WTO chief advises Rwanda on trade

Pascal Lamy sees Africa as a potential China and believes that trade liberalisation will in the near future benefit developing countries more than it benefits rich nations. In an interview with Ivan R. Mugisha, Lamy expounds on what Rwanda needs to improve its internal trade, as well as what it needs to catapult its exports sector and become a regional hub.Question: What is your perception of Rwanda’s trade and industry sector?Answer: Rwanda has a clear, constant and open trade policy, the purpose of which is to maximise its potential and resources in order to add value, grow the economy to increase welfare and reduce poverty.In the last eight years I have been at the World Trade Organisation (WTO), Rwanda has been a constant supporter of trade opening policies developed by WTO. My deputy, Valentine Sendanyoye Rugwabiza, who is Rwandan, has helped to oil WTO’s connections with Rwanda.Given Rwanda’s position on the continent, growing the economy through imports and exports does not only depend on Rwanda alone but its neighbouring countries, hence the crucial importance of East African Community (EAC) integration.Regionalisation is important for Rwanda to be able to access more easily a larger regional market and global goods and markets for both exports and imports. This necessitates global cooperation agreements like the one we are negotiating at WTO on trade facilitation.Regional harmonisation and standardisation, convergence and local efforts like the ones I have seen in the business sector, bureau of standards and revenue authority- all these policies are bent on making things quicker, safer and simpler.Which areas does Rwanda and WTO work together on trade facilitation?Rwanda is making its own efforts, for instance, the single window electronic system that brings together a number of authorities in clearing exports and imports. Quality insurance, safety and a lot of administrative policies have been pulled together in this system to help move goods faster through borders.But again, if other countries in the region or elsewhere do not follow suit, then what Rwanda does for itself has a limited impact…this is where WTO steps in. We are negotiating with the view for an agreement, global standard templates for customs, processing and administration. This is a big plus for Rwanda because if we get there, Rwanda will have insurance that what it does will also be done by others.So, WTO as an initiator for agreements forum is of major importance to countries like Rwanda and other landlocked African nations.World trade has for long been dominated by rich countries, which set prices for commodities from poorer nations and make profits at the detriment of developing countries. WTO has been criticised for failing to intervene to stamp out policies that improve the situation. Why has WTO failed to create free and transparent trade that benefits poor nations?WTO has done its job and we have seen this during the global economic crisis. We provide an insurance policy against protectionism to countries like Rwanda.Rwanda’s trade has not been hurt during this huge economic crisis, largely thanks to the existence of WTO’s disciplined systems that we enforced to prevent countries which were severely hit by the crisis to resort to protectionism.Not that there have not been slippages here and there but overall, for a country like Rwanda, the global insurance policy against protectionism has worked.Now, true we haven’t yet succeeded in rebalancing a number of rules of world trade on tariffs and subsidies which were not development friendly.That is true, but if you look at the composition of world trade, say in 2005 and today, developing countries have greatly benefited from the increasing world trade.Some time ago, world trade was 60 per cent North-North, 30 per cent North-South and 10 per cent South-South. In the years to come, world trade will be one third North-North, one third North-South and one third South-South. This will be a huge contribution to the growth of developing countries.In my view, Africa is a potential China, which is a message I have been trying to pass to my European friends, which I must insist on because I don’t think most of them have yet realised that they have a virtual China next door.Talking of Europe, the Economic Partnership Agreements (EPAs) were supposed to be the answer to the non-reciprocal and discriminatory preferential trade agreements between Europe and developing countries. As of now, Europe has refused to sign the EPAs with East Africa. What is WTO doing to ensure that European countries adhere to trade practices that are compatible with WTO rules?WTO is in the business of multilateral trade negotiations, not in the business of bilateral trade negotiations. The only thing we do during bilateral trade negotiations is that once they are concluded, they have to be screened by WTO.We do not intervene at all in bilateral negotiations between Europe and the East African Community, not more than between China and Korea or the US and Panama.Trade opening has always happened through multilateral trade agreements but also through bilateral trade agreements and WTO comes in at the very end when negotiations have concluded; they have to be notified to WTO.Seeing that WTO is completely focused on trade facilitation, how does it ensure the rights of corporations to make profit do not override human rights,such as against child labour and other labour laws?There are a number of rules in international systems that regulate trade globalisation. There are rules about trade, about environment, about protection of endangered species, climate change, health notification systems and more.So each of these trade organisations have a duty to facilitate agreements on rules and then to enforce them.In terms of human rights, the obligations which members of the international community have subscribed to, in the field of promoting human rights, are under the surveillance of the United Nations Human Rights Council, while Code of labour standards have been agreed by a number of countries and are under the surveillance of the International Labour Organisation.Is there coherence between all these obligations?In theory, yes. Countries that have subscribed to these disciplines and obligations have a duty to abide by all they have subscribed to.There are challenges definitely, but it is up to the International Labour Organisation or the UN Human Rights Council as well as the UN Convention on Climate Change to upgrade their global governance capacity.As an expert on trade, what must Rwanda do to further improve its competitiveness on the international market?I think Rwanda, like Costa Rica and Singapore, in comparison with countries of similar size, has to build on its comparative advantage.Rwanda’s location as a landlocked country is a handicap, but which can turn into an asset if the country is turned into a regional hub for say transport, assemblies or warehousing.At the end of the day, I am not a big fan of resource-based concept of growth in modern times. I know from the intention of authorities that Rwanda can grow its comparative advantage in services.In modern times as you move to a knowledge economy, the main resource of a nation is its population, and I think that Rwanda has a specific advantage in providing quality services as well as improving the discipline and working habits of its population.It definitely still needs investment in education, training and skills development, but also important, it needs to move towards value addition and quality in goods and services.Rwanda can also look at logistic organisation and constant supply chains which are the dominant model of production in the world today and offer quite a lot of opportunities.In my opinion, Rwanda has taken steps in this direction, but the country needs a lot of regional and global cooperation. This is why regional and global integration are more important for a country like Rwanda rather than may be for big Europe or China, which may be less dependent on international cooperation to grow their economies.