The International Trade Centre (ITC) is what I have often termed a ‘strange animal.’ It is a development agency which brings together three different but inter-related strands: the WTO focus on trade opening through multilateral negotiations; the United Nations focus on poverty reduction and development; and the on the ground focus of the private sector on leveraging growth through trade and investment.
We are a hands-on, pragmatic and technical organisation that focuses on providing solutions to SMEs. The context that we are operating in is clear: the post 2015 discourse and renewed multilateralism very much led by the adoption of the Trade Facilitation Agreement in Bali.
Given the estimates that more than 95% of enterprises across the world are SMEs accounting for close to 70% of employment- with this even greater in low income countries where the employment share is close to 80%, our focus on SME competitiveness is sound. We know that 85% of total employment growth between 2002 and 2010 was attributable to SMEs. But we also know that in the SME ecosystem, there are many that never make it past the first year of business. There is a high mortality rate amongst start-ups. We must ensure that the survival rate improves. We also know that high-growth enterprises play a disproportionate role in job creation. The two major distinguishing characteristics of high-growth SMEs are their export orientation and their innovation capabilities. We must work to help survivors move up the value chain and internationalise.
My vision for the ITC is a simple one ‘doing more and doing it better.’ Doing more and better entails innovating to respond to the changing and growing needs of our partners – with our focus remaining on LDCs, LLDCs, SIDs and Sub-Saharan Africa – and our client base: the SMEs in developing countries, the trade support institutions such as trade and investment promotion offices, the chambers of commerce and the sector focused agencies, with a particular attention to women economic empowerment and youth employment. It also means being more attuned to the transformations in the topography of trade. SME competitiveness issues are very much at the heart of the Post 2015 debate and are, in many respects, the growth incubators of the future. Changes in the way that goods and services are produced, traded and consumed have been brought about by advancements in transportation and technology. Doing more also means moving from products to offering solutions to address the demands of the market. This suite of solutions is along the whole of the value chain ranging from product development and branding to market intelligence and capacity building to meet private standards.
We have grouped our solutions around six baskets. The six baskets are a clear signal that we intend to focus our actions and avoid “spreading ourselves too thin.” But it is also clear that we must be the best with regard to our technical expertise in these six baskets. For that we are working on improving our offer in several fronts: services, trade facilitation, strengthening trade support institutions and on SME competitiveness.
Services have become the backbone of our economies. For many developed countries, services account for more than 70 per cent of GDP; for LDCs alone in the six year period to 2011, LDC commercial services exports have more than doubled, growing twice as fast as the world average. We are investing in trade and market intelligence on services, on helping developing countries address regulatory barriers to services trade and in building the capacity of SMEs in the services sector. Tourism services are a particular sector where demand is growing and ITC has a strong presence in linking local value chains to the tourism industry and creating backward linkages. We are growing this pipeline through partnership with the UNWTO.
The second area concerns non-tariff measures (NTMs) and in particular trade facilitation. A December 2013 ITC survey of SMEs in developing countries confirmed just how important it was to identify and address NTMs. Close to 70% of LDCs SMEs reported facing burdensome NTMs including difficulty in accessing finance and cumbersome administrative procedures. The WTO Agreement on Trade Facilitation is a critical response to addressing non- tariffs obstacles to trade faced by SMEs related to border procedures. ITC’s NTM and trade facilitation Programmes are already responding to these challenges.
A few days after the Bali Agreement we published a Business Guide to the Trade Facilitation Agreement which has been translated into seven languages and has become the most downloaded publication in ITC’s history. We have also recently published a handbook on notification timelines under the Agreement. We are helping WTO members and countries in accession to categorise their commitments under the Trade Facilitation Agreement. As of today we have received over 25 requests from developing countries to do this-15 of these from LDCs. By the end of July we hope to have completed this work giving these countries the tools they need to notify their measures to the WTO. This is how we will be able to move to helping those needing assistance to implement the deal. We are a trusted partner for many developing countries and we hope that the donor community will be responsive. And I want to reassure you that our technical assistance on trade facilitation is being provided in close partnership with other international organisations, starting with WTO, UNCTAD, WCO and many more, as well as with the private sector.
On trade support institutions, we have just developed a set of tools to help them improve their performance in assisting SMEs to internationalise. Strengthening institutions is an important contribution to ensuring the long term sustainability of ITC’s support.
On SME competitiveness, we have started developing an integrated programme under a value chain approach to help SMEs internationalise. In addition, we are working to develop an index where SMEs- in both developed and developing countries- can assess their level of ‘competitiveness’ against a set of indices. This would allow for a mapping of current fitness and create a roadmap to improving efficiency and contribution of SMEs to national growth.
In these areas and in many others such as WTO accession, rural development, access to finance, e-solutions, government procurement related to women owned businesses and the development of national and sectoral export strategies, the ITC is a neutral partner. There is no political agenda or parachuting of assistance. It is demand driven and focused on providing technical solutions and tools to our clients. This is a major strength on which we intend to build.
The role that trade, SME development and entrepreneurship can play in supporting global sustainable and equitable growth and decent jobs should be appropriately addressed, in addition to crafting indicators to monitor and measure progress made in these areas. ITC is seeking to advance the growth component by supporting language that reflects just this. We are contributing to develop measurable indicators that can track and evaluate progress and which provide useful tools to countries and communities to move forward.
An important component of our contribution has been around women economic empowerment. Investing in the economic empowerment of women is investing in the economy, the society and in the household. 30-50% of SMEs in client countries are women owned and tomorrow evening you will see this economic empowerment in action as ITC showcases how the value chain “from cotton to the catwalk” can produce economic opportunities for women entrepreneurs that go beyond just a decent job and incorporate better housing, education and nutrition through the proclivity of women to reinvest in their society. This goes hand in hand with SME competitiveness in the ITC philosophy: linking more women owned enterprises to markets, which is what our ethical fashion initiative and Women and Trade programme stand for.
Constant innovation and providing cutting edge solutions has to be the focus so that we can provide transformative support and not simply “sprinkling” of actions.
By Arancha González
Executive Director, International Trade Centre.