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How Google is Helping Africa’s Small Businesses

Africa’s Small BusinessesIn June 2022, Google announced a new initiative that targeted small businesses in Africa. The initiative was part of the company’s month-long celebration of International Micro, Small and Medium-Sized Business Day. Micro, small and medium-sized businesses, make up a large portion of the global economy, “[accounting] for 90% of businesses, 60 to 70% of employment and 50% of GDP worldwide.” The significant role that micro, small and medium-sized businesses play internationally as the backbone of economies holds true, especially in Africa. Consumers “buy more than 70% of their food, beverages and personal care products” from Africa’s small businesses.

Loyalty to Small Businesses

This loyalty to small businesses has continued despite the insurgence of corporate supermarkets and retail chain stores. Transitioning this loyalty to e-commerce holds incredible promise for economic development throughout the continent. South Africa posted online sales of $1.8 billion in 2020 and countries like Nigeria and Kenya where the retail sector is a major component of GDP posted 30% and 40% growth rates respectively in 2021.

The framework for e-commerce in Africa has been laid out. Internet coverage, access to credit cards and bank accounts and mobile phone usage have all increased substantially in Africa in the last decade. Google has noted this opportunity for growth in Africa, with Google’s country director for West Africa Juliet Ehimuan noting that “E-commerce presents an opportunity for small businesses in Africa to reach new customers and grow.”

However, the online market has remained untapped for many small and medium businesses in Africa. Technical know-how, as well as concerns over cybercrime, has impeded online market penetration by small and medium businesses in Africa, according to a report by World Trade Organization (WTO). Fortunately, Google’s new initiative is helping build online retail presences for Africa’s small businesses, aiming to “…assist small businesses in Africa to gain the expertise to connect online, expand their customer base and scale-up,” according to Ehimuan.

Google is accomplishing this strategy through a three-pronged plan. It includes the Shopping Small Business Summit, an online career certificate course, and the Local Opportunity Finder.

Shopping Small Business Summit

In late June 2022, Google hosted a Shopping Small Business Summit. According to The Guardian, this event was a one-hour virtual training session to help small and medium business owners develop the skills they need to compete in the online marketplace. This training session covered both e-commerce trends as well as digital marketing tools and skills.

Online Career Certificate Course

The second portion of Google’s plan to help build online retail presences for Africa’s small businesses is an online career certificate course, as The Guardian reported. Unlike the Shopping Small Business Summit, this course has limited availability and is not free. However, Google has offered 1,000 scholarships to Africans who wish to participate in the course. This course will cover digital marketing and e-commerce trends in a deeper capacity than the Small Business Summit, and it aims to prepare Africans for entry level-jobs in e-commerce.

Local Opportunity Finder

Google also launched the Local Opportunity Finder in June 2022. The Local Opportunity Finder is a free online tool for small and medium business owners that aims to improve their online presences. This new tool can analyze a Google Business Profile and then give personalized recommendations for improvement. These improvements are geared towards making e-commerce sites more appealing to consumers and overall more consumer-friendly.

Google’s commitment to growing small businesses is helping build online retail presences for Africa’s small businesses. The large African retail sector is dependent on small businesses. However, the continent has lagged behind in terms of digital market space until now. If African businesses can take advantage of Google’s initiatives and work through the impediments holding back e-commerce in the continent, they could scale their businesses up and expand their consumer bases.

– Benjamin Brown
Photo: Flickr

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Using Green Trade to Transform Developing Nations

Green Trade
Following the impacts of COVID-19, many developing countries are attempting to rebuild their economies and alleviate the financial hardships of the people facing these impacts. Prior to the pandemic, the International Energy Agency predicted that renewable energy would expand by 50% between 2019 and 2024. As of 2022, it seems many nations are more focused on economic advancement rather than avoiding environmentally dangerous actions. Many world organizations are advocating for “greening trade” as a new growth strategy that could protect the environment and benefit nations with high poverty levels as a consequence of the onset of COVID-19. Green trade has the potential to transform developing countries.

What Does Greening Trade Mean?

According to the United Nations Environment Programme (UNEP), greening trade involves promoting sustainable measures to engage in trade that do not pollute land or water. The process focuses mainly on engaging in trade with renewable energy and energy efficiency markets. Greening trade helps the environment while maintaining trade relations for economic prosperity.

