55th Session of UNCTAD's Trade and Development Board
Evolution of the International Trading System and of International Trade from a Development Perspective
Ladies and Gentlemen
I would have preferred to speak at today's Session on the “Evolution of the International Trading System” about the agreement reached to establish agriculture and industrial modalities towards a final deal of the Doha negotiations, but I cannot.
Instead I will tell you just how much we stand to lose if we do not carry on with the very hard and arduous work of concluding the Doha Round. I am convinced that a deal is still possible. I still believe that with yet another push we could still reach our target. This belief is not obstinacy. It is based on a hard look at what is on the table and what remains to be done.
While we have not yet been able to come up with modalities, I must say that during the period in which Ministers were present in Geneva in July, they managed to fill many of the gaps existing on thorny issues which had remained intractable for years.
Although we are not quite there in terms of an agreement, we have moved a long way. I believe it is in all members' interests, big and small, to reach an agreement, and to do so sooner rather than later. As many of you know, I have always been and continue to be a strong believer in the multilateral trading system.
I consider a freer and fairer trading system an important contribution for least-developed and developing countries to pursue their development objectives, and especially the attainment of the Millennium Development Goals.
Recognition by developing countries themselves of the importance that trade can play in their economic development has been demonstrated by a rise in the number of developing countries that are now members of the WTO, with the most recent addition being Cape Verde, but also by the far reaching reforms that these countries have taken to reach out to new markets and diversify their economies.
Many have been able to realize huge benefits from increased commodity exports. But, as this year's Trade and Development Board report points out, it is exactly now that many of those same countries could use their trade surpluses to start focusing their investments on efforts to diversify their economies and to “create the incentives for a sustained industrialization based on new investment in new productive capacities”. Such efforts would do much to reduce their dependency on only a few commodities.
As the UNCTAD XII conference in Ghana noted, the current upswing in commodity prices has changed trade patterns. But this is not the only factor which is evolving. Trade patterns have changed, with many developing countries becoming important players on the international stage. Added to this is that the world has seen an expansion in South-South trade, particularly in Asian developing countries which are estimated to account for more than two-thirds of all intra-developing country trade. Thus making it increasingly evident that one developing country's trade policies can create opportunities for more trade with other partners.
We have come a long way from arguing whether trade has a role to play in development. We now know that it does have a role to play. Our concern now is to ensure that trade works for development. This includes ensuring that we level the playing field through the results of the Doha Round.
But levelling the playing field will not be enough. As UNCTAD's report for this meeting clearly shows, trade opening needs to be accompanied by measures which facilitate trade. This is where the Aid for Trade agenda kicks in. In addition to freer and fairer trade rules, we also need an integrated agenda for boosting the productive capacities of developing countries so that they can translate these new trade opportunities into increased trade flows.
Aid for Trade as one of the types of development aid is nothing new. What is new, and I dare say essential, is that both trade and Aid for Trade be considered as two sides of the same coin. We have come a long way since we put it squarely on the WTO map at the Hong Kong Ministerial in December 2005. And there is more to come, focusing now on country and regional delivery as well as on the development of evaluation indicators to assess the effectiveness and impact of the aid. The recent meeting in Accra on Aid Effectiveness and the Symposium on Evaluation aimed at identifying indicators for monitoring Aid for Trade, which the WTO is hosting this week, are clear examples of where the current focus is.
And here I would like to commend UNCTAD and in particular Dr Supachai for the support they have lent to Aid for Trade, which could not work if it was not a collective effort whether within developing countries, or between donors and recipients, as well as within the family of international organizations.
The same is true for the Enhanced Integrated Framework for Least Developed Countries, in which we are partners with UNCTAD and the ITC alongside the World Bank, the IMF and UNDP and which I hope to be fully operational soon.
But allow me to get back to the issue of the Doha Round and the attempt in July to reach agreement in modalities on agriculture and industry.
In the WTO we work under the principle of the “single undertaking”, meaning that nothing is agreed until everything is agreed. The Doha Round will not close until agreement has been found not just on agriculture and industry but on all topics on the agenda, including services, trade facilitation, environmental goods and services or special and differential treatment to name but a few.
It would also be fair to say that even after agriculture and industry modalities are established, there would remain important work to translate these into detailed country-specific schedules of commitments.
WTO members entered the July Mini-Ministerial looking at agricultural subsidies, agricultural tariffs, industrial tariffs and ready to provide signals on the opening of a number of their services.
In a short space of time, they accomplished what some never thought they would. They found convergence on the issue of agriculture subsidies, even if the specific extra reduction for cotton subsidies remained to be addressed. They went a long way on the issue of agricultural tariffs. The same can be said about industrial tariffs, even if a few issues remained for further clarification. And they had a promise before them of attractive services offers, based on the Services Signalling Conference that was held.
