Goal 1 of the United Nations (UN) Sustainable Development Goals (SDGs) is to end poverty in all its forms everywhere. There has been some progress – global poverty rates have been cut by more than half since 2000 and most regions have seen a decline in poverty. However, according to the UN, 783 million people still live below USD 1.90 a day and there are millions more who don’t make much more than this. Despite global growth forecasts, the goal of ending extreme poverty by 2030 looks unattainable.
Progress has also been uneven and is sputtering in smaller developing countries. And many of these countries are more vulnerable to threats from climate change as well as from inequality, not to mention the impact of the Fourth Industrial Revolution. Countries and companies that are not ready to embrace or do not have the skills to leverage the new technologies of the digital age will get left behind.
Obstacles to progress
According to the World Bank Group and the World Trade Organization (WTO), trade can help reduce poverty in developing countries and indeed has been a significant contributor. A recent report by the two organizations, Trade and Poverty Reduction: New Evidence of Impacts in Developing Countries, presents case studies that demonstrate how trade has helped to reduce poverty and highlights the obstacles to progress, such as working in the informal sector and gender inequality, among others.
Khemraj Ramful, a senior adviser on export quality management at the International Trade Centre (ITC), acknowledges that while several developing countries have over the past few decades successfully tapped into global markets and used trade to drive rapid growth, increased value addition and poverty reduction, many other countries have not. “These countries remain relatively marginal actors in international trade, supplying raw materials, if anything, to international markets. Faster growth and poverty reduction in these countries will be essential to eliminating extreme poverty and achieving the SDGs.”
There is no doubt that all countries engaged in trade stand to gain, although – in an era of geopolitical uncertainty, trade imbalances and complex supply chains – these gains are not distributed evenly. Take the small island developing states of the Caribbean, which have a long history of trying to overcome a number of institutionalized obstacles and challenges when it comes to trade.
Combating constraints
Deryck Omar is Chief Executive Officer at CROSQ, the regional organization in the Caribbean for standards and quality. He points out that the region is facing an uphill battle in tackling some of the technical barriers to trade head-on. These difficulties are caused by constraints such as “high energy prices, lessened fiscal space and increasing transport costs among many of the islands, vulnerability to natural disasters, and a quality infrastructure that understandably develops at a slower pace to most of the developed world”.
Of course, every country develops at its own pace and this is where international standards can play a vital role. In each of the 15 CARICOM (Caribbean Community) member states there is at least one national body or authority that oversees the development of national quality procedures and systems designed to assist and enhance the country’s ability to trade.
Most of the region’s exports in goods are to the United States, the European Union and other CARICOM countries. In recent years, Omar says there has been a move to strengthen these relationships by ensuring goods and services can adhere to the relevant standards and regulations required for trade. “Increasingly, the economic operators of trade within the Caribbean and extra-regionally are demanding that imported goods be certified to international or national standards before entry is allowed, as a means of adhering to WTO rules, as well as safeguarding the health and safety of the region’s consumers,” he says.
Forming networks
The regionalization of international standards to better fit the context of developing countries is not new to CARICOM countries. CROSQ has been forming networks with international organizations such as ISO, the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE), the International Code Council (ICC) and others.
This trend is continuing elsewhere. In Africa, for instance, the anniversary of the signing of the AfCFTA (African Continental Free Trade Agreement), the biggest regional trade agreement, was celebrated in March this year. Barely a month later, on 29 April, the AfCFTA secured the threshold number of 22 ratifications allowing for its entry into force by end of May. Eve Gadzikwa, Director-General of the Standards Association of Zimbabwe (SAZ) and President of the African Organisation for Standardisation (ARSO), says that coupled with the ratification by, currently, 24 of the potential 55 countries, this signifies a new era for Africa. “Celebrating this milestone marks the realization of a number of trends and challenges which present enormous trade opportunities for the continent. International standards will form the basis on which trade will be facilitated under the CFTA,” she says.
These challenges range from a deeper understanding of quality and safety standards under AfCFTA, to national trade policies as they relate to global trends and quality infrastructure gaps to support conformity assessment of traded goods. Gadzikwa says emerging trends to meet these challenges and improve trade include the digitalization of cross-border trade, promoting intra-African trade to meet the needs of Africa’s 1.6 billion population, and enhancing partnerships between national standardization bodies, business membership organizations and regional economic communities.
Export opportunities
Africa is endowed with many resources, which represent many export opportunities to the global market. As in other regions of the world, Gadzikwa points out that within the continent, all 55 countries are at different stages of development. She emphasizes that “standards are the means by which a level playing field can be achieved and maintained under a single market to promote intra-African and global trade”. She further observes that, “small to medium-sized organizations also stand to gain from a more inclusive approach to standardization to ensure that they contribute to economic growth on the continent”.
According to Khemraj Ramful, of ITC, the lack of harmonization of technical regulations across African countries could impede businesses’ ability to tap the maximum benefits of the continental free trade agreement. He says: “This is where ARSO and national standards bodies can play a more prominent role, by promoting the use of harmonized standards as the basis for technical regulations.”