Evidence of Success in Greening Trade

In 2019, Palgrave Communications reported that the green trading industry generated $1.3 trillion in the United States economy alone. The industry has created 9.5 million full-time jobs in the U.S. In China, the International Monetary Fund (IMF) reported that a mix of carbon taxes and green investment could have the potential to increase China’s GDP by 0.7% and create more than 12 million jobs by 2027. It is clear that green trade has created success in major economies globally.

How Can Greening Trade Reduce Poverty?

The World Trade Organization (WTO) released a study in January 2022 suggesting that more trade in green technologies could help developing nations transition to a low carbon economy. This is an advantage for nations with impoverished populations because new guidelines by WTO may require green practices in the future. In consideration, implementing green policies could prepare developing countries for future trading markets while preventing the countries from lagging behind.

Greening Trade Begins in Developing Countries

In September 2021, the Brookings Africa Growth Initiative hosted an event to explore opportunities for green trade with Europe’s new Green Deal. The event occurred in hopes of encouraging the African Continental Free Trade Area (AfCFTA) to do the same. The AfCFTA is projected to bring 30 million Africans out of poverty simply by means of trade and would benefit from engaging in green trade to maintain trade relations with the United Nations. The recent African Green Recovery Action Plan states that “for the COVID-19 recovery to be sustainable, it must link a green recovery with an inclusive recovery.” The plan insinuates that marginalized groups and those in poverty can benefit from green plans.

The World Bank states that Vietnam should use its resources to promote green trade to maintain a competitive edge in international markets and generate new, innovative jobs for the unemployed to combat pandemic-induced poverty levels. Green recovery is crucial in the post-COVID-19 era to improve the conditions of those in poverty, specifically in developing countries that have the opportunity to rebuild.

Ways to Green Trade

UNEP suggests four ways that governments can actively engage in greening trade:

  1. Enforce strong environmental laws and regulations both at a national and international level.
  2. Have governments create trade rules and agreements that promote environmental awareness.
  3. Promote intergovernmental cooperation on green trade through improved monitoring, green trade finance and sustainability impact assessments.
  4. Identify stakeholder initiatives to green trade and supply chains to craft policy that complements such efforts.

Green trading is a relatively new industry and its full economic potential has not yet come to fruition. If developing countries take advantage of engaging in green trade now, these nations could be setting themselves up for the future of trade in general while benefiting their economies.

 

– Rachel Reardon
Photo: Flickr

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How Vietnam Improved Its Economy

How Vietnam improved its economy
Vietnam has seen a tremendous amount of growth in various sectors over the past three decades. This growth is largely due in part to economic reforms that have undergone implementation in the country. Before the reforms, Vietnam remained one of the poorest countries in the world. However, it has since grown to become a country with a lower-middle income. The GDP of Vietnam grew tremendously between 2002 and 2018 by increasing 2.7 times. Even in the face of the worldwide COVID-19 pandemic, the economy of Vietnam has been able to remain steadfast and resilient through trying times. Here is some information about how Vietnam improved its economy.

The Doi Moi Reforms

The Doi Moi reforms that the government implemented in 1986 helped Vietnam improved its economy. Under these reforms, Vietnam as a country took three significant steps as a country that would help improve the economy. The first of these steps was embracing free trade.

For many years, Vietnam has entered into various free trade agreements with numerous nations. One includes ASEAN, which Vietnam became a part of back in 1995. Vietnam and the U.S. partnered together by signing a free trade agreement in 2000, and seven years later, Vietnam joined the World Trade Organization. By joining these institutions and forming these alliances, Vietnam has been able to reduce the number of tariffs on imports coming into the country and exports leaving the country.

Making Changes

The second step that the Doi Moi reforms took to better the economy was implementing deregulation and making it cheaper for companies to conduct business within Vietnam. One way this occurred was through the enactment of the Law on Foreign Investment which passed in 1986. This law allowed companies from foreign countries to come into Vietnam to conduct business. Over the years, this law underwent revisions numerous times to better accommodate investors.

