Expanding markets and trade
Trade is the lifeblood of global economies. Trade is a stimulus for growth and productivity, and allows a country to expand its horizons beyond its national boundaries. Trade has a direct impact on poverty: on average, an increase in trade volumes of 10% will raise incomes by 5%. Countries which miss out on the benefits of global trade are locked out of opportunities to profit from international expertise, low cost production inputs and much needed technology.
The opportunities to improve the lives of poor people through trade are huge: in Vietnam, export-led growth rates of 7-8% reduced poverty rates from 58% in 1993 to 16% in 2006. There are many prospects to open up global and regional trade further to benefit developing countries. At present, Africa accounts for just 3% of global trade. African countries trade, on average, just 10% of their goods with each other, compared to 65% between European countries.
Reducing the costs of trading
The UK is committed to reducing the costs and time taken to trade in developing countries by collaboration with governments and economic communities. DFID’s new African Free Trade Initiative will support integration and provide technical expertise to unlock issues that continue to hold back economic growth across the region.
Our Regional East Africa Integration and TradeMark East Africa programmes aim to achieve a reduction in the average trade transport costs in East Africa through better border management by 5-10%, and agree common procedures across East African countries for transport and logistics.
In Chirundu, a border between Zambia and Zimbabwe, DFID supported the creation of a ‘one-stop border post’ to streamline customs’ procedures and cut red tape. It will take an anticipated three hours instead of three days to cross the border. In Sierra Leone DFID support is helping to automate customs clearing procedures to reduce waiting times from six days to two days by 2012.
Opening markets
The Government’s recent White Paper ‘Trade and Investment for Growth’ marked a redoubling of DFID’s efforts to open global market opportunities to developing countries. We will press for EU preference schemes and trade agreements to be reformed in ways that enhance opportunities for trade for developing countries. The UK will continue to lobby within the G20 countries to provide 100% Duty Free Quota Free market access for Least Developed Countries, estimated to be worth up to $7 billion a year for their exports.
Raising the bar on working conditions
DFID is committed to improving working conditions for people in developing countries, often working in international supply chains. We provide backing to both the Ethical Trading Initiative (ETI) which drives better working conditions for 8.6 million workers in 40,000 supplier companies, and Fairtrade International which ensures that farmers receive fair prices for their products and workers receive better wages. DFID has established the Responsible and Accountable Garment Sector Challenge Fund which is working in Bangladesh, India, Nepal and Lesotho to stimulate and encourage better working conditions, particularly for female workers, in export garment factories.
Creating and sustaining market linkages
It is challenging for smallholder farmers to access overseas markets because of the relatively small quantities produced and the demanding quality standards required. In Mozambique exports of fish are an important source of income. DFID is helping the industry to maintain its EU standards accreditation, thereby safeguarding 70,000 jobs.