By Mr. Xiangchen Zhang, Deputy Director-General, World Trade Organization (WTO)
South-South cooperation — or cooperation among developing economies — holds a special place in my heart. Seven years ago, I had the honour to be involved in designing and establishing the Institute of South-South Cooperation and Development at Peking University and to unveil it together with Professor Lin Yifu. This July, I received an invitation to the Institute’s commencement ceremony, where I had the honour to share my personal experiences and aspirations for the future of South-South cooperation.
I am deeply convinced that South-South cooperation holds tremendous promise for sustainable development. I often draw inspiration from Professor Lin Yifu’s theory on development economy, which underscores the importance of considering the applicability of economic theories within specific environmental contexts. This theory resonates with a number of recommendations that emerged as early as 2006 through the Aid for Trade Task Force, acknowledging the significant value of technical cooperation among developing economies, and its effectiveness in delivering tangible results due to the shared experiences and understanding of challenges faced.
The Task Force also emphasized the importance of harnessing the strengths of South-South partners to generate trade growth and achieve development objectives. The most recent Aid for Trade Monitoring and Evaluation exercise underlined this message, stressing the increasingly significant role that South-South cooperation can play in supporting growth in developing and least-developed country members of the WTO.
A recent webinar on Aid for Trade highlighted the substantial development potential of tapping into the growth of South-South trade and triangular cooperation among two or more developing economies and a developed economy or multilateral organization.
Experts shared examples of the tangible impact of South-South cooperation in promoting trade growth and attaining the United Nations’ Sustainable Development Goals (SDGs). The expertise, resources and collaborative frameworks offered by South-South partnerships can help developing economies to overcome financial barriers and accelerate the transition to a more sustainable and resilient future.
South-South trade accounts for an increasing share of global trade. It expanded from 17 per cent of global trade in 2005 to 28 per cent in 2021, and since 2019, the value of South-South trade has surged by approximately 50 per cent. According to UNCTAD, Latin America has seen an increase of about 45 per cent, while South Asia and East Asia have witnessed remarkable growth of over 65 per cent. This trend reflects the increasing involvement of South-South partners and of how they are diversifying trade beyond the two largest developing economy markets of China and India.
Open, rules-based trade is crucial to ensure that fast-growing developing economies share their growth with other developing economies. This approach adds to the resilience of the multilateral trading system, making it more inclusive.
In a similar vein, Director-General Ngozi Okonjo-Iweala has highlighted how re-globalization — or increased international cooperation — can empower developing economies to explore growth opportunities, move up the value chain and diversify their exports. It is particularly encouraging to see that Africa’s exports have been showing positive signs of diversification over the last decade.
However, developing economies are also facing pressing challenges, such as the after-effects of the COVID-19 pandemic, ongoing conflicts and the impact of climate change, all of which are threatening food and energy security. To help address these challenges, the new Aid for Trade programme will play a crucial role in providing a platform for collaboration, knowledge-sharing and collective action.
The recent Aid for Trade Monitoring and Evaluation exercise provided valuable insights into the growing role that South-South partners play in supporting sustainable development initiatives. These partnerships are helping to address SDG 12 (“responsible consumption and production”), SDG 13 (“climate action”) and SDG 15 (“life on land”), covering issues such as the green economy, the circular economy, renewable energy and waste management.
South-South cooperation also facilitates access to financing and investment opportunities for renewable energy projects, enabling developing economies to access financial resources and attract the private sector.
It is imperative that developing economies participate fully in WTO negotiations aimed at improving trade rules. Through South-South cooperation initiatives, I hope that developing economies can utilize their mutual knowledge and experiences to fully harness the potential of the multilateral trading system, allowing them to reap the immense benefits of trade for the well-being of their people. Let us work together to forge stronger partnerships, deepen engagement and work towards a more inclusive and prosperous future for global trade.
Originally posted by the World Trade Organization (WTO). To access the original article, please click here.