This law has improved Vietnam’s competitiveness tremendously over the years. In 2006, Vietnam’s global competitiveness ranked at 77. Only 11 years later in 2017, Vietnam ranked at 55 in world competitiveness. Lastly, the Doi Moi reforms aimed at improving human capital in Vietnam and improving the country’s infrastructure.

To improve the human capital of Vietnam, the government decided to prioritize education within the country. Better education is a must for Vietnam due to its ever-growing population. A larger population means more jobs and citizens must receive quality education to perform them. Infrastructure has been vitally important for the growth of Vietnam’s economy as well. Making sure that all citizens have access to internet services is important for a country due to the technological needs of the modern age.

How It Helps

Vietnam improved its economy due largely to the Doi Moi reforms. Today, the economy of Vietnam continues to flourish. In 2020, during the midst of the COVID-19 pandemic, Vietnam’s economy expanded by 2.9%. Compared to other countries at the time, this growth rate was among the highest in the world.

Since 2010, the poverty rate in Vietnam has slowly declined each year. In 2012, the poverty rate was at 40.8%. By 2018, the poverty rate fell almost by 20%, leaving it at 23.1%. As it currently stands, the Vietnamese economy continues to stay strong and grow.

– Jacob E. Lee
Photo: Flickr

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Civil Society’s Response to HIV in South Africa 

HIV in South AfricaFollowing apartheid, South Africa became the focal point of the AIDS epidemic. Despite the rapid rise of HIV in South Africa, the governmental response was slow. During the 1980s, people often assumed that the virus spread because of the behaviors of injection drug users and gay men. However, the spread of the disease in Africa looked incredibly different since more than half of the people living with HIV in sub-Saharan Africa were women.

HIV and AIDS in South Africa

When HIV and AIDS started having a widespread impact on South African society and communities, President Thabo Mbeki followed the arguments of Peter Duesberg. Duesberg believed that HIV could not be the cause of AIDS. This was opposed to Western medical approaches to solve the epidemic. Moreover, Tshabalala-Msimang, the Health Minister, advocated for nutritional solutions in 2003.

Other countries tried to help President Mbeki but were unsuccessful in persuading him. Civil society groups raised grave concerns over the need for urgent action. One of the most prominent groups to raise concerns and to have the greatest impact in the region was the Treatment Action Campaign.

The Treatment Action Campaign

Zackie Achmat, along with fellow 10 activists, founded the Treatment Action Campaign (TAC) in 1998. Achmat was a gay rights activist living with HIV. TAC was a tripartite alliance between the AIDS Law Project and COSATU. It was formed as a response to HIV in South Africa. The organization was needed because of the lack of urgency that the government and the medical industry had in responding to the virus. 

TAC is a rights-based organization focused on getting those in need access to treatment for HIV/AIDS. TAC is technical and political in its arguments as it utilizes justifications for actions through moral, scientific and economic reasoning. Also, TAC develops partnerships with activist groups such as the Gay Men’s Health Crisis (GMHC) and ACT UP. It aids in training on ‘treatment literacy’ and initiated a more extensive peer education network. In addition, TAC formed partnerships between elites, academics, professionals and press. However, it ultimately served to strengthen the effort for the poor to advocate for themselves. TAC uses its sources for social mobilization, advocacy, legal action and education.

TAC Fight Against HIV in South Africa

TAC’s first action was to argue for the right to access medical resources, namely antiretrovirals (ARVs). The organization found an inherent fault with the World Trade Organization’s 1995 TRIPS agreement, which legally protected intellectual property and patents.

In 1998, TAC demanded that the South African government introduced a program to prevent mother-to-child HIV transmission (PMTCT). The social movement around advocacy for PMTCT was primarily made up of predominantly poor black women living with HIV. The issue was framed as a moral issue. The pharmaceutical company GlaxoSmithKline (GSK) was profiteering off the sale of the drug. As a result, TAC demanded a price reduction and framed it as a moral issue regarding the South African constitution. The organization succeeded in its demand for legal action.

TAC’s Success

The essential tools for TAC’s success were its use of legal resources and advocacy. TAC made legal demands of the South African government. It also collaborated with progressive lawyers, scientists and researchers to develop plans and alternative policy proposals. TAC went beyond merely advocating for the poor and based policy on the entitlement of rights. The organization has taken successful litigation measures on many occasions. The past successful cases were supported by the efforts of lawyers and TAC’s actions, which involved marches, media campaigns, legal education and social mobilization.

