TRADE IMPACT FOR GOOD
Annual Report 2018 The International Trade Centre is the only international agency fully dedicated to the development of micro, small and medium-sized enterprises. Working with partners to strengthen the competitiveness of MSME exporters, we help to build vibrant, sustainable export sectors that provide entrepreneurial opportunities, particularly for women, young people and poor communities.
II INTERNATIONAL TRADE CENTRE © shutterstock.com Trade impact for good
ANNUAL REPORT 2018 1 Contents
Foreword 4 The Global Goals are ITC’s goals 6 The global context 8
ITC INTERVENTIONS: DOING MORE, BETTER 12 Providing Trade and Market Intelligence 16 Building a Conducive Business Environment 26 Strengthening Trade and Investment Support Institutions 34 Connecting to International Value Chains 40 Promoting and Mainstreaming Inclusive and Green Trade 48 Supporting Regional Economic Integration and South-South Links 60
CORPORATE RESULTS 66 Corporate governance and structure 68 Evaluation and performance 70 Financial overview 72 Human resource management 75 ITC’s Innovation Lab 77 Communication and outreach 77 ITC events 79 Partnering for good trade 81
APPENDICES 90 APPENDIX I: ITC focus areas and programmes 92 APPENDIX II: ITC technical cooperation by region and focus area 95 APPENDIX III: ITC country and regional projects and programmes by country 102 APPENDIX IV: ITC needs assessment and project design in 2018 by region 110 APPENDIX V: Profile of ITC staff 113 APPENDIX VI: Distribution of assignments by nationality and gender of experts, 2018 114 APPENDIX VII: Schedule of voluntary contributions to the ITC Trust Fund 118
2 INTERNATIONAL TRADE CENTRE Case studies
PROVIDING TRADE AND MARKET INTELLIGENCE 20 22 24 Export Potential Map: Trade obstacle alert Rules of Origin Making trade helps traders in Facilitator: Making it promotion West Africa save easier for MSMEs to more effective time and money use trade agreements
BUILDING A CONDUCIVE BUSINESS ENVIRONMENT 30 32
Bolstering the business Facilitating trade environment for trade-led transparency and development in Sri Lanka reforms in Mali
STRENGTHENING TRADE AND INVESTMENT SUPPORT INSTITUTIONS 36 38
Supporting African export promotion agencies to Better support for improve services for MSMEs Mongolian exporters
CONNECTING TO INTERNATIONAL VALUE CHAINS 42 44 46 Alliances for Action: Connecting Drawing foreign Catalysing investment Afghan businesses venture capital into in the Caribbean to international Uganda’s tech sector coconut industry value chains
PROMOTING AND MAINSTREAMING INCLUSIVE AND GREEN TRADE 53 56 58 Financing for Leveraging technology SheTrades Invest: entrepreneurship and trade to create jobs Catalysing financing and job creation in for refugees and host for women-owned The Gambia communities in Kenya businesses to scale up
SUPPORTING REGIONAL ECONOMIC INTEGRATION AND SOUTH-SOUTH LINKS 62 64
De-risking diversification into MSMEs from developing high-value export crops for countries make inroads farmers in Rwanda into China’s market
ANNUAL REPORT 2018 3 Foreword
For the open global economy, and for rules-based Despite the headwinds facing trade today, we are convinced multilateral cooperation more generally, 2018 was a that ITC’s approach – equipping businesses to make the complicated year. most in practice of whatever market opportunities they enjoy on paper – is especially relevant in a scenario where some Protectionist rhetoric and threats turned into unilateral action countries are raising trade barriers even as others lower on a scale large enough to weigh on cross-border them. Our focus on MSMEs, which employ the vast majority commercial activity. Trade remained a favoured scapegoat for of people, makes more sense than ever at a moment when populists, which exacerbated geopolitical tensions and equitable growth has become a burning political issue in diminished prospects for international economic cooperation. developing and developed countries alike. Our consistent Yet a closer look revealed several bright spots. Many emphasis on empowering women in the global economy is countries pushed ahead with bilateral and regional trade not simply a moral imperative with transformative integration, perhaps none with greater potential significance implications for households’ future prospects – it is a than the African Continental Free Trade Agreement. practical necessity for countries to realize their full Women’s economic empowerment and youth development potential. entrepreneurship have never been higher on the In 2018, ITC worked with governments from West Africa to international policy agenda. Cross-border data flows Sri Lanka to improve the broader business environment for continued to boom; while the digital revolution does raise MSMEs to trade. We refined existing market intelligence political challenges related to fair competition and tools and pioneered new ones to enable governments to employment creation, it has also created new ways for better target trade support and empower businesses to businesses