Arancha González leads the International Trade Center (ITC) - a joint endeavor of the World Trade Organization (WTO) and the United Nations (UN), which provides trade-related technical assistance. Before joining the ITC, González served as the Chief of Staff to the former director general of the WTO, Pascal Lamy, from 2005 to 2013. During her tenure at the WTO, she played an active role in launching the WTO’s Aid for Trade initiative and served as Lamy’s representative at the G-20. Prior to working at the WTO, Gonzalez held several positions at the European Commission, conducting negotiations on trade agreements and assisting developing countries in trade development efforts. Between 2002 and 2004, she was the European Union’s (EU) spokeswoman for trade and advisor to the EU’s Trade Commissioner. Gonzalez has a degree in law from the University of Navarra, Spain, and a postgraduate degree in European law from the University of Carlos III in Madrid, Spain. She came to Ethiopia on October 24, 2013, to participate in the African Union Trade Ministers meeting held in Addis Abeba. For her, Africa can achieve extra growth by facilitating intra-regional trade. But to do just that, she says, a big part of the answer lays in making sure that small and medium enterprises (SMEs) are competitive. In this interview with BINYAM ALEMAYEHU, EDITOR-IN-CHIEF, she discusses Ethiopia’s long-awaited accession to the WTO and the challenges faced by SMEs in Africa, as well as issues related to bilateral trade agreements. Excerpts:
Arancha González leads the International Trade Center (ITC) – a joint endeavor of the World Trade Organization (WTO) and the United Nations (UN), which provides trade-related technical assistance. Before joining the ITC, González served as the Chief of Staff to the former director general of the WTO, Pascal Lamy, from 2005 to 2013. During her tenure at the WTO, she played an active role in launching the WTO’s Aid for Trade initiative and served as Lamy’s representative at the G-20. Prior to working at the WTO, González held several positions at the European Commission, conducting negotiations on trade agreements and assisting developing countries in trade development efforts. Between 2002 and 2004, she was the European Union’s (EU) spokeswoman for trade and advisor to the EU’s Trade Commissioner. González has a degree in law from the University of Navarra, Spain, and a postgraduate degree in European law from the University of Carlos III in Madrid, Spain. She came to Ethiopia on October 24, 2013, to participate in the African Union Trade Ministers meeting held in Addis Abeba. For her, Africa can achieve extra growth by facilitating intra-regional trade. But to do just that, she says, a big part of the answer lays in making sure that small and medium enterprises (SMEs) are competitive. In this interview with BINYAM ALEMAYEHU, EDITOR-IN-CHIEF, she discusses Ethiopia’s long-awaited accession to the WTO and the challenges faced by SMEs in Africa, as well as issues related to bilateral trade agreements. Excerpts:
Fortune: After conducting three rounds of negotiations for its accession to the WTO, Ethiopia is preparing to submit its service offers to members of the WTO. Are you hoping that the accession process will be concluded in 2014?
Arancha González: The short answer would be whenever Ethiopia feels it is ready to do it. The longer answer, on the other hand, will be that any accession is a process.
Accession to the WTO is a process which mirrors the opening up of a domestic economy. If a country quickly opens its economy, it can become a member of the WTO quickly. If it does so gradually, then the process of becoming a member drags on.
For an accession to be successful, the best recipe is to make sure that a nation anchors up its accession to a set of multilaterally agreed rules. The most important thing is that you synergise the accession process with your own view of where you want to go.
Q: According to some political observers, the Ethiopian government is taking time to open up for fear of losing some of its political leverage. How committed do you think the government is to opening up?
It is committed to the accession, I would say. But the difficulty for the Ethiopian government, in my view, is not whether or not it is committed.
The difficult question is rather how it manages the process of opening up with the process of strengthening the industrial base in the country. The government has to work with two parameters.
One is opening up its economy to international competition. This is good, if done in a smart way. That is because it helps to ensure quality, improve standards and ensure there is access to imports. It is also good for consumers because it lowers the cost of purchasing goods.
But all of this can be successful if there is another component, which is a process of making the Ethiopian industry more competitive in the national economy.
What does this mean?
The Ethiopian government has to make sure that if it exposes the industrial sector to greater competition, there is a proper programme to help industries in Ethiopia, most of which are small and medium enterprises, to be more competitive in order to sustain the greater pressure that comes through the opening up of the national economy. Another is to make sure that they receive benefit from the opportunities that come from abroad.
Q: Opening up needs more skills, compliance with global rules and becoming competitive. Even more than that, it needs giving up some sectors. To what extent do you say that the Ethiopian government has met these conditions?
They are met only to a certain extent. That is exactly what the Ethiopian government is engaged in at the moment.
A bigger portion of what Ethiopia can do in the coming years is working on a programme that targets boosting the competitiveness of the economy. I think what they have done in terms of infrastructure is also part of the competitiveness drive.
But you do not build this in one year. You do not build this in five years either. It is a longer term perspective.
Q: One prominent issue in the accession to the WTO is the negotiating capacity of countries. It is natural for these countries to feel weak when they are small. The ITC is also involved in upgrading capacity among African countries. How do you assess the negotiating capacities of countries? Do you feel they are capable of negotiating while still maintaining their safeguards?
If I look back at the first time I came to Ethiopia, which was during the end of the 1990s, and if I compare the capacity of trade negotiators then and now, it has significantly improved. This is because there has been a concerted effort from the side of the international community to ensure that there is training to those who are involved in negotiating.
The WTO spends 20 million dollars every year training civil servants from national governments. The ITC also trains an incredible amount of trade supporting institutions every year. We are improving the negotiating capacity of negotiators, in order to participate meaningfully in any negotiations.