This was possible due to advocacy and partnerships that TAC formed and developed. The structures in which it functioned also made it possible. Article 27 of the South African Constitution took effect in 1997. It includes the right to access medical services, reproductive healthcare and emergency medical treatment.

A key component that made TAC successful was the context in which it was based. The actions of TAC would not be possible without the tools it employed that were already in place within South African infrastructure and ideology. Additionally, TAC focused on the issues of the affected people. This included economic inequity, women’s rights, post-apartheid race relations and the necessity of medication access. The Treatment Action Campaign met immediate and long-term demands for people affected with HIV by addressing inherent human rights issues. TAC was mostly successful in its response to HIV in South Africa because it mobilized the personal into the political.

– Danielle Barnes
Photo: Flickr

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3 Strategies for Improving Agriculture in North Korea

Agriculture in North Korea
A massive famine struck North Korea in the 1990s with a death toll of more than one million. While grain production has nearly doubled since the famine, many agricultural scientists and international humanitarian aid liaisons believe it is not enough to sustain the nation. According to the World Health Organization, two out of every five North Koreans were undernourished in 2017 and 28 percent of North Korean children are stunted in growth due to a “largely irreversible outcome of inadequate nutrition and repeated bouts of infection during the first 1,000 days of their life.”

After Kim Jong Un took power in 2011, the government is more willing to admit its administrative shortcomings in perpetuating food insecurity across the country. In 2018, Former Premier Pak Pong Ju, a member of the ruling Korean Worker’s Party and longtime member of the political elite hierarchy, admitted an agricultural crisis had formed a chokehold on the North Korean economy. In a report, he mentioned that “Some have failed to conduct seed production and management in a responsible way and also fell short of doing proper strain distribution in line with climatic conditions and characteristics of fields.” With lower food production, many locals are going hungry and the poorest are affected the most.

North Korea has many tactics underway in order to improve agricultural conditions in their nation. Here are three strategies for improving agriculture in North Korea.

  1. A 5-Year Strategy – North Korea’s 5-year strategy for improving agricultural development is already underway. The plan includes increasing fruit, vegetable and mushroom cultivation along with improving domestic animal breeds. Furthermore, North Korea plans to upgrade fishing boats and farm equipment in order to use modern scientific methods. As 2018 came to an end, North Korea has already improved plant species with high-yield, created agricultural machinery and scientific farming, increased greenhouse farming production and increased livestock and development of fish aquaculture. They are also in the second stage of constructing the South Hwanghae Province waterway.
  2. Juche Farming Method –  The Juche Farming Method uses the nation’s government style ideals to give farmers a plot of land and a house to live in on collective farms in exchange for the food they produce. Additionally, in just six months after the method was implemented, 650 greenhouses were built across the country allowing for four to five harvests a year. Without greenhouses, locals say the soil is too salty and not sufficient enough for growing crops. Salt increases the acidity in plants which results in poor harvests.
  3. International Aid – International Aid can improve agricultural development in North Korea significantly. The American Friends Service Committee’s Publication and Advocacy Coordinator, Daniel Jasper, says his organization is working on multiple techniques to improve North Korea’s agriculture. For example, one of the organization’s projects is rice cultivation and the introduction of plastic trays. The project has been very successful, raising yields 15 to 20 percent in some farms. North Korea is also interested in joining institutions such as the International Monetary Fund (IMF) and the World Trade Organization (WTO). These institutions would allow North Korea to gain additional international aid.

Agriculture in North Korea has greatly improved since the famine in the 1990s, but the nation’s mountainous geography still makes farming difficult. With 11 million North Koreans malnourished, it is vital that the nation continues to correct the problems within its agricultural industry.

– Maura Byrne

Photo: Unsplash

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Impact of US-China Trade Tensions

US-China Trade Tensions
The U.S. has recently started enforcing tariffs on China to address the trade imbalance between the two countries. The Trump Administration’s goal is to pressure China into altering its trade policies to favor the U.S. In response, China has enforced its own tariffs leading to the US-China trade tensions.

