Tuesday, 7 October 2014

Amanda Long: Viewing trade from the consumer perspective will alter priorities

Last week our Director General Amanda Long attended the WTO Public Forum 2014 to take part in the debate, ‘Why trade matters to everyone?’ She examines what trade would look like if consumers were put at the heart of the process. 

I very much welcome the WTO raising the question of ‘Why trade matters to everyone’. It is an important discussion because, all too often, when people talk about the benefits of trade the neglect to genuinely consider consumers.

After all, ultimately the point of trade is consumption. Consumers are the largest group in the economy and without consumers there would be only limited trade.

So what would trade look like if the primary aim was to ensure that consumers benefit from it?

Of course consumers want choice and value.

International trade and investment have contributed massively to improving choice and value for consumers - not just through access to products and services – but also by increasing competition and spurring innovation in domestic markets.

Of course this is a statement that we all roll out on occasions like these, but we say it because it is true. From the quality of coffee on my local high street to the cost of phone calls in Africa – international trade and investment has benefited consumers.

But if these benefits are going to continue to flow to consumers, we need to keep promoting market access and – importantly - tackle the corruption and lack of competition that can prevent the benefits of international trade being passed to consumers.

However it is naïve to say that consumers are only interested in choice and value. The classical view of the one dimensional, so called ‘rational’ consumer, is far too simplistic.

Consumers also want to be able to trust the products and services they buy and the companies that provide them.

As all successful companies know, earning consumer trust is hugely important. We now need to understand the role of trust in building a solid and respected trading system and find ways to promote trade whilst respecting consumers’ needs and concerns.

Consumers have legitimate interests and concerns that – in their eyes - are as central to value as the cost of a product. We need to think about the information consumers are given about a product such as: the safety of the product; public health; or environmental impact (examples include: GM labelling, nutrition labelling, or warnings on cigarette packaging).

In many cases, national and regional regulations that reflect these consumer interests and concerns have been developed over many years and through heated national debate.

They are important to consumers and should not just be seen as “barriers to trade” that can be removed through international negotiations.

Increasingly trade negotiations are about behind-the-border, regulatory measures. In entering the realm of regulatory politics we need to tread carefully.

Of course there is a tension – companies want harmonisation to ease trade, but what about harmonising upwards on issues of genuine consumer interest such as food safety or labelling?

This is how those championing trade will build consumer trust.

How we consume and what we consume is changing.

Technology is now a much larger proportion of our consumption budgets: computers, smart phones, satellite television, broadband packages: digital products that weren’t available to consumers a generation ago. To varying degrees this is true in every region of the world.

Digital innovation is changing so much of what we do, and how we do it, that it has to be part of this discussion. Research (by the economists Andreas Lendle and Pierre-Louis Vezina) shows that technology-enabled trade does not benefit from existing trade agreements to the extent traditional trade does.

Let me point out some examples:
  • Consumers are baffled that digital locks mean that the e-book they bought in, perhaps the US, can’t be read on their device when they go back home to the Netherlands for example.
  • The online film that they bought on one device, doesn’t play on another one. Or if it does the user may inadvertently break copyright law.
Of course we need IP rules that balance consumers’ needs with rewards for innovation, but we clearly need to develop fair use rules that allow reasonable consumer behaviour that has limited, if any, impact on company profits.

Digital innovation also has the potential to change trade itself. Technology has enabled domestic trade to flourish and respond to consumer needs in ways that have transformed choice for consumers. Retailers can offer more choice and can be more responsive to consumers than at any time before.

Now cross border e-commerce is gradually taking off – creating the opportunity for consumers to engage directly with producers and retailers around the world.

This development has real potential – perhaps as the most democratic form of trade, with consumers themselves making choices and driving business.

But it is largely ‘under the radar’ for the WTO. It does not fit the mindset many trade negotiators have of trade. The question is, can these negotiators adapt their agenda to respond to these new issues that consumers themselves are raising?

To truly spread the benefits of international trade flows to consumers we need to see a renewed focus on competition enforcement and anti-corruption. We need to focus on earning consumers trust by respecting their concerns. And we a new focus on how consumers are using digital technology.

To be effective going forward we must all put consumers at the heart of trade. Because viewing trade from the bottom up will present a very different set of priorities than those currently on the WTO agenda.

Trade DOES matter to everyone.

1 comment:

  1. Director General Amanda Long rightly said in WTO Public Forum 2014 debate, ‘Why trade matters to everyone?’ that “if these benefits are going to continue to flow to consumers, we need to keep promoting market access and – importantly - tackle the corruption and lack of competition that can prevent the benefits of international trade being passed to consumers” The Consumers Eye Pakistan appreciate and support her views. The Consumers Eye Pakistan TCEP is a non-profit, Consumer NGO, working since 2005 for Consumer Empowerment in Pakistan, TCEP’s vision is a world where everyone has access to safe and sustainable goods and services. it includes adequate food, clothing, shelter, health care, education and safe drinking water in Pakistan. TCEP campaign against any behavior that threatens ignores or abuses the principles of consumer protection with the aim of getting every Pakistani consumer a fairer deal to put the rights of consumers at the heart of decision-making.