pacific Islands Forum Secretariat. The report examines the different challenges for trade across the region and the high trade costs many still face.
It also explores the potential of the digital economy to promote trade. Information and communications technology, or ICT, helps companies in the region including SMEs expand potential global customers and link into global value chains. ICT also increases access to new technologies, and supports skills building. ICT can improve the efficiency of women-led firms by reducing time constraints and limited mobility related to childcare and other family duties while providing access to new business opportunities.
This report has special relevance to the Pacific and Central Asia. The potential gains from digital connectivity are greatest for these subregions where distance to markets is a significant barrier. ADB is supporting broadband submarine cable systems between Fiji and Tonga and other Pacific island countries and providing technical assistance for the digital economy.
To conclude, ADB will continue to support Aid for Trade together with WTO, WCO, World Bank and other partners. ADB is committed to stronger infrastructure investment, better trade facilitation reform, and faster, more effective trade finance in order to promote sustained, inclusive growth in Asia and the Pacific.