From May to June this year, the Chinese Renminbi fell 4.3 percent against the U.S. dollar. Many fear an impending trade war if neither side backs down. Unfortunately, the trade tension also has the potential to significantly impact not only the economies of the U.S. and China but developing nations as well.

Impact of US-China Trade Tensions on Developing Nations

The impact of US-China trade tensions on developing nations would be especially significant in Asia. Economic success is a pathway to alleviating poverty and advancing progress globally. The trade tension would serve as a roadblock. Should it continue, China and the U.S. are not likely to immediately feel major shock waves from the tariffs given the enormous size of their economies.

Smaller nations, however, are getting caught in the middle. According to JP Morgan economist, Sin Beng Ong, Asian countries like Japan, Malaysia, Singapore, Thailand, South Korea and Taiwan would be hit the hardest from a possible trade war. Each nation is export dependent and is intertwined in the complex supply chains in the tech and automobile industries. Chinese goods are often made using components produced in other nations. For example, Taiwan’s supply of components to China makes up two percent of its GDP. Tariffs on China then also impact Taiwan by proxy.

South Korea is similar. Compared to last year, exports were up by 13.2 percent in May and following the trade tension it dipped to 0.1 percent in June. OCBC Bank measured the impact of the US-China trade tensions on other nations as well. It projected a drop of 0.2 percent for South Korea and a drop of 0.3 percent for Japan if the U.S. continues with new tariffs on the $250 billion worth of Chinese goods.

Closer allies like India, Canada, EU and Turkey have noted concerns on impending harm in the long run as well. This would not only erode their economic progress but negatively impact our diplomatic relations as well. As a result, these countries have retaliated, despite being allies, fearing lack of jobs and an overall harm to their respective economies.

The US-China trade tensions have the potential to unite the world against the U.S. in order to protect years of economic development and avoid increasing poverty.

Trade Tensions and Poverty

As of 2013, the World Bank has reported the poverty headcount ratio in South East Asia to have significantly improved. The number of individuals living with just $1.90 a day was listed as 15.1 percent: a significant improvement from previous years. The US-China trade tensions, however, will impact this progress negatively.

The impact of the US-China trade tensions on development in the U.S. is mainly centered on food. China has targeted pork through multiple 25 percent tariffs and other products such as soybean. This hurts farmers economically because they now have to sell their products for much less.

Trade War and Nonprofits

In Asia, several nonprofits have a continued mission of resolving the issue of poverty. Organizations such as the Peace Corps and Care have existed for several years. In the event of a trade war, their work will have increased importance in impacted nations.

International groups, such as the World Trade Organization, have worked to quell the escalations through advocacy. WTO Director General Roberto Azevedo noted that the “escalation poses a serious threat to growth and recovery” in nations around the world.

A recent WTO report also mentioned, however, that the global trading system would be able to resolve such issues. Specifically, it asked the G20 economies to alleviate the issue and advocate for trade recovery.

As the US-China trade tensions escalate, it is imperative to the health of developing nations as well as the U.S. and Chinese economies that the issue is resolved. With organizations such as the WTO and nonprofits in South Asia working to minimize tensions, the goal of alleviating the issue is still attainable.

– Mrinal Singh
Photo: Flickr

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5 Important Ways that World Trade Reduces Poverty

World trade reduces poverty
World trade proves to be a prosperous way for countries to keep good relations while benefiting from one another. World trade reduces poverty in many unique forms, allowing businesses to buy and sell their goods in an easier, safer environment while improving economic balance and structure.

Economic Benefits

According to the World Trade Organization (WTO), an economy will grow quicker and at a more consistent pace when free trade is more easily accessible. A company which earns a greater profit is more likely to hire a larger amount of people while giving their employees a stable position within the company, without fear of being laid off or fired due lack of funds or money.

WTO reports that there has been a 34 percent wage increase for companies in sub-Saharan Africa that participate in exporting goods. In a closed economy, the numbers severely decrease in amount, proving that the impact of trade can have a great consequence on each individual country. Generally speaking, world trade reduces poverty by boosting each economy and providing more opportunity for growth in any country.

