How your country can achieve prosperity through trade
Trade with the rest of the world can have many positive effects on your country’s development. But for trade to lead to increased prosperity, political cooperation, complementary policies and a clear regulatory framework are required. The National Board of Trade Sweden can offer assistance with both knowledge and support in practical implementation.
Trade is good for a country’s development in several ways. Increased trade can lead to stronger growth, reduced poverty, and reduced dependence on aid. But this requires other parallel efforts to facilitate cross-border trade and to ensure that trade does not have major negative effects on individual groups.
Different policy areas need to work together
Trade policy alone cannot create prosperity in a country. Trade policy decisions affect other policy areas such as agriculture, transport, employment, education, and health – and vice versa. Therefore, to prevent conflicting policies and regulations, coordination and cooperation within the government are required. Sometimes, trade can have negative effects on certain groups. This may need to be addressed through specific initiatives and support, such as investments in infrastructure, education, tax systems or social safety nets.
For the same reason, it is important to regularly evaluate reforms, to see what the impact of policy has been and whether adjustments are needed. The aim is not to satisfy everyone but to ensure that the government makes informed choices based on a comprehensive analysis that clearly shows how different areas affect each other. The analysis also needs to be communicated to citizens. If you have such a process in place, you will have a balanced trade policy, which will lay the foundations for inclusive growth.
Include many in the design of trade rules
Trade that contributes to sustainable development and increased prosperity is largely dependent on the design of trade rules. For example, it may be a matter of regulations regarding product labelling, animal husbandry, food handling or origin labelling. To ensure that the rules that are developed correspond to and are adapted to the needs of different parties, a broader analysis of the interests of different parties and how they are affected by different rules is also needed. It is commonly known as a Regulatory Impact Assessment, RIA. The sooner you consult with those who are impacted, the better. It is a good idea to involve both business and civil society and a wide range of different groups: small and large companies, entrepreneurs, consumers, workers, women, and men, young and old, and so on. It will help you answer a series of questions that are required to make well founded RIA: Is there a need for a new rule or are there other solutions? Who is affected by the new rule and how? What will it cost for those affected to adapt to the new rule? In dialogue with those affected, you can create the most appropriate rule possible. Consulting more people also increases support for the introduction of new rules.
Clear rules that promote trade
With properly designed trade policies, trade can produce revenue for the public purse in the form of duties and taxes. Commerce can also provide access to a cheaper and better range of goods and services for consumers and domestic industry. But for that to happen, your country’s trade rules need to be designed to facilitate trade, rather than create barriers. If a company from another country does not know what applies when trading with your country, it will be difficult to do business. The uncertainty can also lead to unnecessary costs for companies in your country, which at worst, can put companies out of business. For citizens in their own country, it is also a matter of democracy to know what rights and obligations apply at any given time. A rule needs to be:
- Clear It should not be possible to misinterpret the trade rules of your country, either for importing or exporting companies in your country.
- Inclusive A rule should be developed in consultation with those who will have to adapt to and be affected by it. This can involve stakeholders in all areas within society, both domestic companies and companies in other countries.
- Predictable A rule should not be changed suddenly and without warning.
- Transparent There should be accessible and comprehensible information about a rule, preferably available on a website. It must be clear what it means, when it entered into force and for how long it is valid.
A comprehensive RIA will assist in achieving all of the above. Significant benefits can also be gained from the use of international standards and the recommendations contained in the WTO TBT Agreement. If your country has the same technical requirements for goods as other countries, you will make it easier for potential trading partners and your country will be a more attractive counterparty.
WTO – a common global regulatory framework for trade
One way to align your country’s trade rules with international standards is to be a member of the World Trade Organization (WTO). The WTO has more than 160 member countries, with common basic principles, rules, and processes to ensure that trade relations between the companies that operate within these countries run as smoothly as possible. There are many different agreements under the umbrella of the WTO. One of the agreements that works best in practice is the WTO Agreement on Technical Barriers to Trade (Technical Barriers to Trade (TBT) Agreement) where technical rules for trade between members are regulated. It also contains standards and procedures for conformity assessment. The WTO requires that the trade rules of its member countries are transparent both for companies in its own country and for other WTO members. The aim is to treat all companies fairly. As a member of the WTO, a country has an obligation to inform its trading partners of new rules (preferably accompanied by a RIA) that may have a significant impact on trade. This should preferably be done before the new rules are introduced. Overall, WTO membership means that your country becomes part of a common global regulatory framework and structure which can deal with trade barriers, problems and improvements. The WTO also has its own dispute settlement mechanism – WTO Dispute Settlement Gateway – making it easier for different trading partners to address barriers to trade on an equal footing.
The National Board of Trade can provide support in national trade policy
The National Board of Trade can provide support in several different ways in your country’s national trade policy. Among our collaborations there are several examples of how we do it. For example, it may entail the use of supportive trade policy assessments, fostering dialogue between different actors in society or establishing structures to create rules that are as appropriate as possible. We can also contribute with educational efforts in trade policy through the programme Trade Academy Trade Policy.