For Gadzikwa, many benefits from adopting international standards would include removing unnecessary duplication of efforts, joint harmonization on sector-based priorities, and harmonized standards under the AfCFTA. The mutual recognition of standards, licensing and certification of service suppliers will make it easier for businesses and individuals to satisfy the regulatory requirements of operating in each other’s markets. “Promotion of sustainability standards under the EcoMark Certification Scheme of the African Organisation for Standardisation is gaining traction as a means of eco-labelling and branding agricultural, tourism, fisheries and forestry products destined for the international market,” Gadzikwa says.
Regional value chains
She adds that the easing of trade between African countries is a priority. Intra-African trade will facilitate the establishment of regional value chains in which inputs are sourced from different countries to add value. These products can then be exported externally or circulated in the African market. The benefits of digitalization are also becoming more obvious and “trade in Africa under AfCFTA is waking to the realization of the increased trend towards digitalization”.
The private sector is also important and Gadzikwa says that entrepreneurs, such as the owners of MSMEs (micro, small and medium-sized enterprises) and founders of big companies, as well as providers of services that will be trading across borders must adapt quickly to the new digital conditions or face extinction.
As in Africa, there has been an increasing focus in the Caribbean region on intra-regional trading relationships. This is particularly the case with regional bodies like the Forum of the Caribbean Group of African, Caribbean and Pacific States (CARIFORUM), which includes all the CARICOM member states and the Dominican Republic. Omar says: “These relationships with CARIFORUM are seeing more opportunities for training, trading and information exchanges across countries, as well as efforts at equivalence for standards and conformity assessment systems in mutual areas of interest which could benefit the countries involved.”
Quality infrastructure
According to both Omar and Latoya Burnham, CROSQ’s Technical Officer for Communication and Information, recognizing also that trade and investment opportunities are arising to expand into non-traditional service areas, businesses are increasingly looking for certification and accreditation of services and their processes.
International standards are critical, Burnham says, to ensure that processes, products and services are fit for purpose, interchangeable, compatible, allow for better utilization of resources and create better communication across borders and in numerous settings.
Changing mindsets can be key to successful take-up. Burnham adds: “Standards, while good for trade, often prove challenging to implement to allow locally produced products access to markets beyond their own. In this vein, education about and access to quality services becomes critical, even while it is acknowledged that this same access can at times be difficult.” The region is now concentrating on good regulatory practices through a funded TradeCom II programme targeting members of the African, Caribbean and Pacific Group of States (ACP) “to educate and train regulatory officials as well as the private sector in the importance of this approach to smoothing the way for how businesses operate with the overall aim of accessing greater markets”.
The just-released CROSQ Regional Quality Policy, commonly called the RQP, is a perfect example, Omar says, of how these concepts can be married with quality to produce the kind of multi-sectoral approach needed with an orientation towards increasing trade for developing countries of the Caribbean.
Harmonized approach
The harmonized approach, he says, that has been perfected in the development of international standards is a process from which the developing countries of the region can learn “as we attempt to harmonize many of our procedures and processes, while still attempting to adhere to the guidelines that govern trade”. He goes on to say that harmonization and equivalency are key steps as countries recognize that their small size dictates that there is power in operating cohesively rather than separately.
Ramful agrees that compliance with international standards is a factor in the ability of businesses to tap into international markets. “Business surveys conducted by the ITC in developing countries reveal that more than 50 %, and in some countries as much as 70 %, of the difficulties enterprises face while exporting are due to the technical requirements of the destination market,” he says. These requirements include the need to comply with health and safety standards as well as the associated conformity assessment procedures. In this context, many of ITC’s projects in developing countries include both a component for institutional support in the field of standardization as well as assistance to enterprises for compliance with market-relevant standards.
Joseph Wozniak, who manages the ITC’s Trade for Sustainable Development Programme, says standards also present an opportunity. “Compliance and certification can open the door to new markets and to valuable price premiums under the right conditions. ITC has developed free online tools such as the Sustainability Map that allows enterprises worldwide to compare and contrast 250 voluntary or private standards demanded by private-sector buyers, and to complete self-assessments against these standards.”
Ramful cites three ways for developing countries to tap the full benefits of international standards in promoting trade:
- Developing countries should play a more active role in the development of international standards. These standards should take into consideration the views of the stakeholders in developing countries.
- International standards should be more accessible to enterprises, especially the MSMEs that account for the vast majority of jobs in developing countries as in developed ones.
- Well-designed standards will not by themselves create a level playing field. National members of the international standards bodies must accompany work on standards development with efforts to promote standards to domestic stakeholders while minimizing compliance burdens.
He concludes by saying: “At ITC, we have seen that enterprises supported for compliance with standards have improved their access to foreign markets. Not only has this led to higher revenues for these firms, it has motivated other companies to follow suit.” The knock-on effect for society is obvious. The World Poverty Clock [1] is ticking, but international standards can help to ensure that time does not run out for many.