to connect to international markets irrespective take advantage of bilateral and regional trade agreements. of their size or location. We supported governments’ efforts to better understand With little over a decade left until 2030, our prospects of and tackle the constraints facing women entrepreneurs in attaining the Sustainable Development Goals (SDGs) will the world economy, building on the Buenos Aires rest on reversing the negative trends and building on the Declaration on Women and Trade. And we empowered positive ones. In the absence of more effective international entrepreneurs and companies to tap into international cooperation we will have fewer tools to tackle the next markets from locations as improbable as rural Afghanistan economic downturn, and efforts to tackle climate change and refugee camps in Kenya. will be compromised from the outset. Ending extreme ITC’s mandate is to make trade happen. This report is about poverty will be impossible unless marginalized countries, how we did so in 2018. We delivered a record $64 million of communities and small businesses are empowered to extra-budgetary expenditures on technical assistance, connect to the economic mainstream. capacity building and innovative analysis. This was 38% The International Trade Centre (ITC) worked on both of these more than in 2017, and nearly 15% above the previous fronts in 2018. Our public diplomacy continued to make the high-water mark attesting to strong demand for ITC’s case for positive-sum international cooperation, arguing that services. Despite a constrained financial environment for interdependence means the only outcomes for countries are international development cooperation, ITC reached funding ‘win-win’ or ‘lose-lose.’ Our work on the ground to connect agreements worth $165 million with a wide range of micro, small and medium-sized enterprises (MSMEs) to partners, a sign of the confidence and trust they have international markets provided concrete proof of how good placed in us to deliver value for money in pursuit of our trade contributes to sustainable and inclusive development. shared goals. At home, we invested in streamlining Even in some of the world’s most difficult market management processes, building staff skills, fostering environments, ITC tools and support helped people and diversity and enhancing our ability to scale up for results businesses use trade to create jobs and raise incomes, and impact. particularly for women and young people.
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1. ITC Executive Director visiting a horticulture farm in Lesotho 2. Networking and informal sessions at SheTrades Global 2018, Liverpool 3. Launch of SheTrades Zambia 4. Private sector event at Conference on Afghanistan, United Nations, Geneva
Within this report you will find key results from each of the 15 In the years ahead ITC’s work will continue to focus on the programmes into which ITC organizes its interventions. A countries and communities at the bottom of the pyramid, dozen case studies from the six focus areas of our work which is where we will either achieve the SDGs or fall short. illustrate some of the different ways ITC is having impact on We look forward to working with you to keep delivering trade the ground, from supporting Sri Lanka to meet its ambitious impact for good. trade objectives to attracting Japanese venture capital into tech startups in Uganda. The cases illustrate how large- scale projects have served as multipliers for ITC’s impact, by allowing us to simultaneously address multiple constraints on would-be traders. Three ‘ITC Innovates’ stories describe promising new initiatives such as SheTrades Invest, which aims to catalyse investment into women-owned businesses in developing countries. Arancha González Executive Director One recurring theme within this report is the use of online mechanisms, whether for MSMEs to report trade obstacles to the concerned authorities, access information and documents for cross-border formalities or connect to potential buyers elsewhere in the world. Another is the growing importance of South-South links: enabling businesses in least developed countries to sell into growing markets such as China and India accounts for a growing part of ITC’s portfolio.
ANNUAL REPORT 2018 5 The Global Goals are ITC’s goals
The Sustainable Development Goals (SDGs) represent a ITC contributes to the Global Goals via its support to universal, global development agenda for all United Nations micro, small and medium-sized entreprise (MSME) international member states and development actors until 2030. competitiveness for inclusive and sustainable growth through They consist of an interlinked set of 17 goals supported by value addition, trade, investment and global partnerships. It 169 targets in economic, social and environmental has systems in place to monitor results and assists the global development dimensions. ITC directly supports 10 SDGs. community in tracking advances towards achieving the SDGs. A code of conduct guides ITC interventions.