Education and the World Trade Institute

With a better economy that has higher profits, this creates more money to be given to educational institutions. Not only do elementary, middle and high schools benefit, but for countries with an open market, this gives college-aged students and business owners a chance to learn the skills in trade, importing and exporting.

The World Trade Institute (WTI) provides many different programs for graduate students interested in learning the art of trading. WTI offers Doctorate and Masters programs in economics, political science or international law and economics. The World Trade Institute also offers courses and topics in trade, investment and sustainability, leaving its students with the knowledge of a successful career in trade while providing internship opportunities to gain experience and learn how world trade reduces poverty.

Reduction of Corrupt Governments

Many times, high poverty rates within a country can be a sign of government corruption or the country’s leaders taking advantage of its citizens. The World Trade Organization has enabled many different plans to help fight bribery, extortion, fraud and nepotism. Through the Government Procurement Agreement, government purchases can now be tracked and watched to ensure all money received or gifted is in good faith and only used for those who are abiding by the law.

The American Society of International Law reports that citizens universally pay around 25 percent more than average for communal goods and services under corrupt governments. When the government is providing better funding for things such as housing, education or creating jobs rather than participating in questionable business deals, this opens up opportunities for the people to create a better life.

Industrialization and Infrastructure

When business owners and entrepreneurs have access to public transportation and roads, it provides an outlet that allows them to travel to and from different regions, expanding their markets and advertisements. However, when a business owner who produces a good they would like to trade does not have a simple entry into other provinces, it proves difficult for them to be able to make any money or get their product noticed.

The World Bank reports that, sometimes, increasing trade for poverty-stricken areas can have quite an easy answer; sometimes, all that is needed is a new road. The World Economic Forum states that for a continent such as Africa, it is best for nations to trade with their neighboring countries. This allows the business to trade on a smaller scale before moving on to trade with first-world countries such as China or the U.S.

Technology Brings New Trading Outlets

Technological advances have made it easier than ever before for consumers to find what they wish to buy and for business owners and product builders to “post” their brand online. This way, the consumer can have their product delivered right to their door, while the company benefits from the profit.

E-commerce sites have recently become a staple in African communities, and businesses such as Jumia have seen a rise in revenue by raising $150 million in 2014 alone. Websites like Jumia have everything a customer could possibly want or need, from electronics to fashion to grocery items. Websites like Jumia showcase how technology can bring in money and jobs, while easily marketing brands around the world.

Technology, economic benefits and industrialization are only a few ways world trade reduces poverty. The Office of the United States Trade Representative ensures that our markets are left free and open, while keeping trade agreements with countries where poverty can be most prominent, such as Africa, the Middle East and South and the Western Hemisphere of the Americas. Keeping good relations with these countries ensures economic and job growth while bringing in an abundance of goods.

– Rebecca Lee

Photo: Flickr

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How to Help People in Latvia

How to Help People in LatviaOne of the smaller Baltic states, Latvia gained its independence from the Soviet Union in 1991, and ever since has been shifting to catch up to the rest of the economies in the EU. Although Latvia is one of the fastest growing economies in the EU, nearly one in three Latvians is at risk of severe poverty and nearly one in five suffer severe material deprivation. Additionally, the GDP per capita of Latvia is only $13,700 – in contrast, the United States’ GDP per capita for 2016 was over $52,000. Considering the close strategic ties between the U.S. and Latvia, this all begs the question of how to help people in Latvia who suffer from poverty.

With the aim of helping Latvia develop as a nation and stamp down its poverty rate, here are some ways to get involved and help the people of Latvia:

  1. In 2014, the U.S. provided Latvia with $67 million worth of assistance through an assortment of military programs run in the country. Writing to members of Congress in favor of continued support for Latvia can allow them to focus their attention and finances on their own economy.
  2. Similarly, the U.S. and Latvia are members of many of the same economic groups – such as the World Trade Organization, the World Bank and NATO. Urging your representatives in Congress to support these groups provides Latvia with access to the resources and assistance provided by them.
  3. Latvia is currently in the process of becoming a member of the Organization for Economic Cooperation and Development (OECD) – an international group that seeks to assist nations in improving their economies and the livelihoods of their citizens. Getting involved with the OECD and supporting their initiatives is a tangible way of helping make an impact in the lives of Latvians.
  4. Investing in and purchasing the goods and services of Latvian-based companies puts money directly into the Latvian economy, which is largely based on industries such as transport and telecommunications. For example, choose to fly Air Baltic next time you take a trip to Europe.
  5. Volunteer your time or donate to the American Latvian Association, which has been providing aid to Latvia since 1989.