In agriculture, various elements of the Doha Package have been designed to address both the developed and the developing world's many sensitivities. In July, much progress was achieved on sensitive products for developed and developing countries, and on special products reserved exclusively for the developing world — these are all products that would take either a lower tariff reduction than the norm or no reduction at all, to make trade opening more gradual. Progress was also made in reducing the scope of the existing special safeguard mechanism leading to its disappearance for developed countries. The same can be said of in-quota tariffs and tariff quota administration. Enormous progress was made on the export competition pillar. Good progress was also made on the issue of preference erosion and tropical products. Convergence was also on the table on the thorny issue of bananas, settlement of which is long overdue.
In industry, in addition to the core formula and flexibilities and sectorals, good progress was also made on treatment of Least Developed Countries as well as on the issue of preference erosion. In both agriculture and industry, special and differential treatment for small and vulnerable economies was also recognised and translated into specific parameters for the first time.
But where the negotiations collapsed was on the details of the Special Safeguard Mechanism for agriculture for the developing world. Some members could not agree on the circumstances in which this Safeguard could be used - the extent of volume surge, or price decline of imported products that would have to occur for it to be triggered. And nor could they agree on the extent of the remedy that it would provide when set in motion - the magnitude of the extra duty that would be imposed on imported goods to protect the domestic market. Efforts were made until the very last minute of the meeting to find a compromise over the Special Safeguard Mechanism, but it eventually became clear that we would require more work to build convergence.
As a result of the failure to progress beyond the SSM issue, negotiators never made it to other critical issues, including cotton. The Cotton-4, Benin, Burkina Faso, Chad and Mali — not to mention the rest of Africa — walked away, and understandably so, in extreme disappointment.
So where do we go from here? Since the July meeting, I have been consulting widely among members to get a sense of how they see the way forward and I have to say that a vast majority of developing countries have insisted that all efforts be made to safeguard what is already on the table and for those members that could not reach consensus in July to redouble their efforts in the coming weeks to resolve their differences. I have also been encouraged by the expressions of political commitment to a successful conclusion of the DDA made by leaders across the globe.
There is now far too much on the table, particularly for developing countries, to give up on these negotiations. And while I believe there is scope for renewed engagement over the coming weeks, it is clear that we are coping with a fragile situation. The good news is that a number of negotiators are back into the machine room. But we know that if this is necessary to reignite the process, building consensus and involving all members takes time and we do not have much of that.
In the weeks to come, and depending on progress made by the negotiators, I am ready to call Ministers to Geneva to try and close the issues which remain open so that the scheduling process in both areas can commence.
Quoting Michael Korda, the British novelist, I would like to offer a piece of advice to negotiators: “Never walk away from failure. On the contrary, study it carefully — and imaginatively — for its hidden assets”.
A failure of the Doha Agenda would have serious implications on the ongoing efforts by all developing countries to address their challenges and in particular to meet the UN Millennium Development Goals. The reasons why we must conclude the Round are visible to all of us and are becoming more critical by the day as the economic and financial outlook continues to deteriorate.
One of the most pressing crises facing us today, and which is extremely relevant to growth and poverty reduction, is that of the current food crisis. Whilst the WTO cannot provide an immediate solution, it can through the Doha Round provide medium to long term solutions to better connect demand and offer. A comprehensive WTO deal can help soften the impact of high prices by tackling the current systemic distortions in international agricultural trade that have stifled food production and investment in agriculture for years in many developing countries
And although Aid for Trade is not part of the negotiating agenda, a failure to conclude the Round successfully risks having an impact on the scale of resources that donors have undertaken to provide as part of their support to facilitate developing countries' capacity to fully exploit the potential benefits of further trade opening under a successful DDA.
The next weeks will be difficult but I remain convinced that all members, developed and developing alike, share the desire for a deal. But for us to have a deal, members need to work together towards striking a balance that will be favourable not only for each of them individually but for all members, particularly the most vulnerable. In addition, individual governments need to be clear on how these new trade opportunities will be used to address their own development challenges. While we all agree that trade will not be the panacea for all the challenges of development, trade can, when coupled with supportive economic and social policies, go a long way in helping countries to better address their development challenges.
I believe this is the platform that UNCTAD and the WTO now share. I am thankful to you all, starting with Dr Supachai, for your efforts in translating this vision into the reality of your people.
I thank you for your attention.
Source : WTO NEWS: SPEECHES — DG PASCAL LAMY, 16 September 2008