Trading Values

January 2013, London

Pascal Lamy was busy this month. From Davos, the Director General of the World Trade Organisation went to Bangladesh, where he visited the busy Chittagong port and gave a speech at the Chamber of Commerce on 1 February. On both occasions, he reiterated the importance of removing barriers to trade and establishing a multilateral trade facilitation agreement, which could save up to $1 trillion for the global economy. Apparently, nowadays border crossing cost 10% of the value of trade and average customs transaction involves 20–30 different parties, 40 documents, and 200 data elements, a third of which must be repeated several times. The World Economic Forum estimates that by reducing these barriers — many of them regulatory in nature — global GDP would increase by 4.7%, by contrast to only 0.7% gain if the focus was just on removing tariffs.

There is no doubt that cutting red tape in this way and with such results is important. But I can’t help wondering whether this really is the key issue in international trade and where does this leave other issues, like the human cost of multilateral commerce? Only last week, Apple discovered that child labour had been used at 11 of its factories (most of which in China) last year. For some time now (at least since 1996), a proposal to introduce and observe internationally recognized core labour standards has been made to the WTO, but there seems to be slow progress on it. Perhaps a good topic for the next round at Davos or any future interviews with WTO officials?

Pascal Lamy’s speech to the Chamber of Commerce in Bangladesh is available here.

An interview with Pascal Lamy in Davos is available here.

To read about the use of child labour by Apple suppliers, please click here.