Ultimately, the choice of how to help people in Latvia most effectively lies in the hands of the Latvian government, but urging U.S. representatives to consider ways to assist Latvia as well as volunteering your own time and money can assist the poor in Latvia in making life a little bit better for themselves.

– Erik Halberg
Photo: Flickr

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WTO Discussion on Duty-Free Trade Ends

WTO
The World Trade Organization recently held talks to discuss the possibility of duty-free trade on information technology goods. The proposed legislation sought to extend a 17-year-old trade agreement to end all tariffs on IT products.

However, on December 12, all talks ceased and collapsed due to a deadlock between China and South Korea over liquid crystal displays, commonly referred to as LCDs. The zero-tariff agreement applied to over 200 hundred products. South Korea wanted LCD products to be included in the deal; however, China refused this measure. It seems unlikely that China will concede to the stipulations regarding the LCD screens.

The Information Technology Agreement, or ITA, intends to strengthen trade between countries in the growing sector of technology. Opening channels for trade would have benefited both countries immediately as they would no longer be penalized for trading goods.

WTO Director General Roberto Azevedo said after the talks collapsed, “The participants have significantly reduced the gaps on expanding the coverage of the ITA agreement in recent days, but unfortunately it has not been possible to finalize the negotiations this week.”

In 2015, the talks are projected to continue with the hope that they will receive a unanimous vote in agreement. The WTO is committed to multilateral trade that integrates 161 countries around the world. The ITA deal would integrate mostly developing economies with significant production of new technology.

The deal makes imported products significantly cheaper than manufacturing and selling the products in one’s own country. India’s Prime Minister, Narendra Modi did not enter into the signed deal with the United States and China to protect India’s manufacturing interests.

However, a case could be made that a deal for India would increase exports, in turn benefiting India’s economy.

India is currently number 19 on the list of leading exporters and the 12th largest exporter. The balance of trade is India’s main concern and the concern of counties who do not already have robust industries.

– Maxine Gordon

Sources: NDTV, Rediff
Photo: Business Times

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Trade Facilitation Agreement and India’s Poor

india-trade-facilitation-hurts-poor
Due to lack of progress on food security to help India’s poor, India has refused to accept the World Trade Organization’s, or WTO, trade facilitation agreement. This deal was achieved in Bali in December 2013 and India’s refusal prevents the adoption of the Bali agreement.

India’s refusal has been criticized by trade officials around the world. Diplomats have noted that it may hamper the WTO’s Doha Round of trade negotiations.

Indian Prime Minister Narendra Modi and his Bharatiya Janata Party won a decisive victory in the spring election where they promised to develop the economy and tell the world that India is welcoming to business.

However, the new government is sticking by its previous position that the WTO is limiting their agricultural support programs.

Food security is important concern for India’s poor because 450 million people in India survive on less than $1.25 per day. The government has been arguing that the value of subsidies for food stockpiles has to be changed to more than 10 percent of a country’s total food production.

Indian Finance Minister Arun Jaitley said that the issue of food security is critical for the country’s small farmers. India’s position on the trade facilitation agreement is probably due to political pressure from India’s poor.

India’s government argues that wheat and rice are more expensive than market prices. Their agricultural programs protect farmers’ livelihoods and provide reasonably priced nutrition to India’s poor and vulnerable. However, WTO rules only allow governments to stockpile food if they acquire those stocks at market prices.

The Bali agreement will only take effect if it is approved by all 160 member governments. Unless the World Trade Organization relaxes restrictions on a countries’ ability to subsidize farmers, the agreement will not come into effect.

“India has a decision to make about where it fits in the global trading system,” John Kerry, U.S. Secretary of State, said. “India’s willingness to support a rules-based trading order and fulfill its obligations will help to welcome greater investment from the United States and from elsewhere around the world.”

– Colleen Moore

Sources: Gulf Today, Washington Post, Wall Street Journal
Photo: Washington Post