To increase participation and ensure competitiveness in the world trade, Director-General of the World Trade Organisation (WTO) Ngozi Okonjo-Iweala observed that developing countries should lower their trade costs.
"High trade costs constrain countries' access to foreign markets and cheap inputs, to the mobility and information frictions, skill mismatches, and limited access to finance that, too often, mean people cannot seizing new opportunities," she said.
The DG said this at a recent press briefing at WTO headquarters.
Ngozi Okonjo-Iweala said the high trade costs issue partly stems from trade policies, including high compliance costs associated with foreign standards and incomplete implementation of trade facilitation measures.
Additionally, domestic factors, such as underdeveloped physical infrastructure and inefficient infrastructure services play a significant role in hindering trade, she added.
Referring to a data of the World Trade Report 2024, she said, trade cost reductions between 1995 and 2020 led to around a 6.8 per cent increase in global real GDP over the period, with low-income economies growing by around 33 per cent.
She informed that the trade costs reductions led to between 20 and 35 per cent faster income convergence of low and middle- income economies, trade in services with LDCs than with high-income economies.
"The cost of doing business in some African countries is very expensive. That cost is equal to about 300 percent customs rate. The people of such countries are left behind because of trade. We have to work to improve it," she added.
She said that the "digital divide" in poor countries should be ended as the future business is digital business.
"As we look forward to trade we have to recognize the ways the world trading system is changing. That trade is digital now, services, it's green, and it should also be inclusive. So trying to tackle the issue of inclusiveness is a very important one," she added.
Ngozi Okonjo-Iweala, however, said fast-growing trade in digitally-delivered services and environmental goods offer exciting opportunities, with digital trade in particular lowering the bar for enabling under represented economies, small businesses and women entrepreneurs to connect to international markets.
In an era when global supply chains have exhibited some vulnerabilities, deconcentrating and diversifying them to business-friendly but underrepresented regions and economies can be part of fostering inclusiveness, while also building global resilience, she added.