TRA E O U AREA
Providing trade and T market intelligence Building a conducive business environment
Strengthening trade and investment support institutions E Connecting to international value chains
Promoting and mainstreaming TRA E RELATE NEE TRA E RELATE inclusive and green trade P
Supporting regional economic integration and South-South links
How ITC projects link to individual SDGs
19% 13% 13% 12% 9% 9% 9% 16%
6 INTERNATIONAL TRADE CENTRE GOAL 1
Reduce the proportion of men, women and children of all ages living in poverty Create sound policy frameworks based on pro-poor and gender-sensitive development strategies
GOAL 2
Double agricultural productivity and incomes of small-scale food producers, in particular women Ensure sustainable food production systems and implement climate-resilient agricultural practices
GOAL 4
Ensure youth and adults have relevant skills, including technical and vocational skills, for decent jobs and entrepreneurship
GOAL 5
Ensure women’s full and effective participation in economic life, with equal opportunities for leadership at all levels of decision-making Enhance the use of enabling technology to promote the empowerment of women
GOAL 8
Achieve higher levels of economic productivity through diversification, technological upgrading and innovation Promote development-oriented policies that support productive activities, decent job creation and entrepreneurship Achieve full and productive employment and decent work for all women and men, including young people Substantially reduce the proportion of youth not in employment, education or training Implement policies to promote sustainable tourism that creates jobs and promotes local culture and products Strengthen the capacity of financial institutions to encourage and expand access to financial services for all Increase Aid for Trade support for developing countries, in particular least developed countries (LDCs)
GOAL 9
Improve the access of small-scale enterprises to financial services, and increase their integration into value chains and markets Support domestic technology development, research and innovation in developing countries
GOAL 10
Achieve and sustain income growth of the bottom 40 % of the population Promote the social, economic and political inclusion and empowerment of all Implement the principle of special and differential treatment for developing countries, in particular LDCs
GOAL 12
Achieve the sustainable management and efficient use of natural resources Encourage companies to adopt sustainable practices and integrate sustainability information into their reporting cycles
GOAL 16
Support effective, accountable and transparent institutions at all levels Ensure responsive, inclusive, participatory and representative decision-making Ensure participation of developing countries in the institutions of global governance
GOAL 17
Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system Increase exports of developing countries, in particular with a view to doubling LDCs’ share of global exports Realize timely implementation of duty-free and quota-free market access on a lasting basis for all LDCs
ANNUAL REPORT 2018 7 © shutterstock.com
The global context
World trade slows in 2018 On the other hand, ongoing bilateral talks between Washington and both Beijing and Brussels offered hope that the scope of trade restricting measures would be constrained and even World trade grew by 3.5% in 2018, a fall from 5.4% in 2017, reversed. The United States-Mexico-Canada Agreement, reflecting the increasing headwinds facing global growth as signed by the three parties in October, is meant to supersede well as the trading landscape. the 1994 North American Free Trade Agreement. Global merchandise exports expanded by an estimated Many governments have pushed ahead with bilateral and 3.2% in 2018, compared to 5.0% in 2017. Developed regional trade agreements. Notable among these is the economies saw exports grow by 2.2% and imports rise by Comprehensive and Progressive Agreement for Trans- 2.6%. The figures for developing economies were 4.4% and Pacific Partnership (CPTPP), which entered into force at the 4.1% respectively. end of December with a chapter on digital trade as well as Global services trade grew by 7.7% in 2018, almost two and one intended to help micro, small, and medium-sized a half times faster than global merchandise trade. Growth in enterprises (MSMEs) take advantage of the resulting trade cross-border services trade was driven by a 10% expansion opportunities in 11 Pacific Rim markets. An EU-Japan trade in services related to merchandise, such as maintenance agreement moved towards entry into force, with a formal for aircraft engines. signing in July and ratification by both parties by year’s end. Talks on a Regional Comprehensive Economic Partnership Global gross domestic product (GDP) grew by 3.6%, only involving many of Asia’s biggest economies ‒ China, India, very slightly more than global trade. This continues a trend Japan and Australia, as well as the Association of Southeast since the 2008-09 financial crisis that has seen trade grow Asian Nations (ASEAN) ‒ continue to move forward. at about the same rate as overall economic output, after decades during which trade far outstripped output growth. At the multilateral level, the World Trade Organization (WTO) in 2018 continued to grapple with the prospect that its The policy context for global trade in 2018 was marked by a dispute settlement function, specifically its Appellate Body, shift from protectionist rhetoric to unilateral action. The would be impaired by a deadlock making it impossible to United States imposed tariffs on several of its leading trade replace retiring members. Disagreements revolving around partners, prompting retaliation on substantial portions of the WTO’s ability to protect intellectual property rights, and their respective bilateral trade. the role of subsidies, are challenges that could come to a Meanwhile, the United Kingdom’s impending departure head in 2019. At the same time, however, governments built from the European Union will likely entail a reversal of on the mandate from the 2017 ministerial meeting in Buenos decades of integration into the EU single market. Brexit will Aires to curb fisheries subsidies, discuss e-commerce have implications for the UK’s commercial ties with duties and encourage women’s economic empowerment. developing countries, which in many cases were anchored in trade agreements that those countries had with the EU.
8 INTERNATIONAL TRADE CENTRE Index of world export volumes Growth rates Index (2005 100) Export growth in volume terms (%) Developed countries Developing countries 200 20 0
1 0 180
10 2 0 1 0