But, having said this, it is pretty obvious that we are far from reaching a point where everyone is embraced. It is a gradual process. We are better than 10 or 15 years ago, but much more remains to be done.
Q: Is Ethiopia benefitting from such initiatives?
Yes, I just spent two hours in the Ethiopian Chamber of Commerce & Sectoral Association (ECCSA). I was discussing with officials about the ITC Reference Centre. It is a centre that contributes to building these capacities. They get materials and resource on trade promotions.
That would be very helpful to them in their negotiating capacity. The answer is very clearly, yes. We are contributing every year with different means and through different products to helping build the capacity of governments, institutions and SMEs.
Q: Certain sensitive sectors often become difficulties in trade negotiation processes. The telecom sector in the case of Ethiopia could be taken as an example. How could countries open them up, when the sectors matter most to them?
In every country that is undergoing the process of accession, or even bilateral negotiations, it is a problem. I myself was a negotiator in Europe and I can tell you that certain sectors are very sensitive.
Agriculture proved very sensitive at the time. So did the automobile industry. This is because these were sectors that were more protected than others, since there is either a vested interest or political interest to protect that sector from international competition.
Ethiopia is no exception. Like every other country, there are sectors of the economy that are more sensitive. Telecommunications is an area that the Ethiopian government is very sensitive about opening up.
Generally, the way it would work is through a process of accommodation on both sides. The principle of the WTO is opening trade. It is by no means trade closing or maintenance of the status quo.
People understand that in this process of trade opening, you have to understand the other party. So you agree to open in a more gradual manner, of course, not fully opening it up. But you assert a certain degree. I do not see anything surprising about Ethiopia’s stance on sectors like telecom.
At the end of the day, what governments need to do is to weigh up the different interests at stake. There is the interest of consumers, that of producers and that of the state.
So, my message is that it is not an impossible thing to do. You certainly can do it. But you have to weigh up the different interests. In any negotiation, it is about explaining to the other side why you draw a red line on the sand and convincing the other party about why you are drawing it and where you are drawing it.
Q: Some opine that it is a matter of ideology and opening up forces countries to cede even their safeguards. Do you agree?
No! I certainly do not agree. The WTO is a sufficiently flexible organisation, housing many different ideologies provided you accept one condition, which is that trade opening is good. That is what unites all members of the WTO.
If you look at their ideologies, some are more conservative, some are more liberal, some are more left-wing and some are more right-wing. In spite of these differences, all fit in to the WTO.
We do not exclude anybody. You have got China, Vietnam, Russia and many others together. Provided you accept that trade opening is good, ideology certainly does not matter. The WTO’s very first article says members believe that trade opening is good for employment, improving living standards and sustainable development. If one does not agree with this, then it is better not to knock at the door of the WTO. But a glance at those who have so far knocked the door reveals that it is not at all difficult to adhere to these principles.
Q: More and more governments in the developing world seem to prefer bilateral trade agreements. Some experts say this trend is outcompeting that of WTO.
Well, I think there is certainly a greater acceleration of bilateral agreements. Where I am not clear is with whether or not this is good for business, SMEs and the like.
Any trade agreement that contributes to levelling the playing field must, in principle, be good for small businesses. But, if these bilateral trade agreements result in scattering up of the playing field, then in my view that is a problem.
And why is it a problem?
The real obstacle to business in today’s world are not tariffs, which are becoming smaller and smaller. The real obstacles are rather non-tariff measures, barriers and certifications.
I hear from many business circles in several countries that their biggest obstacles are regulatory non-tariff measures. If bilateral agreements regulate these non-tariff measures, this is certainly not going to help level the playing field.
This will make the life of SMEs shorter. This is because with bilateral agreements they may have 10 standards to meet.
Is this good news for business?
No, I do not think so. In principle, I support bilateral trade agreements so long as they help to level the playing field. You know, the Chinese have a saying – “The colour of the cat does not matter as long as it catches the mouse”. That’s my view on bilateral agreements.
Q: The SMEs need to sprout and be more competitive. But for this to happen, capacity is crucial. In most African nations, the SMEs are the burden for governments. What is the ITC doing to ensure that SMEs receive their fair share of assistance in building capacity?
We are a unique development organisation in that we provide support for SMEs. We do essentially three things. One is what I call market intelligence.
We map the market for these enterprises; we locate the market opportunities; we indicate the standards and the competitors; we provide them with plenty of information about the market, competitors and standards; we also tell them how prices fluctuate.
We support trade and promotion organisations and we support their associations on the ground. In the Ethiopian context, for instance, it is easier for us to deal with the Chamber since we cannot reach all of the 250,000 SMEs.
Another is working directly with the SMEs. So we work with a group of SMEs in a particular sector in one country to help improve their export competitiveness. Women empowerment, youth employment, improving coffee quality and creating e-platforms to sell products directly to export markets, among others are some of our intervention areas in SMEs.
Q: Although there have been candidates from Africa bidding for the top WTO position, the world has so far not been able to see any African at the helm of the WTO. How representative do you think is the leadership of the WTO?
If I look at the head of the WTO, it has traditionally been from developed countries. But we have also have had two developing countries.
We are now on the second one, from Brazil. Before that it was Asia. But it is true that there has never been a director general coming from Africa.
There were two candidates this time around. They were very good candidates. One was from Ghana and one from Kenya. One is a man and the other was a woman. But they did not make it to the final.
At the end of the day, you can see that the process of selecting a WTO director general is a member-driven process. It ends up where the members want it to end. Time has progressed and that is a good sign.
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