The World Trade Organisation's chief of staff marvels at a Spanish example of successful global logistics, considers how to improve links with universities, and speaks on a panel about new models for growthMonday
It is never easy to get up on Monday but today is different. I am in Arteixo, a small town in Galicia, home of the Spanish fashion group Inditex – best known for its brands Zara, Massimo Dutti, and Pull & Bear. Not that I am going shopping on a Monday morning. I have taken the day off to visit a very successful global production chain: designing, cutting, sewing, ironing and distributing done in over 80 countries, and employing over 100 000. It is a true example of 'made in the world'.
Trade is less and less about producing one product in one country and exporting it abroad. It is more and more about 'trade in tasks', performed in different countries and exported to many more. For the 3,000 working in Arteixo with an average age of under 29, imports are as natural as exports. Pakistani fabrics, Turkish buttons, Chinese zips, Indian leather, Portuguese cotton. The entrance of the Inditex building is bustling with people coming and going preparing the winter season. Young designers confer around a table to decide what is the best colour and make for one of the pieces of the Zara kids collection. Forget about the nationality, what counts is the value added. That is what generates jobs and growth. The red coats that we will shop for this autumn have travelled a long way before getting to our closest Zara store, but the longest trip – from Arteixo to a downtown Tokyo store – only takes 48 hours. A miracle? No, great logistics, both inside the factory and across the world.
Efficiently designed production chains, a very smart warehousing and distribution system and well thought out logistics. But it could be even faster and cheaper with the conclusion of the on-going World Trade Organisation negotiations on trade facilitation. We could cut by half the current costs of trading through simplifying customs procedures and red tape, today estimated at about 10 per cent of world trade. We catch a glimpse of Amancio Ortega, founder of Inditex, sleeves rolled up and no tie. A visionary man who back in the 60s imagined a unique business model combining creativity, design, affordability and quick turnaround, essential for the fashion industry. An idea that today is worth €13bn in sales.
Back in Geneva, the day starts with a brainstorming: how can we improve the ties between the WTO and universities in developing countries? Four years ago we set up 'WTO chairs' in 14 universities from Shanghai to Santiago de Chile, from Nairobi to Jordan and Buenos Aires. They can build local knowledge and capacity on trade. They are instrumental in fostering an informed debate over trade. We now need to take this collaboration to a higher level. All ideas are welcome. The rest of the day goes into planning for the autumn and various housekeeping matters. The day ends with a party. Julia, one of our top statisticians, is taking retirement. More than 20 years dedicated to improving our knowledge over trade numbers, but most importantly a great person. She will be missed.
I was shocked yesterday when I read in The Lancet
that physical inactivity causes as many deaths as tobacco. Feeling a bit guilty, the morning starts with a short walk around the park – short because my first meeting is at 8.30am. The press this morning is all about the Russian parliament's lower house, the Duma, having approved the country's accession to the WTO. We are still missing the vote by the upper house and the signature of President Vladimir Putin, which are needed by July 23. Then 30 days later Russia will officially become the WTO's 156th member.
Later in the day we meet with a large ministerial delegation from Liberia, another candidate for WTO accession. They want to leverage trade for growth, development and poverty alleviation. But they need 'Aid for Trade' to build capacity on the ground. Sweden and the United States are helping to fill in the gaps. It is impressive to see how determined the government of President Johnson Sirleaf is to advance the future of this tiny country.
Off to Vienna on the 7am plane. Another early morning. I start with a visit to the Austrian ministry for the economy. Lots of questions about the WTO's future agenda but agreement that the future must be built on a solid present. The WTO must show that it can deliver today to remain relevant tomorrow. Then off to UNIDO, the United Nations organisation for industrial development. They are one of our partners in building trade capacity on the ground. They tell me about their projects in Nigeria, in Bangladesh, in Central Africa. They are all about turning trade opportunities into realities: 100 per cent Aid for Trade. We discuss how to prepare the next Aid for Trade review which we will host in 2013 to look at impact and results.
Then off to the 20th anniversary of the Joint Vienna Institute, an amazing joint venture between the International Monetary Fund and Austria invented at the fall of the Berlin wall to train civil servants in central and eastern Europe. I have been asked to speak at a panel on a new growth model. The crisis has shown us that whichever model of growth we follow in the future, it must be less exuberant, more sustainable and better grounded on long-term policies and not just for short-term, finance driven speculative benefits. The crisis in Europe features high on the discussions. I think it is about more disciplines, better solidarity but also good doses of legitimacy. I meet an old friend from Brussels at the heart of the efforts to solve the current crises. This is not the first time the markets doubt the existence of political will. It happened when the euro was launched. But now, unlike then, political leadership does not sound irreversibly committed, hence constant talk about euro break-up. An Icelander sums it all up: "The European Union must not be allowed to fail; there is no need for a new growth model but rather for the application of policies and strengthening of institutions." An official dinner takes place at the beautiful Palais Ferstel.
This morning I speak on the experience of the Joint Vienna Institute. It is a reliable partner for the WTO to build trade capacity from Albania to Serbia, to Azerbaijan, through Kazakhstan and Tajikistan. My arguments sound more convincing when expressed by the Governor of Kosovo's central bank, himself a former student of the JVI. Another participant talks about "culture as the frontier for growth" and quotes Professor Mincer and his famous equation: an extra year of schooling is likely to result in a plus 10 per cent increase in wages. A stark reminder for governments cutting on education to reduce budget deficits. The week has been long and intense but I still manage to catch a movie I have been meaning to see: The Best Exotic Marigold Hotel
. Fine British humour with a 'message' and an amazing Judi Dench performance. A great way to end the week.
I have the morning free before I fly to Geneva and Vienna is celebrating Gustav Klimt's 150th anniversary, so I start with the Belvedere, which is packed with tourists wanting to catch a glimpse of The Kiss. Next is Wien Museum at Karlsplatz, showing the amazing portrait of Emilie Flöge. As I exit the museum I notice the old subway station by Otto Wagner, roaring Jugendstill. Architecture is everywhere and everything in Vienna. Well, apart from the sachertorte. Back in Geneva a friend calls: we need to start planning our August holiday trip.
A nice walk by the lake this morning. The weather does not feel like summer. No wonder the shores of Lake Leman are crowded with Middle East citizens escaping from the heat. It is July and the thermometer barely reaches 18C. The fridge is empty so I am off to the Sunday market in Divonne; the fishmonger greets me with his freshest catch; he has not seen me for a while, I have been away so much. Late lunch with friends. Lots of excitement when one of them, working at CERN, tells us all about the discovery of the Higgs particle. A bright spot in a world full of bad news. Arancha Gonzalez is chief of staff at the World Trade Organisation in Geneva, Switzerland